59–006 

114TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 114–397 

HOUSING OPPORTUNITY THROUGH MODERNIZATION ACT 

OF 2015 

JANUARY 28, 2016.—Committed to the Committee of the Whole House on the State 

of the Union and ordered to be printed 

Mr. HENSARLING, from the Committee on Financial Services, 

submitted the following 

R E P O R T 

[To accompany H.R. 3700] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 3700) to provide housing opportunities in the United 

States through modernization of various housing programs, and for 

other purposes, having considered the same, reports favorably 

thereon with an amendment and recommends that the bill as 

amended do pass. 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 

(a) SHORT TITLE.—This Act may be cited as the ‘‘Housing Opportunity Through 

Modernization Act of 2015’’. 

(b) TABLE OF CONTENTS.—The table of contents for this Act is as follows: 

Sec. 1. Short title and table of contents. 

TITLE I—SECTION 8 RENTAL ASSISTANCE AND PUBLIC HOUSING 

Sec. 101. Inspection of dwelling units. 

Sec. 102. Income reviews. 

Sec. 103. Limitation on public housing tenancy for over-income families. 

Sec. 104. Limitation on eligibility for assistance based on assets. 

Sec. 105. Units owned by public housing agencies. 

Sec. 106. PHA project-based assistance. 

Sec. 107. Establishment of fair market rent. 

Sec. 108. Collection of utility data. 

Sec. 109. Public housing Capital and Operating Funds. 

Sec. 110. Family unification program for children aging out of foster care. 

TITLE II—RURAL HOUSING 

Sec. 201. Delegation of guaranteed rural housing loan approval. 

TITLE III—FHA MORTGAGE INSURANCE FOR CONDOMINIUMS 

Sec. 301. Modification of FHA requirements for mortgage insurance for condominiums. 


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TITLE IV—HOUSING REFORMS FOR THE HOMELESS AND FOR VETERANS 

Sec. 401. Definition of geographic area for Continuum of Care Program. 

Sec. 402. Inclusion of public housing agencies and local redevelopment authorities in emergency solutions 

grants. 

Sec. 403. Special assistant for Veterans Affairs in the Department of Housing and Urban Development. 

Sec. 404. Annual supplemental report on veterans homelessness. 

TITLE V—MISCELLANEOUS 

Sec. 501. Inclusion of Disaster Housing Assistance Program in certain fraud and abuse prevention measures. 

Sec. 502. Energy efficiency requirements under Self-Help Homeownership Opportunity program. 

Sec. 503. Data exchange standardization for improved interoperability. 

TITLE I—SECTION 8 RENTAL ASSISTANCE AND 

PUBLIC HOUSING 

SEC. 101. INSPECTION OF DWELLING UNITS. 

(a) IN GENERAL.—Section 8(o)(8) of the United States Housing Act of 1937 (42 

U.S.C. 1437f(o)(8)) is amended— 

(1) by striking subparagraph (A) and inserting the following new subparagraph: 

‘‘(A) INITIAL INSPECTION.— 

‘‘(i) IN GENERAL.—For each dwelling unit for which a housing assistance payment contract is established under this subsection, the public 

housing agency (or other entity pursuant to paragraph (11)) shall inspect the unit before any assistance payment is made to determine 

whether the dwelling unit meets the housing quality standards under 

subparagraph (B), except as provided in clause (ii) or (iii) of this subparagraph. 

‘‘(ii) CORRECTION OF NON-LIFE-THREATENING CONDITIONS.—In the case 

of any dwelling unit that is determined, pursuant to an inspection 

under clause (i), not to meet the housing quality standards under subparagraph (B), assistance payments may be made for the unit notwithstanding subparagraph (C) if failure to meet such standards is a result 

only of non-life-threatening conditions, as such conditions are established by the Secretary. A public housing agency making assistance 

payments pursuant to this clause for a dwelling unit shall, 30 days 

after the beginning of the period for which such payments are made, 

withhold any assistance payments for the unit if any deficiency resulting in noncompliance with the housing quality standards has not been 

corrected by such time. The public housing agency shall recommence 

assistance payments when such deficiency has been corrected, and may 

use any payments withheld to make assistance payments relating to 

the period during which payments were withheld. 

‘‘(iii) USE OF ALTERNATIVE INSPECTION METHOD FOR INTERIM PERIOD.—In the case of any property that within the previous 24 months 

has met the requirements of an inspection that qualifies as an alternative inspection method pursuant to subparagraph (E), a public housing agency may authorize occupancy before the inspection under clause 

(i) has been completed, and may make assistance payments retroactive 

to the beginning of the lease term after the unit has been determined 

pursuant to an inspection under clause (i) to meet the housing quality 

standards under subparagraph (B). This clause may not be construed 

to exempt any dwelling unit from compliance with the requirements of 

subparagraph (D).’’; 

(2) by redesignating subparagraph (G) as subparagraph (H); and 

(3) by inserting after subparagraph (F) the following new subparagraph: 

‘‘(G) ENFORCEMENT OF HOUSING QUALITY STANDARDS.— 

‘‘(i) DETERMINATION OF NONCOMPLIANCE.—A dwelling unit that is covered by a housing assistance payments contract under this subsection 

shall be considered, for purposes of subparagraphs (D) and (F), to be 

in noncompliance with the housing quality standards under subparagraph (B) if— 

‘‘(I) the public housing agency or an inspector authorized by the 

State or unit of local government determines upon inspection of the 

unit that the unit fails to comply with such standards; 

‘‘(II) the agency or inspector notifies the owner of the unit in 

writing of such failure to comply; and 

‘‘(III) the failure to comply is not corrected— 


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‘‘(aa) in the case of any such failure that is a result of lifethreatening conditions, within 24 hours after such notice has 

been provided; and 

‘‘(bb) in the case of any such failure that is a result of nonlife-threatening conditions, within 30 days after such notice 

has been provided or such other reasonable longer period as 

the public housing agency may establish. 

‘‘(ii) WITHHOLDING OF ASSISTANCE AMOUNTS DURING CORRECTION.— The public housing agency may withhold assistance amounts under 

this subsection with respect to a dwelling unit for which a notice pursuant to clause (i)(II), of failure to comply with housing quality standards 

under subparagraph (B) as determined pursuant to an inspection conducted under subparagraph (D) or (F), has been provided. If the unit 

is brought into compliance with such housing quality standards during 

the periods referred to in clause (i)(III), the public housing agency shall 

recommence assistance payments and may use any amounts withheld 

during the correction period to make assistance payments relating to 

the period during which payments were withheld. 

‘‘(iii) ABATEMENT OF ASSISTANCE AMOUNTS.—The public housing agency shall abate all of the assistance amounts under this subsection with 

respect to a dwelling unit that is determined, pursuant to clause (i) of 

this subparagraph, to be in noncompliance with housing quality standards under subparagraph (B). Upon completion of repairs by the public 

housing agency or the owner sufficient so that the dwelling unit complies with such housing quality standards, the agency shall recommence payments under the housing assistance payments contract to 

the owner of the dwelling unit. 

‘‘(iv) NOTIFICATION.—If a public housing agency providing assistance 

under this subsection abates rental assistance payments pursuant to 

clause (iii) with respect to a dwelling unit, the agency shall, upon commencement of such abatement— 

‘‘(I) notify the tenant and the owner of the dwelling unit that— 

‘‘(aa) such abatement has commenced; and 

‘‘(bb) if the dwelling unit is not brought into compliance with 

housing quality standards within 60 days after the effective 

date of the determination of noncompliance under clause (i) or 

such reasonable longer period as the agency may establish, the 

tenant will have to move; and 

‘‘(II) issue the tenant the necessary forms to allow the tenant to 

move to another dwelling unit and transfer the rental assistance 

to that unit. 

‘‘(v) PROTECTION OF TENANTS.—An owner of a dwelling unit may not 

terminate the tenancy of any tenant because of the withholding or 

abatement of assistance pursuant to this subparagraph. During the period that assistance is abated pursuant to this subparagraph, the tenant may terminate the tenancy by notifying the owner. 

‘‘(vi) TERMINATION OF LEASE OR ASSISTANCE PAYMENTS CONTRACT.—If 

assistance amounts under this section for a dwelling unit are abated 

pursuant to clause (iii) and the owner does not correct the noncompliance within 60 days after the effective date of the determination of noncompliance under clause (i), or such other reasonable longer period as 

the public housing agency may establish, the agency shall terminate 

the housing assistance payments contract for the dwelling unit. 

‘‘(vii) RELOCATION.— 

‘‘(I) LEASE OF NEW UNIT.—The agency shall provide the family residing in such a dwelling unit a period of 90 days or such longer 

period as the public housing agency determines is reasonably necessary to lease a new unit, beginning upon termination of the contract, to lease a new residence with tenant-based rental assistance 

under this section. 

‘‘(II) AVAILABILITY OF PUBLIC HOUSING UNITS.—If the family is 

unable to lease such a new residence during such period, the public 

housing agency shall, at the option of the family, provide such family a preference for occupancy in a dwelling unit of public housing 

that is owned or operated by the agency that first becomes available for occupancy after the expiration of such period. 

‘‘(III) ASSISTANCE IN FINDING UNIT.—The public housing agency 

may provide assistance to the family in finding a new residence, 

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held or abated pursuant to clause (ii) or (iii), respectively, for costs 

directly associated with relocation of the family to a new residence, 

which shall include security deposits as necessary and may include 

reimbursements for reasonable moving expenses incurred by the 

household, as established by the Secretary. The agency may require that a family receiving assistance for a security deposit shall 

remit, to the extent of such assistance, the amount of any security 

deposit refunds made by the owner of the dwelling unit for which 

the lease was terminated. 

