[Federal Register Volume 66, Number 121 (Friday, June 22, 2001)]
[Rules and Regulations]
[Pages 33610-33614]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-15721]



[[Page 33609]]

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Part II





Department of Housing and Urban Development





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24 CFR Part 982



Section 8 Homeownership Program; Pilot Program for Homeownership 
Assistance for Disabled Families; Interim Rule

  Federal Register / Vol. 66 , No. 121 / Friday, June 22, 2001 / Rules 
and Regulations  

[[Page 33610]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 982

[Docket No. FR-4661-I-01]
RIN 2577-AC24


Section 8 Homeownership Program; Pilot Program for Homeownership 
Assistance for Disabled Families

AGENCY: Office of Assistant Secretary for Public and Indian Housing, 
HUD.

ACTION: Interim rule.

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SUMMARY: This interim rule establishes regulations to implement the 
three-year pilot program authorized by section 302 of the American 
Homeownership and Economic Opportunity Act of 2000. A public housing 
agency (PHA) may elect to provide homeownership assistance to a 
disabled family under the pilot program, rather than under the Housing 
Choice Voucher Program homeownership option. Under the pilot program, a 
PHA provides homeownership assistance to a disabled family residing in 
a home purchased and owned by one or more members of the family. The 
interim rule incorporates the requirements for the pilot program in 
HUD's regulations for the homeownership option. In addition to the 
amendments implementing section 302, HUD has taken the opportunity 
afforded by this interim rule to make several clarifying and technical 
amendments to its September 12, 2000 final rule establishing the 
homeownership option.

DATES: Effective Date: July 23, 2001. Comments Due Date: August 21, 
2001.

ADDRESSES: Interested persons are invited to submit comments regarding 
this interim rule to the Rules Docket Clerk, Office of General Counsel, 
Room 10276, Department of Housing and Urban Development, 451 Seventh 
Street, SW, Washington, DC 20410-0500. Communications should refer to 
the above docket number and title. Facsimile (FAX) comments are not 
acceptable. A copy of each communication submitted will be available 
for public inspection and copying between 7:30 a.m. and 5:30 p.m. 
weekdays at the above address.

FOR FURTHER INFORMATION CONTACT: Gerald J. Benoit, Office of Public and 
Indian Housing, Department of Housing and Urban Development, Room 4210, 
451 Seventh Street, SW, Washington, DC 20410; telephone (202) 708-0477. 
(This is not a toll-free number.) Hearing or speech-impaired 
individuals may access this number via TTY by calling the toll-free 
Federal Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    On September 12, 2000 (65 FR 55134), HUD published its final rule 
implementing the ``homeownership option'' under section 8(y) of the 
United States Housing Act of 1937 (42 U.S.C. 1437 et seq.), as amended 
by section 555 of the Quality Housing and Work Responsibility Act of 
1998 (title V of the Fiscal Year 1999 HUD Appropriations Act; Public 
Law 105-276, 112 Stat. 2461, 2518, approved October 21, 1998). Under 
the section 8(y) homeownership option, a public housing agency (PHA) 
may choose to provide tenant-based assistance to an eligible family 
that purchases a dwelling unit that will be occupied by the family. The 
September 12, 2000 final rule implemented the section 8(y) 
homeownership option by adding a new ``special housing type'' under 
subpart M of HUD's regulations for the Housing Choice Voucher Program 
at 24 CFR part 982. Subpart M describes program requirements for 
alternatives to the basic Housing Choice Voucher Program.
    Under the basic homeownership option, special provisions already 
exist for families with a member who is a person with disabilities. For 
example, there is no maximum term of homeownership assistance for 
disabled families (assistance to other families is limited to a fifteen 
or ten-year term as described in Sec. 982.634). Further, the PHA is 
required to count welfare assistance provided to the disabled family 
for purposes of determining whether the family satisfies the minimum 
income eligibility requirements (generally, such assistance is not 
counted for other families under Sec. 982.627(c)). In addition, if a 
PHA determines that a disabled family requires homeownership assistance 
as a reasonable accommodation, the first-time homeowner requirement 
does not apply (see Sec. 982.627(b)(3)).
    Section 302 of the American Homeownership and Economic Opportunity 
Act of 2000 (Public Law 106-569, 114 Stat. 2944, approved December 27, 
2000) authorizes a pilot program to assist disabled families. Under the 
pilot program, a PHA may provide tenant-based homeownership assistance 
to a disabled family residing in a home purchased and owned by one or 
more members of the family. The pilot program is authorized to operate 
for a three-year period commencing on the effective date of HUD's 
implementing regulations.
    The pilot program provides disabled families with certain benefits 
and disadvantages in comparison to the basic homeownership option. For 
example, families whose annual income exceeds 80 percent of the median 
income for the area are usually ineligible for admission to the Housing 
Choice Voucher Program. PHAs may admit disabled families whose annual 
income is greater than 80 percent of the area median into the pilot 
program. On the other hand, whenever the annual income of a disabled 
family participating in the pilot program exceeds 80 percent of the 
area median income, the amount of assistance the family would normally 
receive under the subsidy formula for the basic homeownership option is 
reduced.

