USC Subchapter IV

USC Subchapter IV
in effect

42 U.S.C. § 12871 Program authority

(a) In generalThe Secretary is authorized to make—(1) planning grants to enable applicants to develop homeownership programs; and (2) implementation grants to enable applicants to carry out homeownership programs. (b) Authority to reserve housing assistanceIn connection with a grant under this part, the Secretary may reserve authority to provide assistance under section 1437f of this title to the extent necessary to provide rental assistance for a nonpurchasing tenant who resides in the project on the date the Secretary approves the application for an implementation grant, for use by the tenant in another project.

42 U.S.C. § 12872 Planning grants

(a) GrantsThe Secretary is authorized to make planning grants to applicants for the purpose of developing homeownership programs under this part. The amount of a planning grant under this section may not exceed $200,000, except that the Secretary may for good cause approve a grant in a higher amount. (b) Eligible activitiesPlanning grants may be used for activities to develop homeownership programs (which may include programs for cooperative ownership), including—(1) development of resident management corporations and resident councils; (2) training and technical assistance of applicants related to the development of a specific homeownership program; (3) studies of the feasibility of a homeownership program; (4) inspection for lead-based paint hazards, as required by section 4822(a) of this title; (5) preliminary architectural and engineering work; (6) tenant and homebuyer counseling and training; (7) planning for economic development, job training, and self-sufficiency activities that promote economic self-sufficiency for homebuyers and homeowners under the homeownership program; (8) development of security plans; and (9) preparation of an application for an implementation grant under this part. (c) Application(1) Form and proceduresAn application for a planning grant shall be submitted by an applicant in such form and in accordance with such procedures as the Secretary shall establish. (2) Minimum requirementsThe Secretary shall require that an application contain at a minimum—(A) a request for a planning grant, specifying the activities proposed to be carried out, the schedule for completing the activities, the personnel necessary to complete the activities, and the amount of the grant requested; (B) a description of the applicant and a statement of its qualifications; (C) identification and description of the eligible property involved, and a description of the composition of the tenants, including family size and income; (D) a certification by the public official responsible for submitting the comprehensive housing affordability strategy under section 12705 of this title that the proposed activities are consistent with the approved housing strategy of the State or unit of general local government within which the project is located (or, during the first 12 months after November 28, 1990, that the application is consistent with such other existing State or local housing plan or strategy that the Secretary shall determine to be appropriate); and (E) a certification that the applicant will comply with the requirements of the Fair Housing Act [42 U.S.C. 3601 et seq.], title VI of the Civil Rights Act of 1964 [42 U.S.C. 2000d et seq.], section 504 of the Rehabilitation Act of 1973 [29 U.S.C. 794], and the Age Discrimination Act of 1975 [42 U.S.C. 6101 et seq.], and will affirmatively further fair housing. (d) Selection criteriaThe Secretary shall, by regulation, establish selection criteria for a national competition for assistance under this section, which shall include—(1) the qualifications or potential capabilities of the applicant; (2) the extent of tenant interest in the development of a homeownership program for the property; (3) the potential of the applicant for developing a successful and affordable homeownership program and the suitability of the property for homeownership; (4) national geographic diversity among housing for which applicants are selected to receive assistance; and (5) such other factors that the Secretary shall require that (in the determination of the Secretary) are appropriate for purposes of carrying out the program established by this part in an effective and efficient manner.