‘‘(viii) TENANT-CAUSED DAMAGES.—If a public housing agency determines that any damage to a dwelling unit that results in a failure of 

the dwelling unit to comply with housing quality standards under subparagraph (B), other than any damage resulting from ordinary use, was 

caused by the tenant, any member of the tenant’s household, or any 

guest or other person under the tenant’s control, the agency may waive 

the applicability of this subparagraph, except that this clause shall not 

exonerate a tenant from any liability otherwise existing under applicable law for damages to the premises caused by such tenant. 

‘‘(ix) APPLICABILITY.—This subparagraph shall apply to any dwelling 

unit for which a housing assistance payments contract is entered into 

or renewed after the date of the effectiveness of the regulations implementing this subparagraph.’’. 

(b) EFFECTIVE DATE.—The Secretary of Housing and Urban Development shall 

issue notice or regulations to implement subsection (a) of this section and such subsection shall take effect upon such issuance. 

SEC. 102. INCOME REVIEWS. 

(a) INCOME REVIEWS FOR PUBLIC HOUSING AND SECTION 8 PROGRAMS.—Section 3 

of the United States Housing Act of 1937 (42 U.S.C. 1437a) is amended— 

(1) in subsection (a)— 

(A) in the second sentence of paragraph (1), by striking ‘‘at least annually’’ and inserting ‘‘pursuant to paragraph (6)’’; and 

(B) by adding at the end the following new paragraphs: 

‘‘(6) REVIEWS OF FAMILY INCOME.— 

‘‘(A) FREQUENCY.—Reviews of family income for purposes of this section 

shall be made— 

‘‘(i) in the case of all families, upon the initial provision of housing 

assistance for the family; 

‘‘(ii) annually thereafter, except as provided in paragraph (1) with respect to fixed-income families; 

‘‘(iii) upon the request of the family, at any time the income or deductions (under subsection (b)(5)) of the family change by an amount that 

is estimated to result in a decrease of 10 percent (or such lower amount 

as the Secretary may, by notice, establish, or permit the public housing 

agency or owner to establish) or more in annual adjusted income; and 

‘‘(iv) at any time the income or deductions (under subsection (b)(5)) 

of the family change by an amount that is estimated to result in an 

increase of 10 percent or more in annual adjusted income, or such other 

amount as the Secretary may by notice establish, except that any increase in the earned income of a family shall not be considered for purposes of this clause (except that earned income may be considered if the 

increase corresponds to previous decreases under clause (iii)), except 

that a public housing agency or owner may elect not to conduct such 

review in the last three months of a certification period. 

‘‘(B) IN GENERAL.—Reviews of family income for purposes of this section 

shall be subject to the provisions of section 904 of the Stewart B. McKinney 

Homeless Assistance Amendments Act of 1988 (42 U.S.C. 3544). 

‘‘(7) CALCULATION OF INCOME.— 

‘‘(A) USE OF CURRENT YEAR INCOME.—In determining family income for 

initial occupancy or provision of housing assistance pursuant to clause (i) 

of paragraph (6)(A) or pursuant to reviews pursuant to clause (iii) or (iv) 

of such paragraph, a public housing agency or owner shall use the income 

of the family as estimated by the agency or owner for the upcoming year. 

‘‘(B) USE OF PRIOR YEAR INCOME.—In determining family income for annual reviews pursuant to paragraph (6)(A)(ii), a public housing agency or 

owner shall, except as otherwise provided in this paragraph and paragraph 

(1), use the income of the family as determined by the agency or owner for 

the preceding year, taking into consideration any redetermination of income 

during such prior year pursuant to clause (iii) or (iv) of paragraph (6)(A). 


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‘‘(C) OTHER INCOME.—In determining the income for any family based on 

the prior year’s income, with respect to prior year calculations of income not 

subject to subparagraph (B), a public housing agency or owner may make 

other adjustments as it considers appropriate to reflect current income. 

‘‘(D) SAFE HARBOR.—A public housing agency or owner may, to the extent 

such information is available to the public housing agency or owner, determine the family’s income prior to the application of any deductions based 

on timely income determinations made for purposes of other means-tested 

Federal public assistance programs (including the program for block grants 

to States for temporary assistance for needy families under part A of title 

IV of the Social Security Act, a program for Medicaid assistance under a 

State plan approved under title XIX of the Social Security Act, and the supplemental nutrition assistance program (as such term is defined in section 

3 of the Food and Nutrition Act of 2008 (7 U.S.C. 2012))). The Secretary 

shall, in consultation with other appropriate Federal agencies, develop procedures to enable public housing agencies and owners to have access to 

such income determinations made by other means-tested Federal programs 

that the Secretary determines to have comparable reliability. Exchanges of 

such information shall be subject to the same limitations and tenant protections provided under section 904 of the Stewart B. McKinney Homeless Assistance Act Amendments of 1988 (42 U.S.C. 3544) with respect to information obtained under the requirements of section 303(i) of the Social Security 

Act (42 U.S.C. 503(i)). 

‘‘(E) PHA AND OWNER COMPLIANCE.—A public housing agency or owner 

may not be considered to fail to comply with this paragraph or paragraph 

(6) due solely to any de minimis errors made by the agency or owner in calculating family incomes.’’; 

(2) by striking subsections (d) and (e); and 

(3) by redesignating subsection (f) as subsection (d). 

(b) CERTIFICATION REGARDING HARDSHIP EXCEPTION TO MINIMUM MONTHLY

RENT.—Not later than the expiration of the 6-month period beginning on the date 

of the enactment of this Act, the Secretary of Housing and Urban Development shall 

submit to the Congress a certification that the hardship and tenant protection provisions in clause (i) of section 3(a)(3)(B) of the United States Housing Act of 1937 (42 

U.S.C. 1437a(a)(3)(B)(i)) are being enforced at such time and that the Secretary will 

continue to provide due consideration to the hardship circumstances of persons assisted under relevant programs of this Act. 

(c) INCOME; ADJUSTED INCOME.—Section 3(b) of the United States Housing Act of 

1937 (42 U.S.C. 1437a(b)) is amended by striking paragraphs (4) and (5) and inserting the following new paragraphs: 

‘‘(4) INCOME.—The term ‘income’ means, with respect to a family, income received from all sources by each member of the household who is 18 years of age 

or older or is the head of household or spouse of the head of the household, plus 

unearned income by or on behalf of each dependent who is less than 18 years 

of age, as determined in accordance with criteria prescribed by the Secretary, 

in consultation with the Secretary of Agriculture, subject to the following requirements: 

‘‘(A) INCLUDED AMOUNTS.—Such term includes recurring gifts and receipts, actual income from assets, and profit or loss from a business. 

‘‘(B) EXCLUDED AMOUNTS.—Such term does not include— 

‘‘(i) any imputed return on assets, except to the extent that net family assets exceed $50,000, except that such amount (as it may have 

been previously adjusted) shall be adjusted for inflation annually by 

the Secretary in accordance with an inflationary index selected by the 

Secretary; 

‘‘(ii) any amounts that would be eligible for exclusion under section 

1613(a)(7) of the Social Security Act (42 U.S.C. 1382b(a)(7)); 

‘‘(iii) deferred disability benefits from the Department of Veterans Affairs that are received in a lump sum amount or in prospective monthly 

amounts; 

‘‘(iv) any expenses related to aid and attendance under section 1521 

of title 38, United States Code, to veterans who are in need of regular 

aid and attendance; and 

‘‘(v) exclusions from income as established by the Secretary by regulation or notice, or any amount required by Federal law to be excluded 

from consideration as income. 

‘‘(C) EARNED INCOME OF STUDENTS.—Such term does not include— 

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pendent is attending school or vocational training on a full-time basis; 

or ‘‘(ii) any grant-in-aid or scholarship amounts related to such attendance used— 

‘‘(I) for the cost of tuition or books; or 

‘‘(II) in such amounts as the Secretary may allow, for the cost of 

room and board. 

‘‘(D) EDUCATIONAL SAVINGS ACCOUNTS.—Income shall be determined without regard to any amounts in or from, or any benefits from, any Coverdell 

education savings account under section 530 of the Internal Revenue Code 

of 1986 or any qualified tuition program under section 529 of such Code. 

‘‘(E) RECORDKEEPING.—The Secretary may not require a public housing 

agency or owner to maintain records of any amounts excluded from income 

pursuant to this subparagraph. 

‘‘(5) ADJUSTED INCOME.—The term ‘adjusted income’ means, with respect to 

a family, the amount (as determined by the public housing agency or owner) 

of the income of the members of the family residing in a dwelling unit or the 

persons on a lease, after any deductions from income as follows: 

‘‘(A) ELDERLY AND DISABLED FAMILIES.—$525 in the case of any family 

that is an elderly family or a disabled family. 

‘‘(B) DEPENDENTS.—In the case of any family, $525 for each member 

who— 

‘‘(i) is less than 18 years of age or attending school or vocational 

training on a full-time basis; or 

‘‘(ii) is a person who is 18 years of age or older, resides in the household, and is certified as disabled and unable to work by the public 

housing agency of jurisdiction. 

‘‘(C) CHILD CARE.—The amount, if any, that exceeds 5 percent of annual 

family income that is used to pay for unreimbursed child care expenses, 

which shall include child care for preschool-age children, for before- and 

after-care for children in school, and for other child care necessary to enable 

a member of the family to be employed or further his or her education. 

‘‘(D) HEALTH AND MEDICAL EXPENSES.—The amount, if any, by which 10 

percent of annual family income is exceeded by the sum of— 

‘‘(i) in the case of any elderly or disabled family, any unreimbursed 

health and medical care expenses; and 

‘‘(ii) any unreimbursed reasonable attendant care and auxiliary apparatus expenses for each handicapped member of the family, if determined necessary by the public housing agency or owner to enable any 

member of such family to be employed. 