II. This Interim Rule

A. Implementation of Pilot Program to Assist Disabled Families

    1. General. This interim rule establishes regulations to implement 
the section 302 pilot program. Because assistance under the pilot 
program is an alternative to tenant-based homeownership assistance, HUD 
has incorporated the requirements for the pilot program in its 
regulations for the homeownership option (codified at Secs. 982.625-
982.641). Specifically, the interim rule establishes a new 
Sec. 982.642, which describes those requirements that are unique to the 
pilot program. Except as provided in new Sec. 982.642, all of the 
regulatory requirements applicable to the homeownership option are also 
applicable to the pilot program.
    A PHA that administers tenant-based assistance has the choice 
whether to offer homeownership assistance under the pilot program 
(whether or not the PHA has also decided to offer the basic 
homeownership option). However, a PHA that elects to provide 
homeownership assistance under the pilot program must have the required 
capacity to operate a successful homeownership program (as required 
under Sec. 982.625(d) of the existing homeownership option 
regulations).
    2. Eligibility requirements. The PHA may not provide homeownership 
assistance under the pilot program unless the PHA determines that the 
family satisfies all of the following initial requirements at 
commencement of homeownership assistance for the family:
     The family is a disabled family (as that term is defined 
in Sec. 5.403 of HUD's regulations);
     The family's annual income at the time of admission does 
not exceed 99

[[Page 33611]]