42 U.S.C. § 12873 Implementation grants

(a) GrantsThe Secretary is authorized to make implementation grants to applicants for the purpose of carrying out homeownership programs approved under this part. (b) Eligible activitiesImplementation grants may be used for activities to carry out homeownership programs (including programs for cooperative ownership), including the following activities:(1) Architectural and engineering work. (2) Acquisition of the eligible property for the purpose of transferring ownership to eligible families in accordance with a homeownership program that meets the requirements under this part. (3) Rehabilitation of any property covered by the homeownership program, in accordance with standards established by the Secretary. (4) Abatement of lead-based paint hazards, as required by section 4822(a) of this title. (5) Administrative costs of the applicant, which may not exceed 15 percent of the amount of the assistance provided under this section. (6) Development of resident management corporations and resident management councils, but only if the applicant has not received assistance under section 12872 11 See References in Text note below. of this title for such activities. (7) Counseling and training of homebuyers and homeowners under the homeownership program. (8) Relocation of tenants who elect to move. (9) Any necessary temporary relocation of tenants during rehabilitation. (10) Planning for establishment of for- or not-for-profit small businesses by or on behalf of residents, job training, and other activities that promote economic self-sufficiency of homebuyers and homeowners of the property covered by the homeownership program and economic development of the neighborhood. (11) Funding of operating expenses and replacement reserves of the property covered by the homeownership program. (12) Legal fees. (13) Defraying costs for the ongoing training needs of the recipient that are related to developing and carrying out the homeownership program. (14) Economic development activities that promote economic self-sufficiency of homebuyers, residents, and homeowners under the homeownership program. (c) Matching funding(1) In generalEach recipient shall assure that contributions equal to not less than 33 percent of the grant amounts made available under this section, excluding any amounts provided for post-sale operating expense, shall be provided from non-Federal sources to carry out the homeownership program. (2) FormSuch contributions may be in the form of—(A) cash contributions from non-Federal resources, which may not include funds from a grant made under section 5306(b) or section 5306(d) of this title; (B) payment of administrative expenses, as defined by the Secretary, from non-Federal resources, including funds from a grant made under section 5306(b) or section 5306(d) of this title; (C) the value of taxes, fees, or other charges that are normally and customarily imposed but are waived, foregone, or deferred in a manner that facilitates the implementation of a homeownership program assisted under this part; (D) the value of land or other real property as appraised according to procedures acceptable to the Secretary; (E) the value of investment in on-site and off-site infrastructure required for a homeownership program assisted under this part; or (F) such other in-kind contributions as the Secretary may approve. Contributions for administrative expenses shall be recognized only up to an amount equal to 7 percent of the total amount of grants made available under this section. (d) 22 So in original. Two subsecs. (d) have been enacted. Application(1) Form and procedureAn application for an implementation grant shall be submitted by an applicant in such form and in accordance with such procedures as the Secretary shall establish. (2) Minimum requirementsThe Secretary shall require that an application contain at a minimum—(A) a request for an implementation grant, specifying the amount of the grant requested and its proposed uses; (B) if applicable, an application for assistance under section 1437f of this title, specifying the proposed uses of such assistance and the period during which the assistance will be needed; (C) a description of the qualifications and experience of the applicant in providing low-income housing; (D) a description of the proposed homeownership program, consistent with section 12874 1 of this title and the other requirements of this part, specifying the activities proposed to be carried out and their estimated costs, identifying reasonable schedules for carrying it out, and demonstrating the program will comply with the affordability requirements under section 12874(b) 1 of this title; (E) identification and description of the property involved, and a description of the composition of the tenants, including family size and income; (F) a description of and commitment for the resources that are expected to be made available to provide the matching funding required under subsection (c) and of other resources that are expected to be made available in support of the homeownership program; (G) identification and description of the financing proposed for any (i) rehabilitation and (ii) acquisition (I) of the property, by an entity for transfer to eligible families, and (II) by eligible families of ownership interests in, or shares representing, units in the project; (H) the proposed sales price, the basis for such price determination, and terms to an entity, if any, that will purchase the property for resale to eligible families; (I) the proposed sales prices, if any, and terms to eligible families; (J) any proposed restrictions on the resale of units under a homeownership program; (K) identification and description of the entity that will operate and manage the property; (L) a certification by the public official responsible for submitting the comprehensive housing affordability strategy under section 12705 of this title that the proposed activities are consistent with the approved housing strategy of the State or unit of general local government within which the project is located (or, during the first 12 months after November 28, 1990, that the application is consistent with such other existing State or local housing plan or strategy that the Secretary shall determine to be appropriate); and (M) a certification that the applicant will comply with the requirements of the Fair Housing Act [42 U.S.C. 3601 et seq.], title VI of the Civil Rights Act of 1964 [42 U.S.C. 2000d et seq.], section 504 of the Rehabilitation Act of 1973 [29 U.S.C. 794], and the Age Discrimination Act of 1975 [42 U.S.C. 6101 et seq.], and will affirmatively further fair housing. (d) 2 Selection criteriaThe Secretary shall establish selection criteria for assistance under this section, which shall include—(1) the qualifications or potential capabilities of the applicant; (2) the feasibility of the homeownership program; (3) the extent of tenant interest in the development of a homeownership program for the property; (4) the potential for developing an affordable homeownership program and the suitability of the property for homeownership; (5) national geographic diversity among housing for which applicants are selected to receive assistance; (6) the extent to which a sufficient supply of affordable rental housing of the type assisted under this title 1 exists in the locality, so that the implementation of the homeownership program will not appreciably reduce the number of such rental units available to residents currently residing in such units or eligible for residency in such units; and (7) such other factors as the Secretary determines to be appropriate for purposes of carrying out the program established by the 33 So in original. Probably should be “this”. part in an effective and efficient manner. (e) ApprovalThe Secretary shall notify each applicant, not later than 6 months after the date of the submission of the application, whether the application is approved or not approved. The Secretary may approve the application for an implementation grant with a statement that the application for the section 8 [42 U.S.C. 1437f] assistance for residents of the project not purchasing units is conditionally approved, subject to the availability of appropriations in subsequent fiscal years.

42 U.S.C. § 12874 Homeownership program requirements

(a) In generalA homeownership program under this part shall provide for acquisition by eligible families of ownership interest in, or shares representing, the units in an eligible property under any arrangement determined by the Secretary to be appropriate, such as cooperative ownership (including limited equity cooperative ownership) and fee simple ownership (including condominium ownership), for occupancy by the eligible families. (b) AffordabilityA homeownership program under this part shall provide for the establishment of sales prices (including principal, insurance, taxes, and interest and closing costs) for initial acquisition of the property, and for sales to eligible families, such that the eligible family shall not be required to expend more than 30 percent of the adjusted income of the family per month to complete a sale under the homeownership program. (c) PlanA homeownership program under this part shall provide, and include a plan, for—(1) identifying and selecting eligible families to participate in the homeownership program; (2) providing relocation assistance to families who elect to move; (3) ensuring continued affordability by tenants, homebuyers, and homeowners in the property; and (4) providing ongoing training and counseling for homebuyers and homeowners. (d) Acquisition and rehabilitation limitationAcquisition or rehabilitation of a property under a homeownership program under this part may not consist of acquisition or rehabilitation of less than all of the units in the property. The provisions of this subsection may be waived upon a finding by the Secretary that the sale of less than all the buildings in a project is feasible and will not result in a hardship to any tenants of the project who are not included in the homeownership program. (e) Financing(1) In generalThe application shall identify and describe the proposed financing for (A) any rehabilitation, and (B) acquisition (i) of the project, where applicable, by an entity for transfer to eligible families, and (ii) by eligible families of ownership interests in, or shares representing, units in the project. Financing may include use of the implementation grant, sale for cash, or other sources of financing (subject to applicable requirements), including conventional mortgage loans and mortgage loans insured under title II of the National Housing Act [12 U.S.C. 1707 et seq.]. (2) Prohibition against pledgesProperty transferred under this part shall not be pledged as collateral for debt or otherwise encumbered except when the Secretary determines that—(A) such encumbrance will not threaten the long-term availability of the property for occupancy by low-income families; (B) neither the Federal Government nor the public housing agency will be exposed to undue risks related to action that may have to be taken pursuant to paragraph (3); (C) any debt obligation can be serviced from project income, including operating assistance; and (D) the proceeds of such encumbrance will be used only to meet housing standards in accordance with subsection (f) or to make such additional capital improvements as the Secretary determines to be consistent with the purposes of this part. (3) Opportunity to cureAny lender that provides financing in connection with a homeownership program under this part shall give the public housing agency, resident management corporation, individual owner, or other appropriate entity a reasonable opportunity to cure a financial default before foreclosing on the property, or taking other action as a result of the default. (f) Housing quality standardsThe application shall include a plan ensuring that the unit—(1) will be free from any defects that pose a danger to health or safety before transfer of an ownership interest in, or shares representing, a unit to an eligible family; and (2) will, not later than 2 years after the transfer to an eligible family, meet minimum housing standards established by the Secretary for the purpose of this title.11 See References in Text note below. (g) Protection of nonpurchasing families(1) In generalNo tenant residing in a dwelling unit in a property on the date the Secretary approves an application for an implementation grant may be evicted by reason of a homeownership program approved under this part. (2) Rental assistanceIf a tenant decides not to purchase a unit, or is not qualified to do so, the Secretary shall, subject to the availability of appropriations, ensure that rental assistance under section 1437f of this title is available for use by each otherwise qualified tenant in that or another property. (3) Relocation assistanceThe recipient shall also inform each such tenant that if the tenant chooses to move, the recipient will pay relocation assistance in accordance with the approved homeownership program.