The Secretary shall, by regulation, provide hardship exemptions to the requirements of this subparagraph and subparagraph (C) for impacted families who demonstrate an inability to pay calculated rents because of financial hardship. Such regulations shall include a requirement to notify tenants regarding any changes to the determination of adjusted income pursuant to such subparagraphs based on the determination of the family’s claim 

of financial hardship exemptions required by the preceding sentence. Such 

regulations shall be promulgated in consultation with tenant organizations, 

industry participants, and the Secretary of Health and Human Services, 

with an adequate comment period provided for interested parties. 

‘‘(E) PERMISSIVE DEDUCTIONS.—Such additional deductions as a public 

housing agency may, at its discretion, establish, except that the Secretary 

shall establish procedures to ensure that such deductions do not materially 

increase Federal expenditures. 

The Secretary shall annually calculate the amounts of the deductions under 

subparagraphs (A) and (B), as such amounts may have been previously calculated, by applying an inflationary factor as the Secretary shall, by regulation, 

establish, except that the actual deduction determined for each year shall be established by rounding such amount to the next lowest multiple of $25.’’. 

(d) HOUSING CHOICE VOUCHER PROGRAM.—Section 8(o) of the United States Housing Act of 1937 (42 U.S.C. 1437f(o)) is amended— 

(1) in paragraph (1)(D), by inserting before the period at the end the following: ‘‘, except that a public housing agency may establish a payment standard of not more than 120 percent of the fair market rent where necessary as 

a reasonable accommodation for a person with a disability, without approval of 

the Secretary. A public housing agency may use a payment standard that is 

greater than 120 percent of the fair market rent as a reasonable accommodation 

for a person with a disability, but only with the approval of the Secretary. In 

connection with the use of any increased payment standard established or apVerDate Sep 11 2014 05:50 Jan 29, 2016 Jkt 059006 PO 00000 Frm 00006 Fmt 6659 Sfmt 6621 E:\HR\OC\HR397.XXX HR397

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proved pursuant to either of the preceding two sentences as a reasonable accommodation for a person with a disability, the Secretary may not establish additional requirements regarding the amount of adjusted income paid by such person for rent’’; and 

(2) in paragraph (5)— 

(A) in the paragraph heading, by striking ‘‘ANNUAL REVIEW’’ and inserting 

‘‘REVIEWS’’; 

(B) in subparagraph (A)— 

(i) by striking ‘‘the provisions of’’ and inserting ‘‘paragraphs (1), (6), 

and (7) of section 3(a) and to’’; and 

(ii) by striking ‘‘and shall be conducted’’ and all that follows through 

the end of the subparagraph and inserting a period; and 

(C) in subparagraph (B), by striking the second sentence. 

(e) ENHANCED VOUCHER PROGRAM.—Section 8(t)(1)(D) of the United States Housing Act of 1937 (42 U.S.C. 1437f(t)(1)(D)) is amended by striking ‘‘income’’ each place 

such term appears and inserting ‘‘annual adjusted income’’. 

(f) PROJECT-BASED HOUSING.—Paragraph (3) of section 8(c) of the United States 

Housing Act of 1937 (42 U.S.C. 1437f(c)(3)) is amended by striking the last sentence. 

(g) IMPACT ON PUBLIC HOUSING REVENUES.— 

(1) ADJUSTMENTS TO OPERATING FORMULA.—If the Secretary of Housing and 

Urban Development determines that the application of subsections (a) through 

(e) of this section results in a material and disproportionate reduction in the 

rental income of certain public housing agencies during the first year in which 

such subsections are implemented, the Secretary may make appropriate adjustments in the formula income for such year of those agencies experiencing such 

a reduction. 

(2) HUD REPORTS ON REVENUE AND COST IMPACT.—In each of the first two 

years after the first year in which subsections (a) through (e) are implemented, 

the Secretary of Housing and Urban Development shall submit a report to Congress identifying and calculating the impact of changes made by such subsections and section 104 of this Act on the revenues and costs of operating public housing units, the voucher program for rental assistance under section 8 of 

the United States Housing Act of 1937, and the program under such section 8 

for project-based rental assistance. If such report identifies a material reduction 

in the net income of public housing agencies nationwide or a material increase 

in the costs of funding the voucher program or the project-based assistance program, the Secretary shall include in such report recommendations for legislative 

changes to reduce or eliminate such a reduction. 

(h) EFFECTIVE DATE.—The Secretary of Housing and Urban Development shall 

issue notice or regulations to implement this section and this section shall take effect after such issuance, except that this section may only take effect upon the commencement of a calendar year. 

SEC. 103. LIMITATION ON PUBLIC HOUSING TENANCY FOR OVER-INCOME FAMILIES. 

Subsection (a) of section 16 of the United States Housing Act of 1937 (42 U.S.C. 

1437n(a)) is amended by adding at the end the following new paragraph: 

‘‘(5) LIMITATIONS ON TENANCY FOR OVER-INCOME FAMILIES.— 

‘‘(A) LIMITATIONS.—Except as provided in subparagraph (D), in the case 

of any family residing in a dwelling unit of public housing whose income 

for the most recent two consecutive years, as determined pursuant to income reviews conducted pursuant to section 3(a)(6), has exceeded the applicable income limitation under subparagraph (C), the public housing agency 

shall— 

‘‘(i) notwithstanding any other provision of this Act, charge such family as monthly rent for the unit occupied by such family an amount 

equal to the greater of— 

‘‘(I) the applicable fair market rental established under section 

8(c) for a dwelling unit in the same market area of the same size; 

or 

‘‘(II) the amount of the monthly subsidy provided under this Act 

for the dwelling unit, which shall include any amounts from the 

Operating Fund and Capital Fund under section 9 used for the 

unit, as determined by the agency in accordance with regulations 

that the Secretary shall issue to carry out this subclause; or 

‘‘(ii) terminate the tenancy of such family in public housing not later 

than 6 months after the income determination described in subparagraph (A). 

‘‘(B) NOTICE.—In the case of any family residing in a dwelling unit of 

public housing whose income for a year has exceeded the applicable income 


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limitation under subparagraph (C), upon the conclusion of such year the 

public housing agency shall provide written notice to such family of the requirements under subparagraph (A). 

‘‘(C) INCOME LIMITATION.—The income limitation under this subparagraph shall be 120 percent of the median income for the area, as determined by the Secretary with adjustments for smaller and larger families, 

except that the Secretary may establish income limitations higher or lower 

than 120 percent of such median income on the basis of the Secretary’s 

findings that such variations are necessary because of prevailing levels of 

construction costs, or unusually high or low family incomes, vacancy rates, 

or rental costs. 

‘‘(D) EXCEPTION.—Subparagraph (A) shall not apply to a family occupying 

a dwelling unit in public housing pursuant to paragraph (5) of section 3(a) 

(42 U.S.C. 1437a(a)(5)). 

‘‘(E) REPORTS ON OVER-INCOME FAMILIES AND WAITING LISTS.—The Secretary shall require that each public housing agency shall— 

‘‘(i) submit a report annually, in a format required by the Secretary, 

that specifies— 

‘‘(I) the number of families residing, as of the end of the year for 

which the report is submitted, in public housing administered by 

the agency who had incomes exceeding the applicable income limitation under subparagraph (C); and 

‘‘(II) the number of families, as of the end of such year, on the 

waiting lists for admission to public housing projects of the agency; 

and 

‘‘(ii) make the information reported pursuant to clause (i) publicly 

available.’’. 

SEC. 104. LIMITATION ON ELIGIBILITY FOR ASSISTANCE BASED ON ASSETS. 

Section 16 of the United States Housing Act of 1937 (42 U.S.C. 1437n) is amended 

by inserting after subsection (d) the following new subsection: 

‘‘(e) ELIGIBILITY FOR ASSISTANCE BASED ON ASSETS.— 

‘‘(1) LIMITATION ON ASSETS.—Subject to paragraph (3) and notwithstanding 

any other provision of this Act, a dwelling unit assisted under this Act may not 

be rented and assistance under this Act may not be provided, either initially 

or at each recertification of family income, to any family— 

‘‘(A) whose net family assets exceed $100,000, as such amount is adjusted 

annually by applying an inflationary factor as the Secretary considers appropriate; or 

‘‘(B) who has a present ownership interest in, a legal right to reside in, 

and the effective legal authority to sell, real property that is suitable for 

occupancy by the family as a residence, except that the prohibition under 

this subparagraph shall not apply to— 

‘‘(i) any property for which the family is receiving assistance under 

subsection (y) or (o)(12) of section 8 of this Act; 

‘‘(ii) any person that is a victim of domestic violence; or 

‘‘(iii) any family that is offering such property for sale. 

‘‘(2) NET FAMILY ASSETS.— 

‘‘(A) IN GENERAL.—For purposes of this subsection, the term ‘net family 

assets’ means, for all members of the household, the net cash value of all 

assets after deducting reasonable costs that would be incurred in disposing 

of real property, savings, stocks, bonds, and other forms of capital investment. Such term does not include interests in Indian trust land, equity in 

property for which the family is receiving assistance under subsection (y) 

or (o)(12) of section 8, equity accounts in homeownership programs of the 

Department of Housing and Urban Development, or Family Self Sufficiency 

accounts. 

‘‘(B) EXCLUSIONS.—Such term does not include— 

‘‘(i) the value of personal property, except for items of personal property of significant value, as the Secretary may establish or the public 

housing agency may determine; 

‘‘(ii) the value of any retirement account; 

‘‘(iii) real property for which the family does not have the effective 

legal authority necessary to sell such property; 

‘‘(iv) any amounts recovered in any civil action or settlement based 

on a claim of malpractice, negligence, or other breach of duty owed to 

a member of the family and arising out of law, that resulted in a member of the family being disabled; 


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‘‘(v) the value of any Coverdell education savings account under section 530 of the Internal Revenue Code of 1986 or any qualified tuition 

program under section 529 of such Code; and 

‘‘(vi) such other exclusions as the Secretary may establish. 