percent of the median income for the area;
     The family is not a current homeowner;
     The family will close on the purchase of the home during 
the three year period commencing on the effective date of this interim 
rule; and
     The family meets the initial requirements for assistance 
under the homeownership option described in Sec. 982.626. However, 
section 302 exempts families seeking to participate in the pilot 
program from two of the eligibility criteria for basic tenant-based 
homeownership assistance--the requirement that the family be a ``first-
time homeowner'' (as that term is defined in Sec. 982.4) and the income 
eligibility requirements of Sec. 982.201(b)(1).
    Accordingly, a member of the disabled family may have owned a 
present homeownership interest in a residence during the three-years 
before commencement of homeownership assistance under the pilot program 
(as in the basic homeownership option, current homeowners are not 
eligible to participate in the pilot program). Secondly, the family 
need not be low-income to participate in the pilot program (however, as 
noted, the annual income of the family at admission may not exceed 99 
percent of the median income for the area). Further, any new admissions 
to the Housing Choice Voucher Program through this pilot program must 
be selected from the PHA waiting list and are counted towards the PHA 
income targeting requirements of Sec. 982.201(b)(2).
    3. Homeownership assistance payments. While the disabled family is 
residing in the home, the PHA shall calculate a monthly homeownership 
assistance payment on behalf of the family by using the lower of (1) 
the payment standard minus the total tenant payment or (2) the monthly 
homeownership expenses minus the total tenant payment (see 
Sec. 982.635). (Total tenant payment is higher of the minimum rent, 10 
percent of monthly income, 30 percent of monthly adjusted income, or 
the welfare rent.) The PHA must use the utility allowance schedule and 
payment standard schedules applicable to the Housing Choice Voucher 
Program.
    Families will receive a monthly homeownership payment equal to a 
specified percentage of the amount calculated under Sec. 982.635. The 
percentage will depend on the annual income of the family at the 
commencement of assistance under the pilot program, and at subsequent 
recertifications. The amount of the homeownership payments will be as 
follows:
     A family that is a low income family (as defined at 24 CFR 
5.603(b)) as determined by HUD shall receive the full amount of the 
monthly homeownership assistance payment calculated under Sec. 982.635.
     A family whose annual income is greater than the low 
income family ceiling but does not exceed 89 percent of the median 
income for the area as determined by HUD shall receive a monthly 
homeownership assistance payment equal to 66 percent of the amount 
calculated under Sec. 982.635.
     A family whose annual income is greater than the 89 
percent ceiling but does not exceed 99 percent of the median income for 
the area as determined by HUD shall receive a monthly homeownership 
assistance payment equal to 33 percent of the amount calculated under 
Sec. 982.635.
     A family whose annual income is greater than 99 percent of 
the median income for the area shall not receive homeownership 
assistance under the pilot program.
    The family is responsible for the monthly homeownership expenses 
not reimbursed by the housing assistance payment. The PHA must make the 
homeownership assistance payments to the lender on behalf of the 
disabled family (the provisions of Sec. 982.635(d), which permit the 
PHA to make the payments directly to the family, do not apply to the 
pilot program). If the assistance payment exceeds the amount due to the 
lender, the PHA must pay the excess directly to the family.
    4. Mortgage defaults. As in the basic homeownership option, the PHA 
must terminate assistance for any member of the family receiving 
homeownership assistance that is dispossessed from the home pursuant to 
a judgment or order of foreclosure on any mortgage securing debt 
incurred to purchase the home, or any refinancing of such debt (whether 
or not the mortgage is insured by HUD-Federal Housing Administration 
(FHA)). However, unlike the basic homeownership option, the PHA may 
permit the family to move to a new unit with continued homeownership 
assistance if the PHA determines that the default is due to 
catastrophic medical reasons or due to the impact of a federally 
declared major disaster or emergency. In the case of all other mortgage 
defaults, although the family is not eligible to purchase another home 
with tenant-based assistance, the PHA may, in its discretion, provide 
the family with continued voucher rental assistance. The PHA must deny 
such rental assistance if the family defaulted on an FHA-insured 
mortgage and the family fails to demonstrate that:
     The family has conveyed, or will convey, title to the 
home, as required by HUD, to HUD or HUD's designee; and
     The family has moved, or will move, from the home within 
the time period established or approved by HUD.

