U.S. Department of Housing and Urban Development

Office of Housing

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Special Attention of: Notice H 91-92

Regional Administrators

All Regional Directors of Issued: 11/15/91

CPD and Housing Expires: 9/30/93

All Field Office Managers
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All CPD Division Directors Cross References: 56 FR 51913 (Oct. 16, 1991)

All Chief Property Officers 55 FR 49490 (Nov. 28, 1990)

55 FR 32562 (Aug. 9, 1990)

Handbook 4310.5 REV-1

Notice H-90-51

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Subject: Revision & Extension of H 90-83/Instructions to Field Offices
on

Implementation of Single Family Demonstration Program for Sale of

Properties to Nonprofits and Government Entities

This Notice revises and extends Housing Notice 90-83, issued December

3, 1990, which set forth procedures for implementing the Single Family

Property Disposition Demonstration Program. These instructions

specifically address provisions of the Notice which appeared in the
Federal

Register/Vol. 56, No. 200/Wednesday, October 16, 1991/pp. 51913-51914

(attached) and seek to clarify issues which have been problematical for

Field Office staff. In addition, a new Attachment 3 is incorporated
which

provides guidance on coding Demonstration properties into SAMS.

Extension of Timeframe for Property Acquisition

The Secretary has announced that nonprofit organizations or government

entities already approved for participation in the Demonstration may

continue to purchase properties in their designated neighborhoods until

September 30, 1992, or until the 1500 property cap nationwide has been

reached. This should not affect any implementation schedule previously

approved which anticipated that all properties selected by September 30,

1991 will go to closing by November 30, 1991.

Approved participants may request permission to increase the number of

properties they originally intended to purchase, or to expand their

Demonstration area, as set forth in the program application. Such a

request should be in writing and directed to the appropriate Field
Office

Manager or Regional Director of Housing. A request to amend a current

proposal must also include a brief status report on the progress of the

participant\'s project as previously approved.

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HSIP: Distribution: W-3-1, W-2, W-3, R-1, R-2, R-3,

R-3-1(H)(CPD)(RC)(FHEO), R-3-3, R-6, R-6-1, R-6-2,

R-7, R-7-1, R-7-2, R-8, R-8-1, R-9, R-3-2

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Field Offices should review such requests with favor unless the

applicant lacks continuing capacity to acquire, rehabilitate and resell

properties in a timely manner or is in noncompliance with program

requirements. Examples of situations which do not merit approval of a

project expansion include the following:

1\) The applicant has failed to close on properties previously

selected and has been unable to meet other target dates in its

project schedule;

2\) The applicant wishes to expand into a neighborhood that does not

have a high concentration of HUD-owned properties and/or that does

not meet other program requirements. Demonstration discounts

approved for economically declining areas must NOT be

automatically extended to other areas.

On request, program participants should continue to be given priority

to purchase new properties entering HUD\'s inventory within their
approved

Demonstration neighborhood(s) before public listing unless the Field
Office

determines that the agency lacks capacity to expand its project. The

participant has 10 days after notification by HUD to exercise first
right

of refusal.

Second Application Period

Nonprofit organizations and government agencies not currently

participating in the Demonstration Program may submit a proposal to the

appropriate Field Office until December 31, 1991. Please note that
review

procedures and selection criteria were previously described in Housing

Notice 90-83.

Coding Demonstration Properties into SAMS

Please refer to the new Attachment 3. It replaces instructions on how

to code Demonstration properties into the CPPS. All properties selected

and closed for the Demonstration must be recorded into SAMS by Field
Office

staff using these procedures. Monthly reports will permit Regional
Offices

and Headquarters to monitor progress in the program and ensure that the

1500 property cap nationwide is not exceeded.

Submission of HUD Form 92800 to HQ

Field Offices must submit a copy of their completed HUD Form 92800, the

Uniform Residential Appraisal Report, on each Demonstration property to

Headquarters\' Property Disposition Division within 30 days of closing
with

the nonprofit or government agency. In addition, blank copies of
92800\'s

and 92900\'s, the Application for HUD/FHA Insured Mortgage, must be

distributed to the purchasing agency at HUD\'s closing. The purchaser

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10/30/91 2

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is responsible for returning these completed forms on each property to

Headquarters\' Property Disposition Division 30 days after resale.

Sanction for Nonperformance

If a previously approved program participant is not in compliance with

the terms of the Demonstration Sales Contract, or with program

requirements, the Field Office should not sell additional properties to

this agency. A written warning should be sent to the nonprofit or

government agency specifying what aspect of its program is in
noncompliance

and stating that no further properties will be sold under the
Demonstration

until the situation is remedied to HUD\'s satisfaction. A copy of this

letter should be sent to the Director, Headquarters\' Single Family
Property

Disposition Division.

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Arthur J. Hill

Assistant Secretary for Housing

-Federal Housing Commissioner

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3 10/30/91

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New Attachment 3 to Housing Notice 90-83

CODING DEMONSTRATION PROPERTIES INTO SAMS

1\. When a Field Office forwards its recommendation for approval

of a Demonstration application to Headquarters, at least five

properties included in the project are to be entered into SAMS at

(CM/DS/C3) screen. Place a \"9\" in the Held off Market field,

\"Offered Direct Sale\". The property will remain in Step 3 - HOM

until a contract is accepted for processing. Once a contract is

accepted, the Field Office will modify (MO) the CM/C3 screen and

place an \"N\" in the HOM field to advance the property to the Sale

Type field. The Sale Type to be entered is \"DR\" for Direct Sale.

The Direct Sale Type is: \"D Demonstration Program\".

Enter as is price, \"Y\" at discount, and the discount price.

Once the Direct Sale pop up screen is completed, SAMS

returns the user to the C3 screen. Complete it as usual, except

the \"Ready to List\" field. Enter \"N\" here.

2\. When the program is approved, the case moves from Step 3 to

Step 7 (Primary Offer Accepted). When the sales contract is

received, the Field Office will add the CM-DS-OA screen (Sales

Offer Accepted) at Step 8 of SAMS. At this point the name of the

purchaser, a nonprofit or government agency participating in the

Demonstration Program, its address, bid, and the generic EO-NA

code for the selling broker field should be entered.

In addition, the property should be coded as \"owner

occupied\", since the purchaser will resell to a lower income

buyer immediately after rehabilitation is completed.

These properties are now out to closing.

3\. At closing, enter \"DS\" for finance type, \"OT\" for special

sale effort, and \"Demo Prog\" in the optional field at Step 9

(Sales Package/HUD1/Received).

If the participating nonprofit or government agency has

expressed an interest in purchasing additional properties over an

extended timeframe, but prior to September 30, 1992, then

properties entering HUD\'s inventory in the designated

Demonstration area(s) are offered first for direct sale to the

participant for a ten day period. During this ten day period,

such properties are held off market and programmed \"HOM-9\" on the

CM-DS-C3 screen. This screen would be modified as above if the

agency decides on purchase.

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Federal Register, Vol. 56, No. 200, Wednesday, October 16, 1991,

pp. 51913-51914, can be found in the FR database.