‘‘(C) TRUST FUNDS.—In cases in which a trust fund has been established 

and the trust is not revocable by, or under the control of, any member of 

the family or household, the value of the trust fund shall not be considered 

an asset of a family if the fund continues to be held in trust. Any income 

distributed from the trust fund shall be considered income for purposes of 

section 3(b) and any calculations of annual family income, except in the 

case of medical expenses for a minor. 

‘‘(3) SELF-CERTIFICATION.— 

‘‘(A) NET FAMILY ASSETS.—A public housing agency or owner may determine the net assets of a family, for purposes of this section, based on a certification by the family that the net assets of such family do not exceed 

$50,000, as such amount is adjusted annually by applying an inflationary 

factor as the Secretary considers appropriate. 

‘‘(B) NO CURRENT REAL PROPERTY OWNERSHIP.—A public housing agency 

or owner may determine compliance with paragraph (1)(B) based on a certification by the family that such family does not have any current ownership interest in any real property at the time the agency or owner reviews 

the family’s income. 

‘‘(C) STANDARDIZED FORMS.—The Secretary may develop standardized 

forms for the certifications referred to in subparagraphs (A) and (B). 

‘‘(4) COMPLIANCE FOR PUBLIC HOUSING DWELLING UNITS.—When recertifying 

family income with respect to families residing in public housing dwelling units, 

a public housing agency may, in the discretion of the agency and only pursuant 

to a policy that is set forth in the public housing agency plan under section 5A 

for the agency, choose not to enforce the limitation under paragraph (1). 

‘‘(5) ENFORCEMENT.—When recertifying the income of a family residing in a 

dwelling unit assisted under this Act, a public housing agency or owner may 

choose not to enforce the limitation under paragraph (1) or may establish exceptions to such limitation based on eligibility criteria, but only pursuant to a policy that is set forth in the public housing agency plan under section 5A for the 

agency or under a policy adopted by the owner. Eligibility criteria for establishing exceptions may provide for separate treatment based on family type and 

may be based on different factors, such as age, disability, income, the ability 

of the family to find suitable alternative housing, and whether supportive services are being provided. 

‘‘(6) AUTHORITY TO DELAY EVICTIONS.—In the case of a family residing in a 

dwelling unit assisted under this Act who does not comply with the limitation 

under paragraph (1), the public housing agency or project owner may delay eviction or termination of the family based on such noncompliance for a period of 

not more than 6 months.’’. 

SEC. 105. UNITS OWNED BY PUBLIC HOUSING AGENCIES. 

Paragraph (11) of section 8(o) of the United States Housing Act of 1937 (42 U.S.C. 

1437f(o)(11)) is amended— 

(1) by striking ‘‘(11) LEASING OF UNITS OWNED BY PHA.—If’’ and inserting the 

following: 

‘‘(11) LEASING OF UNITS OWNED BY PHA.— 

‘‘(A) INSPECTIONS AND RENT DETERMINATIONS.—If’’; and 

(2) by adding at the end the following new subparagraph: 

‘‘(B) UNITS OWNED BY PHA.—For purposes of this subsection, the term 

‘owned by a public housing agency’ means, with respect to a dwelling unit, 

that the dwelling unit is in a project that is owned by such agency, by an 

entity wholly controlled by such agency, or by a limited liability company 

or limited partnership in which such agency (or an entity wholly controlled 

by such agency) holds a controlling interest in the managing member or 

general partner. A dwelling unit shall not be deemed to be owned by a public housing agency for purposes of this subsection because the agency holds 

a fee interest as ground lessor in the property on which the unit is situated, 

holds a security interest under a mortgage or deed of trust on the unit, or 

holds a non-controlling interest in an entity which owns the unit or in the 

managing member or general partner of an entity which owns the unit.’’. 

SEC. 106. PHA PROJECT-BASED ASSISTANCE. 

(a) IN GENERAL.—Paragraph (13) of section 8(o) of the United States Housing Act 

of 1937 (42 U.S.C. 1437f(o)(13)) is amended— 


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(1) by striking ‘‘structure’’ each place such term appears and inserting 

‘‘project’’; 

(2) by striking subparagraph (B) and inserting the following new subparagraph: 

‘‘(B) PERCENTAGE LIMITATION.— 

‘‘(i) IN GENERAL.—Subject to clause (ii), a public housing agency may 

use for project-based assistance under this paragraph not more than 20 

percent of the authorized units for the agency. 

‘‘(ii) EXCEPTION.—A public housing agency may use up to an additional 10 percent of the authorized units for the agency for projectbased assistance under this paragraph, to provide units that house individuals and families that meet the definition of homeless under section 103 of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 

11302), that house families with veterans, that provide supportive 

housing to persons with disabilities or elderly persons, or that are located in areas where vouchers under this subsection are difficult to use, 

as specified in subparagraph (D)(ii)(II). Any units of project-based assistance that are attached to units previously subject to federally required rent restrictions or receiving another type of long-term housing 

subsidy provided by the Secretary shall not count toward the percentage limitation under clause (i) of this subparagraph. The Secretary 

may, by regulation, establish additional categories for the exception 

under this clause.’’; 

(3) by striking subparagraph (D) and inserting the following new subparagraph: 

‘‘(D) INCOME-MIXING REQUIREMENT.— 

‘‘(i) IN GENERAL.—Except as provided in clause (ii), not more than the 

greater of 25 dwelling units or 25 percent of the dwelling units in any 

project may be assisted under a housing assistance payment contract 

for project-based assistance pursuant to this paragraph. For purposes 

of this subparagraph, the term ‘project’ means a single building, multiple contiguous buildings, or multiple buildings on contiguous parcels 

of land. 

‘‘(ii) EXCEPTIONS.— 

‘‘(I) CERTAIN FAMILIES.—The limitation under clause (i) shall not 

apply to dwelling units assisted under a contract that are exclusively made available to elderly families or to households eligible 

for supportive services that are made available to the assisted residents of the project, according to standards for such services the 

Secretary may establish. 

‘‘(II) CERTAIN AREAS.—With respect to areas in which tenantbased vouchers for assistance under this subsection are difficult to 

use, as determined by the Secretary, and with respect to census 

tracts with a poverty rate of 20 percent or less, clause (i) shall be 

applied by substituting ‘40 percent’ for ‘25 percent’, and the Secretary may, by regulation, establish additional conditions. 

‘‘(III) CERTAIN CONTRACTS.—The limitation under clause (i) shall 

not apply with respect to contracts or renewal of contracts under 

which a greater percentage of the dwelling units in a project were 

assisted under a housing assistance payment contract for projectbased assistance pursuant to this paragraph on the date of the enactment of the Housing Opportunity Through Modernization Act of 

2015. 

‘‘(IV) CERTAIN PROPERTIES.—Any units of project-based assistance under this paragraph that are attached to units previously 

subject to federally required rent restrictions or receiving other 

project-based assistance provided by the Secretary shall not count 

toward the percentage limitation imposed by this subparagraph 

(D). 

‘‘(iii) ADDITIONAL MONITORING AND OVERSIGHT REQUIREMENTS.—The 

Secretary may establish additional requirements for monitoring and 

oversight of projects in which more than 40 percent of the dwelling 

units are assisted under a housing assistance payment contract for 

project-based assistance pursuant to this paragraph.’’; 

(4) by striking subparagraph (F) and inserting the following new subparagraph: 

‘‘(F) CONTRACT TERM.— 


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‘‘(i) TERM.—A housing assistance payment contract pursuant to this 

paragraph between a public housing agency and the owner of a project 

may have a term of up to 20 years, subject to— 

‘‘(I) the availability of sufficient appropriated funds for the purpose of renewing expiring contracts for assistance payments, as 

provided in appropriation Acts and in the agency’s annual contributions contract with the Secretary, provided that in the event 

of insufficient appropriated funds, payments due under contracts 

under this paragraph shall take priority if other cost-saving measures that do not require the termination of an existing contract are 

available to the agency; and 

‘‘(II) compliance with the inspection requirements under paragraph (8), except that the agency shall not be required to make biennial inspections of each assisted unit in the development. 

‘‘(ii) ADDITION OF ELIGIBLE UNITS.—Subject to the limitations of subparagraphs (B) and (D), the agency and the owner may add eligible 

units within the same project to a housing assistance payments contract at any time during the term thereof without being subject to any 

additional competitive selection procedures. 

‘‘(iii) HOUSING UNDER CONSTRUCTION OR RECENTLY CONSTRUCTED.— An agency may enter into a housing assistance payments contract with 

an owner for any unit that does not qualify as existing housing and is 

under construction or recently has been constructed whether or not the 

agency has executed an agreement to enter into a contract with the 

owner, provided that the owner demonstrates compliance with applicable requirements prior to execution of the housing assistance payments 

contract. This clause shall not subject a housing assistance payments 

contract for existing housing under this paragraph to such requirements or otherwise limit the extent to which a unit may be assisted 

as existing housing. 