42 U.S.C. § 12875 Other program requirements

(a) PreferencesIn selecting eligible families for homeownership, the recipient shall give a first preference to otherwise qualified current tenants and a second preference to otherwise qualified eligible families who have completed participation in an economic self-sufficiency program specified by the Secretary. (b) Cost limitationsThe Secretary may establish cost limitations on eligible activities under this part, subject to the provisions of this part. (c) Use of proceeds from sales to eligible familiesThe entity that transfers ownership interests in, or shares representing, units to eligible families, or another entity specified in the approved application, shall use the proceeds, if any, from the initial sale for costs of the homeownership program, including operating expenses, improvements to the project, business opportunities for low-income families, supportive services related to the homeownership program, additional homeownership opportunities, and other activities approved by the Secretary. (d) Restrictions on resale by homeowners(1) In general(A) Transfer permittedA homeowner under a homeownership program may transfer the homeowner’s ownership interest in, or shares representing, the unit, except that a homeownership program may establish restrictions on the resale of units under the program. (B) Right to purchaseWhere a resident management corporation, resident council, or cooperative has jurisdiction over the unit, the corporation, council, or cooperative shall have the right to purchase the ownership interest in, or shares representing, the unit from the homeowner for the amount specified in a firm contract between the homeowner and a prospective buyer. If such an entity does not have jurisdiction over the unit or elects not to purchase and if the prospective buyer is not a low-income family, the public housing agency or the implementation grant recipient shall have the right to purchase the ownership interest in, or shares representing, the unit for the same amount. (C) Promissory note requiredThe homeowner shall execute a promissory note equal to the difference between the market value and the purchase price, payable to the public housing agency or other entity designated in the homeownership plan, together with a mortgage securing the obligation of the note. (2) 6 years or lessIn the case of a transfer within 6 years of the acquisition under the program, the homeownership program shall provide for appropriate restrictions to assure that an eligible family may not receive any undue profit. The plan shall provide for limiting the family’s consideration for its interest in the property to the total of—(A) the contribution to equity paid by the family; (B) the value, as determined by such means as the Secretary shall determine through regulation, of any improvements installed at the expense of the family during the family’s tenure as owner; and (C) the appreciated value determined by an inflation allowance at a rate which may be based on a cost-of-living index, an income index, or market index as determined by the Secretary through regulation and agreed to by the purchaser and the entity that transfers ownership interests in, or shares representing, units to eligible families (or another entity specified in the approved application), at the time of initial sale, and applied against the contribution to equity. Such an entity may, at the time of initial sale, enter into an agreement with the family to set a maximum amount which this appreciation may not exceed. (3) 6–20 yearsIn the case of a transfer during the period beginning 6 years after the acquisition and ending 20 years after the acquisition, the homeownership program shall provide for the recapture by the Secretary or the program of an amount equal to the amount of the declining balance on the note described in paragraph (1)(C). (4) Use of recaptured fundsFifty percent of any portion of the net sales proceeds that may not be retained by the homeowner under the plan approved pursuant to this subsection shall be paid to the entity that transferred ownership interests in, or shares representing, units to eligible families, or another entity specified in the approved application, for use for improvements to the project, business opportunities for low-income families, supportive services related to the homeownership program, additional homeownership opportunities, and other activities approved by the Secretary. The remaining 50 percent shall be returned to the Secretary for use under this part, subject to limitations contained in appropriations Acts. Such entity shall keep and make available to the Secretary all records necessary to calculate accurately payments due the Secretary under this subsection. (e) Third party rightsThe requirements under this part regarding quality standards, resale, or transfer of the ownership interest of a homeowner shall be judicially enforceable against the grant recipient with respect to actions involving rehabilitation, and against purchasers of property under this subsection or their successors in interest with respect to other actions by affected low-income families, resident management corporations, resident councils, public housing agencies, and any agency, corporation, or authority of the United States Government. The parties specified in the preceding sentence shall be entitled to reasonable attorney fees upon prevailing in any such judicial action. (f) Dollar limitation on economic development activitiesNot more than an aggregate of $250,000 from amounts made available under sections 12872 and 12873 of this title may be used for economic development activities under sections 12872(b)(6) and 12873(b)(9) 11 See References in Text note below. of this title for any project. (g) Timely homeownershipRecipients shall transfer ownership of the property to tenants within a specified period of time that the Secretary determines to be reasonable. During the interim period when the property continues to be operated and managed as rental housing, the recipient shall utilize written tenant selection policies and criteria that are approved by the Secretary as consistent with the purpose of improving housing opportunities for low-income families. The recipient shall promptly notify in writing any rejected applicant of the grounds for any rejection. (h) Records and audit of recipients of assistance(1) In generalEach recipient shall keep such records as may be reasonably necessary to fully disclose the amount and the disposition by such recipient of the proceeds of assistance received under this part (and any proceeds from financing obtained or sales under subsections (c) and (d)), the total cost of the homeownership program in connection with which such assistance is given or used, and the amount and nature of that portion of the program supplied by other sources, and such other sources as will facilitate an effective audit. (2) Access by SecretaryThe Secretary shall have access for the purpose of audit and examination to any books, documents, papers, and records of the recipient that are pertinent to assistance received under this part. (3) Access by Comptroller GeneralThe Comptroller General of the United States, or any of the duly authorized representatives of the Comptroller General, shall also have access for the purpose of audit and examination to any books, documents, papers, and records of the recipient that are pertinent to assistance received under this part. (i) Certain entities not eligibleAny entity that assumes, as determined by the Secretary, a mortgage covering eligible property in connection with the acquisition of the property from an owner under this section must comply with any low-income affordability restrictions for the remaining term of the mortgage. This requirement shall only apply to an entity, such as a cooperative association, that, as determined by the Secretary, intends to own the housing on a permanent basis.