B. Technical and Clarifying Changes to Homeownership Option Regulations

    In addition to implementing the pilot program for disabled 
families, HUD has taken the opportunity afforded by this interim rule 
to make several clarifying and technical amendments to the existing 
regulations for the homeownership option. The amendments do not 
establish or modify substantive requirements or procedures. Rather, 
these technical changes are designed to correct a typographical error, 
improve the clarity of existing requirements, and facilitate 
administration of the homeownership option. The changes are as follows:
    1. Correction of typographical error   (Sec. 982.4(b)). This 
interim rule corrects a typographical error contained in the definition 
of the term ``present homeownership interest'' at Sec. 982.4. The 
codified text erroneously refers to ``present homeownership option.'' 
Although the appropriate term is made clear by the surrounding text, 
HUD has taken this opportunity to make the necessary correction.
    2. PHA requirements for financing purchase of home 
(Sec. 982.632(a)). This interim rule clarifies the regulatory 
provisions governing PHA establishment of lender qualifications. Under 
Sec. 982.632(a), a PHA may establish requirements for financing the 
purchase of a home to be assisted under the homeownership option. These 
requirements may include requirements concerning the qualification of 
lenders or the terms of financing.
    The regulatory language of Sec. 982.632(a) might be interpreted to 
mean that a PHA may require a family to use the services of specific 
lenders, thereby restricting the family's ability to secure favorable 
financing terms. However, as the preamble to the September 12, 2000 
final rule makes clear, ``[a] PHA may not reduce a family's choice by 
limiting the use of homeownership assistance to particular * * * 
lenders'' (see, 65 FR 55134, middle column). This interim rule amends 
Sec. 982.632(a) to clarify that a PHA may not require that families 
acquire financing from one or more specified lenders.
    This interim rule also amends Sec. 982.632(a) to highlight PHA 
efforts to curb predatory lending abuses in the

[[Page 33612]]

homeownership option. The regulatory language contains a non-exclusive 
list of financing terms that a PHA may elect to require for financing 
the purchase of a home with homeownership assistance. This interim rule 
expands this list of examples to clarify that a PHA may choose to 
require financing terms necessary to protect borrowers against high 
cost loans or predatory loans. (See section VII of the preamble to the 
September 12, 2000 final rule establishing the homeownership option for 
additional discussion regarding the prevention of predatory lending 
practices, 65 FR 55159, middle column.)
    3. Continued voucher rental assistance following a default on an 
FHA-insured mortgage (Sec. 982.638(d)). This interim rule amends the 
provisions regarding the continuation of voucher rental assistance to a 
family following a default on an FHA-insured mortgage. Currently, 
Sec. 982.638(d) provides that the PHA may only permit such continued 
assistance if the family has: (1) conveyed title to the home, as 
required by HUD, to HUD or HUD's designee, and (2) moved from the home 
within the period established or approved by HUD. This regulatory 
requirement has the potential to delay the provision of continued 
assistance to families who will shortly be complying with the two 
prerequisite requirements for such assistance, but have not yet 
conveyed title and moved from the home. Accordingly, this interim rule 
authorizes a PHA to provide continued voucher rental assistance to a 
family that has defaulted on an FHA-insured mortgage if the family has 
complied or will be complying with the two requirements described 
above.
    4. Recapture documentation (Sec. 982.640(b)). Under Sec. 982.640, a 
PHA is required to recapture a percentage of the homeownership 
assistance provided to a family upon the sale or refinancing of the 
home. The regulatory language of Sec. 982.640(b) requires that, upon 
purchase of the home, the family execute documentation ``as required by 
HUD'' to secure the PHA's recapture rights. However, given the many 
variations in State and local law regarding liens, HUD does not believe 
it would be appropriate, or feasible, to develop a single lien document 
applicable to all recaptures under the homeownership option. 
Accordingly, HUD is revising Sec. 982.640(b) to provide PHAs with the 
necessary flexibility to develop lien documentation that is consistent 
with State and local requirements.