‘‘(iv) ADDITIONAL CONDITIONS.—The contract may specify additional 

conditions, including with respect to continuation, termination, or expiration, and shall specify that upon termination or expiration of the contract without extension, each assisted family may elect to use its assistance under this subsection to remain in the same project if its unit 

complies with the inspection requirements under paragraph (8), the 

rent for the unit is reasonable as required by paragraph (10)(A), and 

the family pays its required share of the rent and the amount, if any, 

by which the unit rent (including the amount allowed for tenant-based 

utilities) exceeds the applicable payment standard.’’; 

(5) in subparagraph (G), by striking ‘‘15 years’’ and inserting ‘‘20 years’’; 

(6) by striking subparagraph (I) and inserting the following new subparagraph: 

‘‘(I) RENT ADJUSTMENTS.—A housing assistance payments contract pursuant to this paragraph entered into after the date of the enactment of the 

Housing Opportunity Through Modernization Act of 2015 shall provide for 

annual rent adjustments upon the request of the owner, except that— 

‘‘(i) by agreement of the parties, a contract may allow a public housing agency to adjust the rent for covered units using an operating cost 

adjustment factor established by the Secretary pursuant to section 

524(c) of the Multifamily Assisted Housing Reform and Affordability 

Act of 1997 (which shall not result in a negative adjustment), in which 

case the contract may require an additional adjustment, if requested, 

up to the reasonable rent periodically during the term of the contract, 

and shall require such an adjustment, if requested, upon extension pursuant to subparagraph (G); 

‘‘(ii) the adjusted rent shall not exceed the maximum rent permitted 

under subparagraph (H); 

‘‘(iii) the contract may provide that the maximum rent permitted for 

a dwelling unit shall not be less than the initial rent for the dwelling 

unit under the initial housing assistance payments contract covering 

the units; and 

‘‘(iv) the provisions of subsection (c)(2)(C) shall not apply.’’; 

(7) in subparagraph (J)— 

(A) in the first sentence— 

(i) by striking ‘‘shall’’ and inserting ‘‘may’’; and 

(ii) by inserting before the period the following: ‘‘or may permit owners to select applicants from site-based waiting lists as specified in this 

subparagraph’’; 


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(B) by striking the third sentence and inserting the following: ‘‘The agency or owner may establish preferences or criteria for selection for a unit assisted under this paragraph that are consistent with the public housing 

agency plan for the agency approved under section 5A and that give preference to families who qualify for voluntary services, including disabilityspecific services, offered in conjunction with assisted units.’’; and 

(C) by striking the fifth and sixth sentences and inserting the following: 

‘‘A public housing agency may establish and utilize procedures for ownermaintained site-based waiting lists, under which applicants may apply at, 

or otherwise designate to the public housing agency, the project or projects 

in which they seek to reside, except that all eligible applicants on the waiting list of an agency for assistance under this subsection shall be permitted 

to place their names on such separate list, subject to policies and procedures established by the Secretary. All such procedures shall comply with 

title VI of the Civil Rights Act of 1964, the Fair Housing Act, section 504 

of the Rehabilitation Act of 1973, and other applicable civil rights laws. The 

owner or manager of a project assisted under this paragraph shall not 

admit any family to a dwelling unit assisted under a contract pursuant to 

this paragraph other than a family referred by the public housing agency 

from its waiting list, or a family on a site-based waiting list that complies 

with the requirements of this subparagraph. A public housing agency shall 

disclose to each applicant all other options in the selection of a project in 

which to reside that are provided by the public housing agency and are 

available to the applicant.’’; 

(8) in subparagraph (M)(ii), by inserting before the period at the end the following: ‘‘relating to funding other than housing assistance payments’’; and 

(9) by adding at the end the following new subparagraphs: 

‘‘(N) STRUCTURE OWNED BY AGENCY.—A public housing agency engaged in 

an initiative to improve, develop, or replace a public housing property or 

site may attach assistance to an existing, newly constructed, or rehabilitated structure in which the agency has an ownership interest or which the 

agency has control of without following a competitive process, provided that 

the agency has notified the public of its intent through its public housing 

agency plan and subject to the limitations and requirements of this paragraph. 

‘‘(O) SPECIAL PURPOSE VOUCHERS.—A public housing agency that administers vouchers authorized under subsection (o)(19) or (x) of this section 

may provide such assistance in accordance with the limitations and requirements of this paragraph, without additional requirements for approval by 

the Secretary.’’. 

(b) EFFECTIVE DATE.—The Secretary of Housing and Urban Development shall 

issue notice or regulations to implement subsection (a) of this section and such subsection shall take effect upon such issuance. 

SEC. 107. ESTABLISHMENT OF FAIR MARKET RENT. 

(a) IN GENERAL.—Paragraph (1) of section 8(c) of the United States Housing Act 

of 1937 (42 U.S.C. 1437f(c)(1)) is amended— 

(1) by inserting ‘‘(A)’’ after the paragraph designation; 

(2) by striking the fourth, seventh, eighth, and ninth sentences; and 

(3) by adding at the end the following: 

‘‘(B) Fair market rentals for an area shall be published not less than annually by 

the Secretary on the site of the Department on the World Wide Web and in any 

other manner specified by the Secretary. Notice that such fair market rentals are 

being published shall be published in the Federal Register, and such fair market 

rentals shall become effective no earlier than 30 days after the date of such publication. The Secretary shall establish a procedure for public housing agencies and other 

interested parties to comment on such fair market rentals and to request, within 

a time specified by the Secretary, reevaluation of the fair market rentals in a jurisdiction before such rentals become effective. The Secretary shall cause to be published for comment in the Federal Register notices of proposed material changes in 

the methodology for estimating fair market rentals and notices specifying the final 

decisions regarding such proposed substantial methodological changes and responses 

to public comments.’’. 

(b) PAYMENT STANDARD.—Subparagraph (B) of section 8(o)(1) of the United States 

Housing Act of 1937 (42 U.S.C. 1437f(o)(1)(B)) is amended by inserting before the 

period at the end the following: ‘‘, except that no public housing agency shall be required as a result of a reduction in the fair market rental to reduce the payment 

standard applied to a family continuing to reside in a unit for which the family was 

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duced. The Secretary shall allow public housing agencies to request exception payment standards within fair market rental areas subject to criteria and procedures 

established by the Secretary’’. 

(c) EFFECTIVE DATE.—The amendments made by this section shall take effect 

upon the date of the enactment of this Act. 

SEC. 108. COLLECTION OF UTILITY DATA. 

Section 8(o) of the United States Housing Act of 1937 (42 U.S.C. 1437f(o)) is 

amended by adding at the end the following new paragraph: 

‘‘(20) COLLECTION OF UTILITY DATA.— 

‘‘(A) PUBLICATION.—The Secretary shall, to the extent that data can be 

collected cost effectively, regularly publish such data regarding utility consumption and costs in local areas as the Secretary determines will be useful 

for the establishment of allowances for tenant-paid utilities for families assisted under this subsection. 

‘‘(B) USE OF DATA.—The Secretary shall provide such data in a manner 

that— 

‘‘(i) avoids unnecessary administrative burdens for public housing 

agencies and owners; and 

‘‘(ii) protects families in various unit sizes and building types, and 

using various utilities, from high rent and utility cost burdens relative 

to income.’’. 

SEC. 109. PUBLIC HOUSING CAPITAL AND OPERATING FUNDS. 

(a) CAPITAL FUND REPLACEMENT RESERVES.—Section 9 of the United States Housing Act of 1937 (42 U.S.C. 1437g) is amended— 

(1) in subsection (j), by adding at the end the following new paragraph: 

‘‘(7) TREATMENT OF REPLACEMENT RESERVE.—The requirements of this subsection shall not apply to funds held in replacement reserves established pursuant to subsection (n).’’; and 

(2) by adding at the end the following new subsection: 

‘‘(n) ESTABLISHMENT OF REPLACEMENT RESERVES.— 

‘‘(1) IN GENERAL.—Public housing agencies shall be permitted to establish a 

replacement reserve to fund any of the capital activities listed in subsection 

(d)(1). 

‘‘(2) SOURCE AND AMOUNT OF FUNDS FOR REPLACEMENT RESERVE.—At any 

time, a public housing agency may deposit funds from such agency’s Capital 

Fund into a replacement reserve, subject to the following: 

‘‘(A) At the discretion of the Secretary, public housing agencies may 

transfer and hold in a replacement reserve funds originating from additional sources. 

‘‘(B) No minimum transfer of funds to a replacement reserve shall be required. 

‘‘(C) At any time, a public housing agency may not hold in a replacement 

reserve more than the amount the public housing authority has determined 

necessary to satisfy the anticipated capital needs of properties in its portfolio assisted under this section, as outlined in its Capital Fund 5-Year Action Plan, or a comparable plan, as determined by the Secretary. 

‘‘(D) The Secretary may establish, by regulation, a maximum replacement 

reserve level or levels that are below amounts determined under subparagraph (C), which may be based upon the size of the portfolio assisted under 

this section or other factors. 

‘‘(3) TRANSFER OF OPERATING FUNDS.—In first establishing a replacement reserve, the Secretary may allow public housing agencies to transfer more than 

20 percent of its operating funds into its replacement reserve. 

‘‘(4) EXPENDITURE.—Funds in a replacement reserve may be used for purposes 

authorized by subsection (d)(1) and contained in its Capital Fund 5-Year Action 

Plan. 

‘‘(5) MANAGEMENT AND REPORT.—The Secretary shall establish appropriate accounting and reporting requirements to ensure that public housing agencies are 

spending funds on eligible projects and that funds in the replacement reserve 

are connected to capital needs.’’. 

(b) FLEXIBILITY OF OPERATING FUND AMOUNTS.—Paragraph (1) of section 9(g) of 

the United States Housing Act of 1937 (42 U.S.C. 1437g(g)(1)) is amended— 

(1) by striking ‘‘(1)’’ and all that follows through ‘‘—Of’’ and inserting the following: 

‘‘(1) FLEXIBILITY IN USE OF FUNDS.— 

‘‘(A) FLEXIBILITY FOR CAPITAL FUND AMOUNTS.—Of’’; and 

(2) by adding at the end the following new subparagraph: 


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‘‘(B) FLEXIBILITY FOR OPERATING FUND AMOUNTS.—Of any amounts appropriated for fiscal year 2016 or any fiscal year thereafter that are allocated 

for fiscal year 2016 or any fiscal year thereafter from the Operating Fund 

for any public housing agency, the agency may use not more than 20 percent for activities that are eligible under subsection (d) for assistance with 

amounts from the Capital Fund, but only if the public housing plan under 

section 5A for the agency provides for such use.’’. 