42 U.S.C. § 12876 Definitions

For purposes of this part: (1) The term “applicant” means the following entities that may represent the tenants of the housing:(A) A resident management corporation established in accordance with the requirements of the Secretary under section 1437r of this title. (B) A resident council. (C) A cooperative association. (D) A public or private nonprofit organization. (E) A public body (including an agency or instrumentality thereof). (F) A public housing agency (including an Indian housing authority). (G) A mutual housing association. (2) The term “eligible family” means a family or individual—(A) who is a tenant of the eligible property on the date the Secretary approves an implementation grant; or (B) whose income does not exceed 80 percent of the median income for the area, as determined by the Secretary with adjustments for smaller and larger families. (3) The term “eligible property” means a multifamily rental property, containing 5 or more units, that is—(A) owned or held by the Secretary; (B) financed by a loan or mortgage held by the Secretary or insured by the Secretary; (C) determined by the Secretary to have serious physical or financial problems under the terms of an insurance or loan program administered by the Secretary; or (D) owned or held by the Secretary of Agriculture, the Resolution Trust Corporation, the Federal Deposit Insurance Corporation, the Secretary of Defense, the Secretary of Transportation, the General Services Administration, any other Federal agency, or a State or local government or an agency or instrumentality thereof. (4) The term “homeownership program” means a program for homeownership under this part. (5) The term “Indian housing authority” has the meaning given such term in section 1437a(b)(11) 11 See References in Text note below. of this title. (6) The term “low-income family” has the meaning given such term in section 1437a(b)(2) of this title. (7) The term “public housing agency” has the meaning given such term in section 1437a(b)(6) of this title. (8) The term “recipient” means an applicant approved to receive a grant under this title 1 or such other entity specified in the approved application that will assume the obligations of the recipient under this part. (9) The term “resident council” means any incorporated nonprofit organization or association that—(A) is representative of the tenants of the housing; (B) adopts written procedures providing for the election of officers on a regular basis; and (C) has a democratically elected governing board, elected by the tenants of the housing. (10) The term “Secretary” means the Secretary of Housing and Urban Development.

42 U.S.C. § 12877 Exemption

Eligible property covered by a homeownership program approved under this part shall not be subject to— (1) the Low-Income Housing Preservation and Resident Homeownership Act of 1990 [12 U.S.C. 4101 et seq.], or (2) the requirements of section 1701z–11 of title 12 applicable to the sale of projects either at foreclosure or after acquisition by the Secretary.

42 U.S.C. § 12878 Limitation on selection criteria

In establishing criteria for selecting applicants to receive assistance under this part, the Secretary may not establish any selection criterion or criteria that grant or deny such assistance to an applicant (or have the effect of granting or denying assistance) based on the implementation, continuation, or discontinuation of any public policy, regulation, or law of any jurisdiction in which the applicant or project is located.

42 U.S.C. § 12879 Implementation

Not later than the expiration of the 180-day period beginning on the date that funds authorized under this part first become available for obligation, the Secretary shall by notice establish such requirements as may be necessary to carry out the provisions of this part. Such requirements shall be subject to section 553 of title 5. The Secretary shall issue regulations based on the initial notice before the expiration of the 8-month period beginning on the date of the notice.

42 U.S.C. § 12880 Report

The Secretary shall no later than December 31, 1995, submit to the Congress a report setting forth— (1) the number, type and cost of eligible properties transferred pursuant to this part; (2) the income, race, gender, children and other characteristics of families participating (or not participating) in homeownership programs funded under this part; (3) the amount and type of financial assistance provided under and in conjunction with this part; (4) the amount of financial assistance provided under this part that was needed to ensure continued affordability and meet future maintenance and repair costs; and (5) the recommendations of the Secretary for statutory and regulatory improvements to the program.

42 U.S.C. § 12891 Program authority

The Secretary is authorized to make— (1) planning grants to help applicants develop homeownership programs in accordance with this part; and (2) implementation grants to enable applicants to carry out homeownership programs in accordance with this part.