III. Justification for Interim Rulemaking

    In general, HUD publishes a rule for public comment before issuing 
a rule for effect, in accordance with its own regulations on rulemaking 
at 24 CFR part 10. Part 10, however, does provide for exceptions from 
that general rule where HUD finds good cause to omit advance notice and 
public participation. The good cause requirement is satisfied when the 
prior public procedure is ``impracticable, unnecessary, or contrary to 
the public interest'' (24 CFR 10.1). HUD finds that good cause exists 
to publish this rule for effect without first soliciting public 
comment, in that prior public procedure is unnecessary and contrary to 
the public interest. The reasons for HUD's determination are as 
follows.
    To a large extent, section 302 repeats the statutory language of 
the section 8(y) homeownership option, which HUD has already 
implemented through notice and comment rulemaking. Where applicable, 
the interim rule simply cross-references to those existing regulatory 
requirements (Sec. 982.642(b)), and does not elaborate on or modify 
these provisions. Where the interim rule differs from the regulations 
for the basic homeownership option (for example, in exempting disabled 
families from the ``first-time homeowner'' and the income eligibility 
requirements) it does so as a result of the statutory mandates 
contained in section 302 and not as an exercise of HUD's rulemaking 
discretion. Accordingly, HUD's authority to revise these provisions of 
the interim rule in response to public comment would be limited.
    Further, HUD believes that delaying the implementation of the pilot 
program to permit prior public comment would be contrary to the public 
interest. As discussed in this preamble, the pilot program is designed 
to expand the provision of voucher homeownership assistance to disabled 
families. Immediate implementation of this interim rule will allow 
disabled families to enjoy the benefits of the pilot program as 
expeditiously as possible.
    In addition to implementing section 302, HUD has taken the 
opportunity afforded by this interim rule to make several clarifying 
and technical amendments to the existing regulations for the 
homeownership option. The amendments do not establish or modify 
substantive requirements or procedures. Rather, these technical changes 
are designed to correct a typographical error, improve the clarity of 
existing requirements, and facilitate administration of the 
homeownership option. Accordingly, HUD believes it is unnecessary to 
solicit public comments before making these technical changes 
effective.
    Although HUD believes that good cause exists to publish this rule 
for effect without prior public comment, HUD recognizes the value of 
public comment in the development of its regulations. HUD has, 
therefore, issued these regulations on an interim basis and has 
provided the public with a 60-day comment period. HUD welcomes comment 
on the regulatory amendments made by this interim rule. The public 
comments will be addressed in the final rule.

IV. Findings and Certifications

Regulatory Planning and Review

    The Office of Management and Budget (OMB) reviewed this rule under 
Executive Order 12866, Regulatory Planning and Review. OMB determined 
that this rule is a ``significant regulatory action'' as defined in 
section 3(f) of the Order (although not an economically significant 
regulatory action under the Order). Any changes made to this rule as a 
result of that review are identified in the docket file, which is 
available for public inspection in the office of the Department's Rules 
Docket Clerk, Room 10276, 451 Seventh Street, SW, Washington, DC 20410-
0500.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. This interim rule does not impose 
any Federal mandates on any State, local, or tribal governments or the 
private sector within the meaning of Unfunded Mandates Reform Act of 
1995.

Environmental Impact

    A Finding of No Significant Impact (FONSI) with respect to the 
environment has been made in accordance with HUD regulations in 24 CFR 
part 50 that implement section 102(2)(C) of the National Environmental 
Policy Act of 1969 (42 U.S.C. 4223). This FONSI is available for public 
inspection between 7:30 a.m. and 5:30 p.m. weekdays in the Office of 
the Rules Docket Clerk, Office of General Counsel, Room 10276, 
Department of Housing and Urban Development, 451 Seventh Street, SW, 
Washington, DC 20410.

Impact on Small Entities

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C.

[[Page 33613]]

605(b)) (the RFA), has reviewed and approved this interim rule and in 
so doing certifies that this rule will not have a significant economic 
impact on a substantial number of small entities. The reasons for HUD's 
determination are as follows:
    (1) A Substantial Number of Small Entities Will Not be Affected. 
The interim rule is exclusively concerned with public housing agencies 
that administer tenant-based housing assistance under section 8 of the 
United States Housing Act of 1937. Specifically, the interim rule 
implements a pilot program under which a PHA may elect to provide 
tenant-based assistance to an eligible disabled family residing in a 
home purchased and owned by one or more members of the family. Under 
the definition of ``small governmental jurisdiction'' in section 601(5) 
of the RFA, the provisions of the RFA are applicable only to those few 
PHAs that are part of a political jurisdiction with a population of 
under 50,000 persons. The number of entities potentially affected by 
this rule is therefore not substantial.
    (2) No Significant Economic Impact. The interim rule will not 
change the amount of funding available under the Housing Choice Voucher 
Program. Accordingly, the economic impact of this rule will not be 
significant, and it will not affect a substantial number of small 
entities.
    Notwithstanding HUD's determination that this rule will not have a 
significant economic effect on a substantial number of small entities, 
HUD specifically invites comments regarding any less burdensome 
alternatives to this rule that will meet HUD's objectives as described 
in this preamble.