SEC. 110. FAMILY UNIFICATION PROGRAM FOR CHILDREN AGING OUT OF FOSTER CARE. 

Section 8(x) of the United States Housing Act of 1937 (42 U.S.C. 1437f(x)) is 

amended— 

(1) in paragraph (2)(B)— 

(A) by striking ‘‘18 months’’ and inserting ‘‘36 months’’; 

(B) by striking ‘‘21 years of age’’ and inserting ‘‘24 years of age’’; and 

(C) by inserting after ‘‘have left foster care’’ the following: ‘‘, or will leave 

foster care within 90 days, in accordance with a transition plan described 

in section 475(5)(H) of the Social Security Act, and is homeless or is at risk 

of becoming homeless’’; 

(2) by redesignating paragraph (4) as paragraph (5); and 

(3) by inserting after paragraph (3) the following new paragraph: 

‘‘(4) COORDINATION BETWEEN PUBLIC HOUSING AGENCIES AND PUBLIC CHILD

WELFARE AGENCIES.—The Secretary shall, not later than the expiration of the 

180-day period beginning on the date of the enactment of the Housing Opportunity Through Modernization Act of 2015 and after consultation with other appropriate Federal agencies, issue guidance to improve coordination between 

public housing agencies and public child welfare agencies in carrying out the 

program under this subsection, which shall provide guidance on— 

‘‘(A) identifying eligible recipients for assistance under this subsection; 

‘‘(B) coordinating with other local youth and family providers in the community and participating in the Continuum of Care program established 

under subtitle C of title IV of the McKinney-Vento Homeless Assistance Act 

(42 U.S.C. 11381 et seq.); 

‘‘(C) implementing housing strategies to assist eligible families and youth; 

‘‘(D) aligning system goals to improve outcomes for families and youth 

and reducing lapses in housing for families and youth; and 

‘‘(E) identifying resources that are available to eligible families and youth 

to provide supportive services available through parts B and E of title IV 

of the Social Security Act (42 U.S.C. 621 et seq.; 670 et seq.) or that the 

head of household of a family or youth may be entitled to receive under section 477 of the Social Security Act (42 U.S.C. 677).’’. 

TITLE II—RURAL HOUSING 

SEC. 201. DELEGATION OF GUARANTEED RURAL HOUSING LOAN APPROVAL. 

Subsection (h) of section 502 of the Housing Act of 1949 (42 U.S.C. 1472(h)) is 

amended by adding at the end the following new paragraph: 

‘‘(18) DELEGATION OF APPROVAL.—The Secretary may delegate, in part or in 

full, the Secretary’s authority to approve and execute binding Rural Housing 

Service loan guarantees pursuant to this subsection to certain preferred lenders, 

in accordance with standards established by the Secretary.’’. 

TITLE III—FHA MORTGAGE INSURANCE FOR 

CONDOMINIUMS 

SEC. 301. MODIFICATION OF FHA REQUIREMENTS FOR MORTGAGE INSURANCE FOR CONDOMINIUMS. 

Section 203 of the National Housing Act (12 U.S.C. 1709) is amended by adding 

at the end the following new subsection: 

‘‘(y) REQUIREMENTS FOR MORTGAGES FOR CONDOMINIUMS.— 

‘‘(1) PROJECT RECERTIFICATION REQUIREMENTS.—Notwithstanding any other 

law, regulation, or guideline of the Secretary, including chapter 2.4 of the Condominium Project Approval and Processing Guide of the FHA, the Secretary 

shall streamline the project certification requirements that are applicable to the 

insurance under this section for mortgages for condominium projects so that recertifications are substantially less burdensome than certifications. The SecVerDate Sep 11 2014 05:50 Jan 29, 2016 Jkt 059006 PO 00000 Frm 00014 Fmt 6659 Sfmt 6621 E:\HR\OC\HR397.XXX HR397

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retary shall consider lengthening the time between certifications for approved 

properties, and allowing updating of information rather than resubmission. 

‘‘(2) COMMERCIAL SPACE REQUIREMENTS.—Notwithstanding any other law, regulation, or guideline of the Secretary, including chapter 2.1.3 of the Condominium Project Approval and Processing Guide of the FHA, in providing for exceptions to the requirement for the insurance of a mortgage on a condominium 

property under this section regarding the percentage of the floor space of a condominium property that may be used for nonresidential or commercial purposes, 

the Secretary shall provide that— 

‘‘(A) any request for such an exception and the determination of the disposition of such request may be made, at the option of the requester, under 

the direct endorsement lender review and approval process or under the 

HUD review and approval process through the applicable field office of the 

Department; and 

‘‘(B) in determining whether to allow such an exception for a condominium property, factors relating to the economy for the locality in which 

such project is located or specific to project, including the total number of 

family units in the project, shall be considered. 

Not later than the expiration of the 90-day period beginning on the date of the 

enactment of this paragraph, the Secretary shall issue regulations to implement 

this paragraph, which shall include any standards, training requirements, and 

remedies and penalties that the Secretary considers appropriate. 

‘‘(3) TRANSFER FEES.—Notwithstanding any other law, regulation, or guideline 

of the Secretary, including chapter 1.8.8 of the Condominium Project Approval 

and Processing Guide of the FHA and section 203.41 of the Secretary’s regulations (24 C.F.R. 203.41), existing standards of the Federal Housing Finance 

Agency relating to encumbrances under private transfer fee covenants shall 

apply to the insurance of mortgages by the Secretary under this section to the 

same extent and in the same manner that such standards apply to the purchasing, investing in, and otherwise dealing in mortgages by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. 

If the provisions of part 1228 of the Director of the Federal Housing Finance 

Agency’s regulations (12 C.F.R. part 1228) are amended or otherwise changed 

after the date of the enactment of this paragraph, the Secretary of Housing and 

Urban Development shall adopt any such amendments or changes for purposes 

of this paragraph, unless the Secretary causes to be published in the Federal 

Register a notice explaining why the Secretary will disregard such amendments 

or changes within 90 days after the effective date of such amendments or 

changes. 

‘‘(4) OWNER-OCCUPANCY REQUIREMENT.— 

‘‘(A) ESTABLISHMENT OF PERCENTAGE REQUIREMENT.—Not later than the 

expiration of the 90-day period beginning on the date of the enactment of 

this paragraph, the Secretary shall, by rule, notice, or mortgagee letter, 

issue guidance regarding the percentage of units that must be occupied by 

the owners as a principal residence or a secondary residence (as such terms 

are defined by the Secretary), or must have been sold to owners who intend 

to meet such occupancy requirements, including justifications for the percentage requirements, in order for a condominium project to be acceptable 

to the Secretary for insurance under this section of a mortgage within such 

condominium property. 

‘‘(B) FAILURE TO ACT.—If the Secretary fails to issue the guidance required under subparagraph (A) before the expiration of the 90-day period 

specified in such clause, the following provisions shall apply: 

‘‘(i) 35 PERCENT REQUIREMENT.—In order for a condominium project 

to be acceptable to the Secretary for insurance under this section, at 

least 35 percent of all family units (including units not covered by 

FHA-insured mortgages) must be occupied by the owners as a principal 

residence or a secondary residence (as such terms are defined by the 

Secretary), or must have been sold to owners who intend to meet such 

occupancy requirement. 

‘‘(ii) OTHER CONSIDERATIONS.—The Secretary may increase the percentage applicable pursuant to clause (i) to a condominium project on 

a project-by-project or regional basis, and in determining such percentage for a project shall consider factors relating to the economy for the 

locality in which such project is located or specific to project, including 

the total number of family units in the project.’’. 


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TITLE IV—HOUSING REFORMS FOR THE 

HOMELESS AND FOR VETERANS 

SEC. 401. DEFINITION OF GEOGRAPHIC AREA FOR CONTINUUM OF CARE PROGRAM. 

(a) DEFINITION.—Subtitle C of the McKinney-Vento Homeless Assistance Act is 

amended— 

(1) by redesignating sections 432 and 433 (42 U.S.C. 11387, 11388) as sections 

433 and 434, respectively; and 

(2) by inserting after section 431 (42 U.S.C. 11386e) the following new section: 

‘‘SEC. 432. GEOGRAPHIC AREAS. 

‘‘(a) REQUIREMENT TO DEFINE.—For purposes of this subtitle, the term ‘geographic 

area’ shall have such meaning as the Secretary shall by notice provide. 

‘‘(b) ISSUANCE OF NOTICE.—Not later than the expiration of the 90-day period beginning on the date of the enactment of the Housing Opportunity Through Modernization Act of 2015, the Secretary shall issue a notice setting forth the definition 

required by subsection (a).’’. 

(b) CLERICAL AMENDMENT.—The table of contents in section 101(b) of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11301 note) is amended by striking 

the items relating to sections 432 and 433 and inserting the following new items: 

‘‘Sec. 432. Geographic areas. 

‘‘Sec. 433. Regulations. 

‘‘Sec. 434. Reports to Congress.’’. 

SEC. 402. INCLUSION OF PUBLIC HOUSING AGENCIES AND LOCAL REDEVELOPMENT AUTHORITIES IN EMERGENCY SOLUTIONS GRANTS. 

Section 414(c) of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 

11373(c)) is amended— 

(1) in the subsection heading, by inserting ‘‘, PUBLIC HOUSING AGENCIES, AND

LOCAL REDEVELOPMENT AUTHORITIES’’ after ‘‘ORGANIZATIONS’’; and 

(2) in the first sentence, by inserting before the period at the end the following: ‘‘, to public housing agencies (as defined under section 3(b)(6) of the 

United States Housing Act of 1937), or to local redevelopment authorities (as 

defined under State law)’’. 