42 U.S.C. § 12892 Planning grants

(a) GrantsThe Secretary is authorized to make planning grants to applicants for the purpose of developing homeownership programs under this part. The amount of a planning grant under this section may not exceed $200,000, except that the Secretary may for good cause approve a grant in a higher amount. (b) Eligible activitiesPlanning grants may be used for activities to develop homeownership programs (which may include programs for cooperative ownership), including—(1) identifying eligible properties; (2) training and technical assistance of applicants related to the development of a specific homeownership program; (3) studies of the feasibility of specific homeownership programs; (4) inspection for lead-based paint hazards, as required by section 4822(a) of this title; (5) preliminary architectural and engineering work; (6) homebuyer counseling and training; (7) planning for economic development, job training, and self-sufficiency activities that promote economic self-sufficiency for homebuyers and homeowners under the homeownership program; (8) development of security plans; and (9) preparation of an application for an implementation grant under this part. (c) Application(1) Form and proceduresAn application for a planning grant shall be submitted by an applicant in such form and in accordance with such procedures as the Secretary shall establish. (2) Minimum requirementsThe Secretary shall require that an application contain at a minimum—(A) a request for a planning grant, specifying the activities proposed to be carried out, the schedule for completing the activities, the personnel necessary to complete the activities, and the amount of the grant requested; (B) a description of the applicant and a statement of its qualifications; (C) identification and description of the eligible properties likely to be involved, and a description of the composition of the potential homebuyers and residents of the areas in which such eligible properties are located, including family size and income; (D) a certification by the public official responsible for submitting the comprehensive housing affordability strategy under section 12705 of this title that the proposed activities are consistent with the approved housing strategy of the State or unit of general local government within which the project is located (or, during the first 12 months after November 28, 1990, that the application is consistent with such other existing State or local housing plan or strategy that the Secretary shall determine to be appropriate); and (E) a certification that the applicant will comply with the requirements of the Fair Housing Act [42 U.S.C. 3601 et seq.], title VI of the Civil Rights Act of 1964 [42 U.S.C. 2000d et seq.], section 504 of the Rehabilitation Act of 1973 [29 U.S.C. 794], and the Age Discrimination Act of 1975 [42 U.S.C. 6101 et seq.], and will affirmatively further fair housing. (d) Selection criteriaThe Secretary shall, by regulation, establish selection criteria for a national competition for assistance under this section, which shall include—(1) the qualifications or potential capabilities of the applicant; (2) the extent of interest in the development of a homeownership program; (3) the potential of the applicant for developing a successful and affordable homeownership program and the availability and suitability of eligible properties in the applicable geographic area with respect to the application; (4) national geographic diversity among housing for which applicants are selected to receive assistance; and (5) such other factors that the Secretary shall require that (in the determination of the Secretary) are appropriate for purposes of carrying out the program established by this part in an effective and efficient manner.

42 U.S.C. § 12893 Implementation grants

(a) GrantsThe Secretary is authorized to make implementation grants to applicants for the purpose of carrying out homeownership programs approved under this part. (b) Eligible activitiesImplementation grants may be used for activities to carry out homeownership programs (which may include programs for cooperative ownership), including the following activities:(1) Architectural and engineering work. (2) Acquisition of the property for the purpose of transferring ownership to eligible families in accordance with a homeownership program meeting the requirements of this part. (3) Rehabilitation of the property covered by the homeownership program, in accordance with standards established by the Secretary. (4) Abatement of lead-based paint hazards, as required by section 4822(a) of this title. (5) Administrative costs of the applicant, which may not exceed 15 percent of the amount of assistance provided under this section. (6) Counseling and training of homebuyers and homeowners under the homeownership program. (7) Relocation of eligible families who elect to move. (8) Any necessary temporary relocation of homebuyers during rehabilitation. (9) Legal fees. (10) Defraying costs for the ongoing training needs of the recipient that are related to developing and carrying out the homeownership program. (11) Economic development activities that promote economic self-sufficiency of homebuyers and homeowners under the homeownership program. (c) Matching funding(1) In generalEach recipient shall assure that contributions equal to not less than 25 percent of the grant amounts under this section are provided from non-Federal sources to carry out the homeownership program. (2) FormSuch contributions may be in the form of—(A) cash contributions from non-Federal resources which may not include funds from a grant made under section 5306(b) or section 5306(d) of this title; (B) payment of administrative expenses, as defined by the Secretary, from non-Federal resources, including funds from a grant made under section 5306(b) or section 5306(d) of this title; (C) the value of taxes, fees, or other charges that are normally and customarily imposed but are waived, foregone, or deferred in a manner that facilitates the implementation of a homeownership program assisted under this part; (D) the value of investment in on-site and off-site infrastructure required for a homeownership program assisted under this part; or (E) such other in-kind contributions as the Secretary may approve. Contributions for administrative expenses shall be recognized only up to an amount equal to 7 percent of the total amount of grants made available under this section. (d) Application(1) Form and procedureAn application for an implementation grant shall be submitted by an applicant in such form and in accordance with such procedures as the Secretary shall establish. (2) Minimum requirementsThe Secretary shall require that an application contain at a minimum—(A) a request for an implementation grant, specifying the amount of the grant requested and its proposed uses; (B) a description of the qualifications and experience of the applicant in providing low-income housing; (C) a description of the proposed homeownership program, consistent with section 12894 of this title and the other requirements of this part specifying the activities proposed to be carried out and their estimated costs, identifying reasonable schedules for carrying it out, and demonstrating that the program will comply with the affordability requirements under section 12894(b) of this title; (D) an identification and description of the properties to be acquired under the homeownership program and a description of the composition of potential eligible families, including family size and income; (E) a description of and commitment for the resources that are expected to be made available to provide the matching funding required under subsection (c) and of other resources that are expected to be made available in support of the homeownership program; (F) identification and description of the financing proposed for any (i) rehabilitation and (ii) acquisition (I) of the project, where applicable, by an entity for transfer to eligible families, and (II) by eligible families of ownership interests in, or shares representing, units in the project; (G) the proposed sales prices for the properties, the basis for such price determinations, and terms to an entity, if any, that will purchase that property for resale to eligible families; (H) the proposed sales prices, if any, and terms to eligible families; (I) identification and description of the entity that will operate and manage the property; (J) a certification by the public official responsible for submitting the comprehensive housing affordability strategy under section 12705 of this title that the proposed activities are consistent with the approved housing strategy of the State or unit of general local government within which the project is located (or, during the first 12 months after November 28, 1990, that the application is consistent with such other existing State or local housing plan or strategy that the Secretary shall determine to be appropriate); and (K) a certification that the applicant will comply with the requirements of the Fair Housing Act [42 U.S.C. 3601 et seq.], title VI of the Civil Rights Act of 1964 [42 U.S.C. 2000d et seq.], section 504 of the Rehabilitation Act of 1973 [29 U.S.C. 794], and the Age Discrimination Act of 1975 [42 U.S.C. 6101 et seq.], and will affirmatively further fair housing. (e) Selection criteriaThe Secretary shall establish selection criteria for assistance under this part, which shall include—(1) the ability of the applicant to develop and carry out the proposed homeownership program, taking into account the qualifications and experience of the applicant and the quality of any related ongoing program of the applicant; (2) the feasibility of the homeownership program; (3) the quality and viability of the proposed homeownership program; (4) the extent to which suitable eligible property is available for use under the program in the area to be served, and the extent to which the types of property expected to be covered by the proposed homeownership program are federally owned; (5) whether the approved comprehensive housing affordability strategy for the jurisdiction within which the eligible property is located includes the proposed homeownership program as one of the general priorities identified pursuant to section 12705(b)(7) of this title; (6) national geographic diversity among housing for which applicants are selected to receive assistance; and (7) the extent to which a sufficient supply of affordable rental housing of the type assisted under this part exists in the locality, so that the implementation of the homeownership program will not appreciably reduce the number of such rental units available to residents currently residing in such units or eligible for residency in such units. (f) ApprovalThe Secretary shall notify each applicant, not later than 6 months after the date of the submission of the application, whether the application is approved or not approved.