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either imposes substantial direct compliance costs on State and local 
governments and is not required by statute, or the rule preempts State 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive Order. This interim rule is exclusively 
concerned with the establishment of an alternative use of rental 
voucher assistance. Specifically, the rule authorizes a PHA to provide 
tenant-based assistance for an eligible disabled family that purchases 
a dwelling unit that will be occupied by the family. This interim rule 
does not have federalism implications and does not impose substantial 
direct compliance costs on State and local governments or preempt State 
law within the meaning of the Executive Order.

Catalog of Domestic Assistance Number

    The Catalog of Domestic Assistance Number for the Housing Choice 
Voucher program is 14.871.

List of Subjects in 24 CFR Part 982

    Grant programs--housing and community development, Housing, Rent 
subsidies, Reporting and recordkeeping requirements.


    Accordingly, for the reasons described in the preamble, HUD amends 
24 CFR part 982 as follows:

PART 982--SECTION 8 TENANT-BASED ASSISTANCE: HOUSING CHOICE VOUCHER 
PROGRAM

    1. The authority citation for 24 CFR part 982 continues to read as 
follows:

    Authority: 42 U.S.C. 1437f and 3535(d).

    2. In Sec. 982.4(b), revise the definition of ``Present 
homeownership interest'' to read as follows:


Sec. 982.4  Definitions

* * * * *
    (b) * * *
    Present homeownership interest. In the homeownership option: 
``Present ownership interest'' in a residence includes title, in whole 
or in part, to a residence, or ownership, in whole or in part, of 
membership shares in a cooperative. ``Present ownership interest'' in a 
residence does not include the right to purchase title to the residence 
under a lease-purchase agreement.
* * * * *

    3. Revise Sec. 982.632(a) to read as follows:


Sec. 982.632  Homeownership option: Financing purchase of home; 
affordability of purchase.

    (a) The PHA may establish requirements for financing purchase of a 
home to be assisted under the homeownership option. Such PHA 
requirements may include requirements concerning qualification of 
lenders (for example, prohibition of seller financing or case-by-case 
approval of seller financing), or concerning terms of financing (for 
example, a prohibition of balloon payment mortgages, establishment of a 
minimum homeowner equity requirement from personal resources, or 
provisions required to protect borrowers against high cost loans or 
predatory loans). A PHA may not require that families acquire financing 
from one or more specified lenders, thereby restricting the family's 
ability to secure favorable financing terms.
* * * * *

    4. Revise Sec. 982.638(d)(2) to read as follows:


Sec. 982.638  Homeownership option: Denial or termination of assistance 
for family.

* * * * *
    (d) * * *
    (2) The family fails to demonstrate that:
    (i) The family has conveyed, or will convey, title to the home, as 
required by HUD, to HUD or HUD's designee; and
    (ii) The family has moved, or will move, from the home within the 
period established or approved by HUD.

    5. Revise Sec. 982.640(b) to read as follows:


Sec. 982.640  Homeownership option: Recapture of homeownership 
assistance.

* * * * *
    (b) Securing the PHA's right of recapture. Upon purchase of the 
home, a family receiving homeownership assistance shall execute 
documentation as required by the PHA and consistent with State and 
local law, that secures the PHA's right to recapture the homeownership 
assistance in accordance with this section. The lien securing the 
recapture of homeownership subsidy may be subordinated to a refinanced 
mortgage.
* * * * *

    6. Add Sec. 982.642 to read as follows:


Sec. 982.642  Homeownership option: Pilot program for homeownership 
assistance for disabled families.