SEC. 403. SPECIAL ASSISTANT FOR VETERANS AFFAIRS IN THE DEPARTMENT OF HOUSING 

AND URBAN DEVELOPMENT. 

(a) TRANSFER OF POSITION TO OFFICE OF THE SECRETARY.—Section 4 of the Department of Housing and Urban Development Act (42 U.S.C. 3533) is amended by 

adding at the end the following new subsection: 

‘‘(h) SPECIAL ASSISTANT FOR VETERANS AFFAIRS.— 

‘‘(1) POSITION.—There shall be in the Office of the Secretary a Special Assistant for Veterans Affairs, who shall report directly to the Secretary. 

‘‘(2) APPOINTMENT.—The Special Assistant for Veterans Affairs shall be appointed based solely on merit and shall be covered under the provisions of title 

5, United States Code, governing appointments in the competitive service. 

‘‘(3) RESPONSIBILITIES.—The Special Assistant for Veterans Affairs shall be responsible for— 

‘‘(A) ensuring veterans have fair access to housing and homeless assistance under each program of the Department providing either such assistance; 

‘‘(B) coordinating all programs and activities of the Department relating 

to veterans; 

‘‘(C) serving as a liaison for the Department with the Department of Veterans Affairs, including establishing and maintaining relationships with the 

Secretary of Veterans Affairs; 

‘‘(D) serving as a liaison for the Department, and establishing and maintaining relationships with the United States Interagency Council on Homelessness and officials of State, local, regional, and nongovernmental organizations concerned with veterans; 

‘‘(E) providing information and advice regarding— 

‘‘(i) sponsoring housing projects for veterans assisted under programs 

administered by the Department; or 

‘‘(ii) assisting veterans in obtaining housing or homeless assistance 

under programs administered by the Department; 

‘‘(F) coordinating with the Secretary of Housing and Urban Development 

and the Secretary of Veterans Affairs in carrying out section 404 of the 

Housing Opportunity Through Modernization Act of 2015; and 


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‘‘(G) carrying out such other duties as may be assigned to the Special Assistant by the Secretary or by law.’’. 

(b) TRANSFER OF POSITION IN OFFICE OF DEPUTY ASSISTANT SECRETARY FOR SPECIAL NEEDS.—On the date that the initial Special Assistant for Veterans Affairs is 

appointed pursuant to section 4(h)(2) of the Department of Housing and Urban Development Act, as added by subsection (a) of this section, the position of Special Assistant for Veterans Programs in the Office of the Deputy Assistant Secretary for 

Special Needs of the Department of Housing and Urban Development shall be terminated. 

SEC. 404. ANNUAL SUPPLEMENTAL REPORT ON VETERANS HOMELESSNESS. 

(a) IN GENERAL.—The Secretary of Housing and Urban Development and the Secretary of Veterans Affairs, in coordination with the United States Interagency Council on Homelessness, shall submit annually to the Committees of the Congress specified in subsection (b), together with the annual reports required by such Secretaries 

under section 203(c)(1) of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 

11313(c)(1)), a supplemental report that includes the following information with respect to the preceding year: 

(1) The same information, for such preceding year, that was included with respect to 2010 in the report by the Secretary of Housing and Urban Development 

and the Secretary of Veterans Affairs entitled ‘‘Veterans Homelessness: A Supplemental Report to the 2010 Annual Homeless Assessment Report to Congress’’. 

(2) Information regarding the activities of the Department of Housing and 

Urban Development relating to veterans during such preceding year, as follows: 

(A) The number of veterans provided assistance under the housing choice 

voucher program for Veterans Affairs supported housing under section 

8(o)(19) of the United States Housing Act of 1937 (42 U.S.C. 1437f(o)(19)), 

the socioeconomic characteristics of such homeless veterans, and the number, types, and locations of entities contracted under such section to administer the vouchers. 

(B) A summary description of the special considerations made for veterans under public housing agency plans submitted pursuant to section 5A 

of the United States Housing Act of 1937 (42 U.S.C. 1437c–1) and under 

comprehensive housing affordability strategies submitted pursuant to section 105 of the Cranston-Gonzalez National Affordable Housing Act (42 

U.S.C. 12705). 

(C) A description of the activities of the Special Assistant for Veterans Affairs of the Department of Housing and Urban Development. 

(D) A description of the efforts of the Department of Housing and Urban 

Development and the other members of the United States Interagency 

Council on Homelessness to coordinate the delivery of housing and services 

to veterans. 

(E) The cost to the Department of Housing and Urban Development of 

administering the programs and activities relating to veterans. 

(F) Any other information that the Secretary of Housing and Urban Development and the Secretary of Veterans Affairs consider relevant in assessing the programs and activities of the Department of Housing and 

Urban Development relating to veterans. 

(b) COMMITTEES.—The Committees of the Congress specified in this subsection are 

as follows: 

(1) The Committee on Banking, Housing, and Urban Affairs of the Senate. 

(2) The Committee on Veterans’ Affairs of the Senate. 

(3) The Committee on Appropriations of the Senate. 

(4) The Committee on Financial Services of the House of Representatives. 

(5) The Committee on Veterans’ Affairs of the House of Representatives. 

(6) The Committee on Appropriations of the House of Representatives. 

TITLE V—MISCELLANEOUS 

SEC. 501. INCLUSION OF DISASTER HOUSING ASSISTANCE PROGRAM IN CERTAIN FRAUD AND 

ABUSE PREVENTION MEASURES. 

The Disaster Housing Assistance Program administered by the Department of 

Housing and Urban Development shall be considered a ‘‘program of the Department 

of Housing and Urban Development’’ under section 904 of the Stewart B. McKinney 

Homeless Assistance Amendments Act of 1988 (42 U.S.C. 3544) for the purpose of 

income verifications. 


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SEC. 502. ENERGY EFFICIENCY REQUIREMENTS UNDER SELF-HELP HOMEOWNERSHIP OPPORTUNITY PROGRAM. 

Section 11 of the Housing Opportunity Program Extension Act of 1996 (42 U.S.C. 

12805 note) is amended by inserting after subsection (f) the following new subsection: 

‘‘(g) ENERGY EFFICIENCY REQUIREMENTS.—The Secretary may not require any 

dwelling developed using amounts from a grant made under this section to meet any 

energy efficiency standards other than the standards applicable at such time pursuant to section 109 of the Cranston-Gonzalez National Affordable Housing Act (42 

U.S.C. 12709) to housing specified in subsection (a) of such section.’’. 

SEC. 503. DATA EXCHANGE STANDARDIZATION FOR IMPROVED INTEROPERABILITY. 

(a) DATA EXCHANGE STANDARDIZATION.—Title I of the United States Housing Act 

of 1937 (42 U.S.C. 1437 et seq.) is amended by adding at the end the following new 

section: 

‘‘SEC. 37. DATA EXCHANGE STANDARDS FOR IMPROVED INTEROPERABILITY. 

‘‘(a) DESIGNATION.—The Secretary shall, in consultation with an interagency work 

group established by the Office of Management and Budget, and considering State 

government perspectives, designate data exchange standards to govern, under this 

Act— 

‘‘(1) necessary categories of information that State agencies operating related 

programs are required under applicable law to electronically exchange with another State agency; and 

‘‘(2) Federal reporting and data exchange required under applicable law. 

‘‘(b) REQUIREMENTS.—The data exchange standards required by subsection (a) 

shall, to the maximum extent practicable— 

‘‘(1) incorporate a widely accepted, nonproprietary, searchable, computer-readable format, such as the eXtensible Markup Language; 

‘‘(2) contain interoperable standards developed and maintained by intergovernmental partnerships, such as the National Information Exchange Model; 

‘‘(3) incorporate interoperable standards developed and maintained by Federal 

entities with authority over contracting and financial assistance; 

‘‘(4) be consistent with and implement applicable accounting principles; 

‘‘(5) be implemented in a manner that is cost- effective and improves program 

efficiency and effectiveness; and 

‘‘(6) be capable of being continually upgraded as necessary. 

‘‘(c) RULES OF CONSTRUCTION.—Nothing in this section requires a change to existing data exchange standards for Federal reporting found to be effective and efficient.’’. 

(b) APPLICABILITY.— (1) IN GENERAL.—Not later than 2 years after the date of the enactment of 

this Act, the Secretary of Housing and Urban Development shall issue a proposed rule to carry out the amendments made by subsection (a). 

(2) REQUIREMENTS.—The rule shall— 

(A) identify federally required data exchanges; 

(B) include specification and timing of exchanges to be standardized; 

(C) address the factors used in determining whether and when to standardize data exchanges; 

(D) specify State implementation options; and 

(E) describe future milestones. 

PURPOSE AND SUMMARY

Introduced by Representative Luetkemeyer on October 7, 2015, 

H.R. 3700, the Housing Opportunity Through Modernization Act of 

2015, reforms certain Department of Housing and Urban Development (HUD) and Rural Housing Service programs in order to improve their effectiveness and provide enhanced opportunity for program beneficiaries and the organizations that serve such individuals. 

H.R. 3700 enhances the implementation of HUD’s existing Section 8 voucher assistance and Public Housing programs, and also 

achieves savings by modernizing outdated rules and regulations 

which in some cases have not been updated in over a generation. 

Thus, H.R. 3700 streamlines the inspection protocol for rental assistance units, simplifies income review and recertification policies 


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for all assisted households, modifies Federal Housing Administration (FHA) requirements for mortgage insurance for condominiums, 

clarifies homeless assistance program requirements, delegates 

rural housing loan approval authority, and provides limited flexibility between public housing operating and capital funds. 

H.R. 3700 gives state and local housing agencies, and private 

owners, enhanced flexibility in meeting key program objectives 

such as reducing homelessness, improving access to higher-opportunity neighborhoods, and addressing repair needs in public housing. 