42 U.S.C. § 12894 Homeownership program requirements

(a) In generalA homeownership program under this part shall provide for acquisition by eligible families of ownership interests in, or shares representing, units in an eligible property under any arrangement determined by the Secretary to be appropriate, such as cooperative ownership (including limited equity cooperative ownership) and fee simple ownership (including condominium ownership), for occupancy by the eligible families. (b) AffordabilityA homeownership program under this part shall provide for the establishment of sales prices (including principal, insurance, taxes, and interest and closing costs) for initial acquisition of the property, and for sales to eligible families, such that the eligible family shall not be required to expend more than 30 percent of the adjusted income of the family per month to complete a sale under the homeownership program. (c) Eligible propertyA property may not participate in a homeownership program under this part unless all tenants or occupants of the property (at the time of 11 So in original. The word “of” probably should not appear. the application for the implementation grant covering the property is filed with the Secretary) participate in the homeownership program. (d) PlanA homeownership program under this part shall provide, and include a plan, for—(1) identifying and selecting eligible families to participate in the homeownership program; (2) providing relocation assistance to families who elect to move; and (3) ensuring continued affordability of the property to homebuyers and homeowners. (e) Housing quality standardsThe application shall include a plan ensuring that the unit—(1) will be free from any defects that pose a danger to health or safety before transfer of an ownership interest in, or shares representing, a unit to an eligible family; and (2) will, not later than 2 years after the transfer to an eligible family, meet minimum housing standards established by the Secretary for the purpose of this title.22 So in original. See References in Text note below. (f) Preference for acquisition of vacant unitsEach homeownership program under this part shall provide that, in making vacant units in eligible properties available for acquisition by eligible families, preference shall be given to eligible families who reside in public or Indian housing.

42 U.S.C. § 12895 Other program requirements

(a) Cost limitationsThe Secretary may establish cost limitations on eligible activities under this part, subject to the provisions of this part. (b) Use of proceeds from sales to eligible familiesAny entity that transfers ownership interests in, or shares representing, units to eligible families, or another entity specified in the approved application, may use the proceeds, if any, from the initial sale for costs of the homeownership program, including operating expenses, improvements to the project, business opportunities for low-income families, supportive services related to the homeownership program, additional homeownership opportunities, and other activities approved by the Secretary. (c) Restrictions on resale by homeowners(1) In general(A) Transfer permittedA homeowner under a homeownership program may transfer the homeowner’s ownership interest in, or shares representing, the unit, except that a homeownership program may establish restrictions on the resale of units under the program. (B) Right to purchaseWhere a resident management corporation, resident council, or cooperative has jurisdiction over the unit, the corporation, council, or cooperative shall have the right to purchase the ownership interest in, or shares representing, the unit from the homeowner for the amount specified in a firm contract between the homeowner and a prospective buyer. If such an entity does not have jurisdiction over the unit or elects not to purchase and if the prospective buyer is not a low-income family, the public housing agency or the implementation grant recipient shall have the right to purchase the ownership interest in, or shares representing, the unit for the same amount. (C) Promissory note requiredThe homeowner shall execute a promissory note equal to the difference between the market value and the purchase price, payable to the public housing agency or other entity designated in the homeownership plan, together with a mortgage securing the obligation of the note. (2) 6 years or lessIn the case of a transfer within 6 years of the acquisition under the program, the homeownership program shall provide for appropriate restrictions to assure that an eligible family may not receive any undue profit. The plan shall provide for limiting the family’s consideration for its interest in the property to the total of—(A) the contribution to equity paid by the family; (B) the value, as determined by such means as the Secretary shall determine through regulation, of any improvements installed at the expense of the family during the family’s tenure as owner; and (C) the appreciated value determined by an inflation allowance at a rate which may be based on a cost-of-living index, an income index, or market index as determined by the Secretary through regulation and agreed to by the purchaser and the entity that transfers ownership interests in, or shares representing, units to eligible families (or another entity specified in the approved application), at the time of initial sale, and applied against the contribution to equity. Such an entity may, at the time of initial sale, enter into an agreement with the family to set a maximum amount which this appreciation may not exceed. (3) 6–20 yearsIn the case of a transfer during the period beginning 6 years after the acquisition and ending 20 years after the acquisition, the homeownership program shall provide for the recapture by the Secretary or the program of an amount equal to the amount of the declining balance on the note described in paragraph (1)(C). (4) Use of recaptured fundsFifty percent of any portion of the net sales proceeds that may not be retained by the homeowner under the plan approved pursuant to this subsection shall be paid to the entity that transferred ownership interests in, or shares representing, units to eligible families, or another entity specified in the approved application, for use for improvements to the project, business opportunities for low-income families, supportive services related to the homeownership program, additional homeownership opportunities, and other activities approved by the Secretary. The remaining 50 percent shall be returned to the Secretary for use under this part, subject to limitations contained in appropriations Acts. Such entity shall keep and make available to the Secretary all records necessary to calculate accurately payments due the Secretary under this subsection. (d) Third party rightsThe requirements under this part regarding quality standards, resale, or transfer of the ownership interest of a homeowner shall be judicially enforceable against the grant recipient with respect to actions involving rehabilitation, and against purchasers of property under this subsection or their successors in interest with respect to other actions by affected low-income families, resident management corporations, resident councils, public housing agencies, and any agency, corporation, or authority of the United States Government. The parties specified in the preceding sentence shall be entitled to reasonable attorney fees upon prevailing in any such judicial action. (e) Protection of nonpurchasing familiesNo tenant residing in a dwelling unit in a property on the date the Secretary approves an application for an implementation grant may be evicted by reason of a homeownership program approved under this part. (h) 11 So in original. Probably should be “(f)”. Records and audit of recipients of assistance(1) In generalEach recipient shall keep such records as may be reasonably necessary to fully disclose the amount and the disposition by such recipient of the proceeds of assistance received under this part (and any proceeds from financing obtained or sales under subsections (b) and (c)), the total cost of the homeownership program in connection with which such assistance is given or used, and the amount and nature of that portion of the program supplied by other sources, and such other sources as will facilitate an effective audit. (2) Access by SecretaryThe Secretary shall have access for the purpose of audit and examination to any books, documents, papers, and records of the recipient that are pertinent to assistance received under this part. (3) Access by Comptroller GeneralThe Comptroller General of the United States, or any of the duly authorized representatives of the Comptroller General, shall also have access for the purpose of audit and examination to any books, documents, papers, and records of the recipient that are pertinent to assistance received under this part.