    (a) General. This section implements the pilot program authorized 
by section 302 of the American Homeownership and Economic Opportunity 
Act of 2000. Under the pilot program, a PHA may provide homeownership 
assistance to a disabled family residing in a home purchased and owned 
by one or more members of the family. A PHA that administers tenant-
based assistance has the choice whether to offer homeownership 
assistance under the pilot program (whether or not the PHA has also 
decided to offer the homeownership option).
    (b) Applicability of homeownership option requirements. Except as 
provided in this section, all of the regulations applicable to the 
homeownership option (as described in Secs. 982.625 through 982.641) 
are also applicable to the pilot program.
    (c) Initial eligibility requirements. Before commencing 
homeownership assistance under the pilot program for a family, the PHA 
must determine that all

[[Page 33614]]

of the following initial requirements have been satisfied:
    (1) The family is a disabled family (as defined in Sec. 5.403 of 
this title);
    (2) The family annual income does not exceed 99 percent of the 
median income for the area;
    (3) The family is not a current homeowner;
    (4) The family must close on the purchase of the home during the 
period starting on July 23, 2001 and ending on July 23, 2004; and
    (5) The family meets the initial requirements described in 
Sec. 982.626; however, the following initial requirements do not apply 
to a family seeking to participate in the pilot program:
    (i) The income eligibility requirements of Sec. 982.201(b)(1);
    (ii) The first-time homeowner requirements of Sec. 982.627(b); and
    (iii) The mortgage default requirements of Sec. 982.627(e), if the 
PHA determines that the default is due to catastrophic medical reasons 
or due to the impact of a federally declared major disaster or 
emergency.
    (d) Amount and distribution of homeownership assistance payments. 
(1) While the family is residing in the home, the PHA shall calculate a 
monthly homeownership assistance payment on behalf of the family in 
accordance with Sec. 982.635 and this section.
    (2) A family that is a low income family (as defined at 24 CFR 
5.603(b)) as determined by HUD shall receive the full amount of the 
monthly homeownership assistance payment calculated under Sec. 982.635.
    (3) A family whose annual income is greater than the low income 
family ceiling but does not exceed 89 percent of the median income for 
the area as determined by HUD shall receive a monthly homeownership 
assistance payment equal to 66 percent of the amount calculated under 
Sec. 982.635.
    (4) A family whose annual income is greater than the 89 percent 
ceiling but does not exceed 99 percent of the median income for the 
area as determined by HUD shall receive a monthly homeownership 
assistance payment equal to 33 percent of the amount calculated under 
Sec. 982.635.
    (5) A family whose annual income is greater than 99 percent of the 
median income for the area shall not receive homeownership assistance 
under the pilot program.
    (e) Assistance payments to lender. The PHA must make homeownership 
assistance payments to a lender on behalf of the disabled family. If 
the assistance payment exceeds the amount due to the lender, the PHA 
must pay the excess directly to the family. The provisions of 
Sec. 982.635(d), which permit the PHA to make monthly homeownership 
assistance payments directly to the family, do not apply to the pilot 
program.
    (f) Mortgage defaults. The requirements of Sec. 982.638(d) 
regarding mortgage defaults are applicable to the pilot program. 
However, notwithstanding Sec. 982.638(d), the PHA may, in its 
discretion, permit a family that has defaulted on its mortgage to move 
to a new unit with continued voucher homeownership assistance if the 
PHA determines that the default is due to catastrophic medical reasons 
or due to the impact of a federally declared major disaster or 
emergency. The requirements of Secs. 982.627(a)(5) and 982.627(e) do 
not apply to such a family.

    Dated: March 19, 2001.
Mel Martinez,
Secretary.
[FR Doc. 01-15721 Filed 6-19-01; 2:10 pm]
BILLING CODE 4210-33-P