42 U.S.C. § 12896 Definitions

For purposes of this part: (1) The term “applicant” means a private nonprofit organization, cooperative association, or a public agency (including an agency or instrumentality thereof) in cooperation with a private nonprofit organization. (2) The term “displaced homemaker” has the same meaning as in section 12704 of this title. (3) The term “eligible family” means a family or individual who—(A) has an income that does not exceed 80 percent of the median income for the area, as determined by the Secretary with adjustments for smaller and larger families; and (B) is a first-time homebuyer. (4) The term “eligible property” means a single family property, containing no more than four units, that is owned or held by the Secretary, the Secretary of Veterans Affairs, the Secretary of Agriculture, the Resolution Trust Corporation, the Federal Deposit Insurance Corporation, the Secretary of Defense, the Secretary of Transportation, the General Services Administration, any other Federal agency, a State or local government (including any in rem property), or a public housing agency or an Indian housing authority (excluding public or Indian housing under the United States Housing Act of 1937 [42 U.S.C. 1437 et seq.] and including properties held by institutions within the jurisdiction of the Resolution Trust Corporation). (5) The term “first-time homebuyer” has the same meaning as in section 12704 of this title. (6) The term “homeownership program” means a program for homeownership under this part. (7) The term “Indian housing authority” has the meaning given such term in section 3(b)(11) 11 See References in Text note below. of the United States Housing Act of 1937. (8) The term “low-income family” has the meaning given such term in section 3(b)(2) of the United States Housing Act of 1937 [42 U.S.C. 1437a(b)(2)]. (9) The term “public housing agency” has the meaning given such term in section 3(b)(6) of the United States Housing Act of 1937 [42 U.S.C. 1437a(b)(6)]. (10) The term “recipient” means an applicant approved to receive a grant under this part or such other entity specified in the approved application that will assume the obligations of the recipient under this part. (11) The term “Secretary” means the Secretary of Housing and Urban Development. (12) The term “single parent” means an individual who—(A) is unmarried or legally separated from a spouse; and (B)(i) has 1 or more minor children for whom the individual has custody or joint custody; or (ii) is pregnant.

42 U.S.C. § 12897 Limitation on selection criteria

In establishing criteria for selecting applicants to receive assistance under this part, the Secretary may not establish any selection criterion or criteria that grant or deny such assistance to an applicant (or have the effect of granting or denying assistance) based on the implementation, continuation, or discontinuation of any public policy, regulation, or law of any jurisdiction in which the applicant or project is located.

42 U.S.C. § 12898 Implementation

Not later than the expiration of the 180-day period beginning on the date funds authorized under this part first become available for obligation, the Secretary shall by notice establish such requirements as may be necessary to carry out the provisions of this part. Such requirements shall be subject to section 553 of title 5. The Secretary shall issue regulations based on the initial notice before the expiration of the 8-month period beginning on the date of the notice.

42 U.S.C. § 12898a Enterprise zone homeownership opportunity grants

(a) Statement of purposeIt is the purpose of this section—(1) to encourage homeownership by families in the United States who are not otherwise able to afford homeownership; (2) to encourage the redevelopment of economically depressed areas; and (3) to provide better housing opportunities in federally approved and equivalent State-approved enterprise zones. (b) DefinitionsFor purposes of this section the following definitions shall apply:(1) HomeThe term “home” means any 1- to 4-family dwelling. Such term includes any dwelling unit in a condominium project or cooperative project consisting of not more than 4 dwelling units, any town house, and any manufactured home. (2) Metropolitan statistical areaThe term “metropolitan statistical area” means a metropolitan statistical area as established by the Office of Management and Budget. (3) Nonprofit organizationThe term “nonprofit organization” means a private nonprofit corporation, or other private nonprofit legal entity, that is approved by the Secretary as to financial responsibility. (4) SecretaryThe term “Secretary” means the Secretary of Housing and Urban Development. (5) StateThe term “State” means each of the several States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Northern Mariana Islands, the Trust Territory of the Pacific Islands, and any other territory or possession of the United States. (6) Unit of general local governmentThe term “unit of general local government” means any borough, city, county, parish, town, township, village, or other general purpose political subdivision of a State. (c) Assistance to nonprofit organizations(1) In generalThe Secretary may provide assistance to nonprofit organizations to carry out enterprise zone homeownership opportunity programs to promote homeownership in federally approved and equivalent State-approved enterprise zones in accordance with the provisions of this section. Such assistance shall be made in the form of grants. (2) ApplicationsApplications for assistance under this section shall be made in such form, and in accordance with such procedures, as the Secretary may prescribe. (d) Eligible uses of assistance(1) In generalAny nonprofit organization receiving assistance under this section shall use such assistance to provide loans to families purchasing homes constructed or rehabilitated in accordance with an enterprise zone homeownership opportunity program approved under this section. (2) Specific requirementsEach loan made to a family under this subsection shall—(A) be secured by a second mortgage held by the Secretary on the property involved; (B) be in an amount not exceeding $15,000; (C) bear no interest; and (D) be repayable to the Secretary upon the sales, lease, or other transfer of such property. (e) Program requirements(1) In generalAssistance provided under this section may be used only in connection with an enterprise zone homeownership opportunity program of construction or rehabilitation of homes. (2) Family needEach family purchasing a home under this section shall—(A) have a family income on the date of such purchase that is not more than the median income for a family of 4 persons (adjusted for family size) in the metropolitan statistical area in which a federally approved or equivalent State-approved enterprise zone is located; and (B) not have owned a home during the 3-year period preceding such purchase. (3) DownpaymentEach family purchasing a home under this section shall make a downpayment of not less than 5 percent of the sale price of such home. (4) Leasing prohibitionNo family purchasing a home under this section may lease such home. (f) Terms and conditions of assistance(1) Local consultationNo proposed enterprise zone homeownership opportunity program may be approved by the Secretary under this section unless the applicant involved demonstrates to the satisfaction of the Secretary that—(A) it has consulted with and received the support of residents of the neighborhood in which such program is to be located; and (B) it has the approval of each unit of general local government in which such program is to be located. (2) Program scheduleEach applicant for assistance under this section shall submit to the Secretary an estimated schedule for completion of its proposed enterprise zone homeownership opportunity program, which schedule shall have been agreed to by each unit of general local government in which such program is to be located. (3) LocationAll homes constructed or rehabilitated under such program will be located in federally approved or equivalent State-approved enterprise zones. (4) Sales contractsSales contracts entered into under such program will contain provisions requiring repayment of any loan made under this section upon the sale or other transfer of the home involved, unless the Secretary approves a transfer of such home without repayment (in which case the second mortgage held by the Secretary on such home shall remain in force until such loan is fully repaid). (g) Program selection criteria(1) In generalIn selecting enterprise zone homeownership opportunity programs for assistance under this section from among eligible programs, the Secretary shall make such selection on the basis of the extent to which—(A) non-Federal public or private entities will contribute land necessary to make each program feasible; (B) non-Federal public and private financial or other contributions (including tax abatements, waivers of fees related to development, waivers of construction, development, or zoning requirements, and direct financial contributions) will reduce the cost of home 11 So in original. Probably should be “homes”. constructed or rehabilitated under each program; (C) each program will produce the greatest number of units for the least amount of assistance provided under this section, taking into consideration the cost differences among different market areas; and (D) each program provides for the involvement of local residents in the planning, and construction or rehabilitation, of homes. (2) ExceptionTo the extent that non-Federal public entities are prohibited by the law of any State from making any form of contribution described in subparagraph (A) or (B) of paragraph (1), the Secretary shall not consider such form of contribution in evaluating such program. (h) RegulationsNot later than 180 days after October 28, 1992, the Secretary shall issue final regulations to carry out the provisions of this title.22 So in original. Probably should be “this section.” Any such regulations shall be issued in accordance with section 553 of title 5, notwithstanding the provisions of subsection (a)(2) of such section. (i) FundingThere are authorized to be appropriated to carry out this section $30,000,000 in each of fiscal years 1993 and 1994.

42 U.S.C. § 12870 Authorization of appropriations

(a) Fiscal year 1993There are authorized to be appropriated for grants under this title 11 See References in Text note below. $855,000,000 for fiscal year 1993, of which—(1) $285,000,000 shall be available for activities authorized under title III of the United States Housing Act of 1937 [42 U.S.C. 1437aaa et seq.], of which up to $4,500,000 of any amounts appropriated may be made available for technical assistance to potential applicants, applicants and recipients of assistance under this 22 So in original. Probably should be “such”. title; (2) $285,000,000 shall be available for activities authorized under part A, of which up to $3,250,000 of any amounts appropriated may be made available for technical assistance to potential applicants, applicants and recipients of assistance under this 2 part; and (3) $285,000,000 shall be available for activities under part B, of which up to $2,250,000 of any amounts appropriated may be made available for technical assistance to potential applicants, applicants and recipients of assistance under this 2 part. Any amount appropriated pursuant to this subsection shall remain available until expended. (b) Fiscal year 1994There are authorized to be appropriated for grants under this title 1 $883,641,000 for fiscal year 1994, of which—(1) $294,547,000 shall be available for activities authorized under title III of the United States Housing Act of 1937 [42 U.S.C. 1437aaa et seq.], up to $4,500,000 of which may be made available for technical assistance to potential applicants, applicants and recipients of assistance under this 2 title; (2) $294,547,000 shall be available for activities authorized under part A, up to $3,250,000 of which may be made available for technical assistance to potential applicants, applicants and recipients of assistance under this 2 part; and (3) $294,547,000 shall be available for activities under part B, up to $2,250,000 of which may be made available for technical assistance to potential applicants, applicants and recipients of assistance under this 2 part. Any amount appropriated pursuant to this subsection shall remain available until expended. (c) Technical assistanceTechnical assistance made available under title III of the United States Housing Act of 1937 [42 U.S.C. 1437aaa et seq.] or part A or part B of this subchapter may include, but shall not be limited to, training, clearinghouse services, the collection, processing and dissemination of program information useful for local and national program management, and provision of seed money. Such technical assistance may be made available directly, or indirectly under contracts and grants, as appropriate. In any fiscal year, no single applicant, potential applicant, or recipient under title III of the United States Housing Act of 1937, or part A or part B of this subchapter may receive technical assistance in an amount exceeding 20 percent of the total amount made available for technical assistance under such title or part for the fiscal year.

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