In addition, H.R. 3700 reduces the lengthy process for the certification and recertification of condominium buildings, which can cost 

thousands of dollars for small condominium boards, modifies the 

process for approving condominium buildings with commercial 

space, aligns FHA’s transfer fee policy to that of the Federal Housing Finance Agency, and changes the current standard owner-occupancy requirement from 50% to 35%. 

Collectively, by improving program effectiveness while ensuring 

that scarce resources are used to support those who are most in 

need, these and other provisions within H.R. 3700 expand affordable homeownership opportunities for American families. 

BACKGROUND AND NEED FOR LEGISLATION

For many years, the federal government has provided affordable 

housing for families of modest means. Federal housing programs 

trace their roots to programs established in the 1930s through 

which the federal government helped secure lower rents for lowand middle income tenants. Today, HUD-administered programs 

rely on housing properties that are owned and managed at the 

local level by quasi-governmental public housing authorities, which 

are under contract to the federal government. Given this partnership between the federal government and local housing authorities, 

federal housing programs are governed in part by federal rules and 

regulations and in part by local policies. 

The federal government subsidizes affordable rental housing 

through two formula grants—the Public Housing Capital Fund and 

the Public Housing Operating Fund. These grants supplement 

rents collected by public housing authorities. Public housing authorities use the grants to meet their operation, maintenance, and 

capital improvement needs. Families who live in public housing 

generally pay rent equal to 30 percent of their adjusted gross income. Today, roughly 1.2 million public housing units receive federal funds. 

By the early 1970s, construction programs for public housing 

were increasingly criticized because they took too long to complete 

and because they were expensive. Policymakers had also become 

concerned that aging public housing units were beginning to physically deteriorate and that public housing communities might be 

contributing to social problems, including by perpetuating intergenerational dependence on government assistance, chronic poverty, 

and crime. In 1989, Congress established a National Commission 

on Severely Distressed Public Housing (Commission) to identify 

public housing projects that were in a severe state of distress, assess strategies for improvement, and develop a plan to improve 

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ing residents lived in fear of crime, and that they suffered from 

high unemployment and limited opportunities for employment, insufficient resources to address the needs of residents, and disincentives to self-sufficiency. The Commission also found that some public housing units had deteriorated to the point that they posed a 

physical danger to their residents. To address these problems, the 

Commission recommended that (1) public housing residents be provided with more social services; (2) funding be increased for public 

housing capital needs; (3) the operational performance of public 

housing authorities be assessed; and (4) new forms of affordable 

housing public-private partnerships be explored. 

Even prior to the Commission’s report, Congress and the Executive Branch examined new ideas for delivering housing subsidies to 

low-income families. The Housing and Community Development 

Act of 1974 created the Housing Choice Voucher Program, popularly known as the Section 8 program. The Section 8 program shifted funds from public-housing construction projects to subsidizing 

rents for low-income families living in privately-owned housing. 

The Section 8 program was designed to respond to criticisms of earlier housing programs by providing rental subsidies for tenants living in private units and relying less heavily on new construction 

and housing in concentrated public housing developments. 

The Section 8 program provides housing assistance to approximately two million low-income families and individuals each year. 

Under the Section 8 program, tenants pay approximately 30 percent of their income towards rent; the balance of rent is paid by 

the federal government. The Section 8 program is itself comprised 

of two programs: the first provides tenant-based rental assistance 

and the second provides project-based rental assistance. 

Tenant-based rental assistance vouchers are subsidies that lowincome families can use to pay part of their rent for private-market 

housing; because families can move yet still retain their vouchers, 

the subsidy is portable. By contrast, project-based rental assistance 

is a subsidy attached to a unit of privately-owned housing that 

houses low-income tenants; if the family moves, the subsidy remains with the unit of housing. The Section 8 program is administered by more than 3,000 local public housing authorities, which receive payments from the federal government. 

Over the past decade, the Section 8 program has consumed an 

increasingly large part of HUD’s budget. In 2002, Section 8 accounted for 46 percent of HUD’s annual budget. For fiscal year 

2015, the budget authority for the HUD division responsible for administering Section 8—the Office of Public and Indian Housing— 

was $26.401 billion, accounting for 58.21 percent of HUD’s budget. 

Within the Office of Public and Indian Housing, 99 percent of the 

FY 2015 funding was allocated to contract renewals or formula 

grants, meaning HUD had little flexibility or input regarding how 

the funds were spent. 

Section 8 is consuming a larger part of HUD’s budget because 

more people are participating in the program and new participants 

have lower incomes than legacy participants. The subsidy provided 

by the federal government has increased for new Section 8 participants, which has in turn increased Section 8’s share of the HUD 

budget. This ever-increasing consumption of HUD resources by the 

Section 8 program has concerned both critics and advocates of the 


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program. Many fear that unless the Section 8 program is reformed, 

it will soon drain resources from other HUD programs or it will require significant increased funding notwithstanding diminishing 

program effectiveness. 

In addition to reforming the Section 8 program, H.R. 3700 remedies a byzantine condominium building approval process administered the FHA. The FHA was created by the National Housing Act 

of 1934 and primarily serves as a federal mortgage insurance program for loans made by banks and other private lenders. H.R. 3700 

eases restrictions on the purchase of condominiums using an FHAinsured mortgage, which for some can be a low-cost housing opportunity in place of purchasing a more expensive free-standing home. 

Specifically, H.R. 3700 updates and clarifies the FHA’s condominium approval regulations, which will provide broader and more 

affordable financing options particularly to low- and moderate income qualified homebuyers. 

HEARINGS

The Committee on Financial Services’ Subcommittee on Housing 

and Insurance held a hearing examining matters relating to H.R. 

3700 on October 21, 2015. 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on December 8 and 9, 2015, and ordered H.R. 3700 to be reported favorably to the House as amended by a recorded vote of 44 yeas to 10 

nays (recorded vote no. FC–76), a quorum being present. An 

amendment in the nature of a substitute offered by Representative 

Luetkemeyer was agreed to, as amended as set for the below, by 

a voice vote. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. An amendment to 

the amendment in the nature of a substitute offered by Representative Luetkemeyer was agreed to be a recorded vote of 43 yeas—10 

nays (FC–74). An amendment to the amendment in the nature of 

a substitute offered by Representative Waters was not agreed to by 

a recorded vote of 21 yeas to 32 nays (FC–75). The third and final 

recorded vote in Committee was a motion by Chairman Hensarling 

to report the bill favorably to the House as amended. The motion 

was agreed to by a recorded vote of 44 yeas to 10 nays (Record vote 

no. FC–76), a quorum being present. 


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COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the findings and recommendations of the committee based on oversight activities under clause 2(b)(1) of rule X 

of the Rules of the House of Representatives, are incorporated in 

the descriptive portions of this report. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee states that H.R. 3700 updates 

HUD and Rural Housing Service rules to in order to increase their 

effectiveness and better serve program beneficiaries and organizations involved in assisting beneficiaries. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATES

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, Washington, DC, January 28, 2015. 

Hon. JEB HENSARLING, Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 3700, the Housing Opportunity Through Modernization Act of 2015. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Elizabeth Cove Delisle. 

Sincerely, 

KEITH HALL. 

Enclosure. 


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H.R. 3700—Housing Opportunity Through Modernization Act of 

2015 

Summary: H.R. 3700 would amend the United States Housing 

Act of 1937 to change certain aspects of the Department of Housing 

and Urban Development’s (HUD’s) rental assistance programs. The 

bill would alter calculations of tenant income and rent; make 

households that exceed new income and asset limits ineligible for 

assistance; change requirements for adjusting payment standards; 

and expand eligibility for the Family Unification Program. The bill 

also would make changes to Federal Housing Administration 

(FHA) requirements that affect whether buyers of certain condominiums would be eligible to receive mortgage insurance from 

the agency. 

CBO estimates that implementing this legislation would reduce 

spending subject to appropriation by $311 million over the 2017– 

2021 period, assuming appropriations are consistent with the estimate. 

Enacting H.R. 3700 would not affect direct spending or revenues; 

therefore, pay-as-you-go procedures do not apply. CBO estimates 

that enacting H.R. 3700 would not increase net direct spending or 

on-budget deficits in any of the four consecutive 10-year periods beginning in 2026. 

H.R. 3700 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA). 

Estimated cost to the Federal Government: The estimated budgetary effect of H.R. 3700 is shown in the following table. The costs 

of this legislation fall within budget functions 370 (housing) and 

600 (income security). 

By fiscal year, in millions of dollars— 

2017 2018 2019 2020 2021 2017–2021 

CHANGES IN SPENDING SUBJECT TO APPROPRIATION 

Changes to Allowances: 

Medical Expense Allowance: 

Estimated Authorization Level ............................................... ¥144 ¥201 ¥211 ¥223 ¥236 ¥1,015 

Estimated Outlays: ................................................................. ¥79 ¥175 ¥207 ¥218 ¥230 ¥909 

Childcare Allowance: 

Estimated Authorization Level ............................................... ¥36 ¥49 ¥50 ¥51 ¥53 ¥239 

Estimated Outlays .................................................................. ¥20 ¥43 ¥49 ¥51 ¥52 ¥215 

Elderly and Disabled Allowance: 

Estimated Authorization Level ............................................... 66 88 88 105 105 452 

Estimated Outlays .................................................................. 36 78 88 97 105 404 

Dependent Allowance: 

Estimated Authorization Level ............................................... 34 46 46 71 71 268 

Estimated Outlays .................................................................. 19 41 46 60 71 237 

Eligibility Changes: 

Asset Eligibility 

Estimated Authorization Level ............................................... 10 13 14 14 14 65 

Estimated Outlays .................................................................. 6 12 14 14 14 59 

Income Limit in Public Housing: 

Estimated Authorization Level ............................................... 8 10 11 11 12 52 

Estimated Outlays .................................................................. 4 9 11 11 11 46 

Income Determination Changes: 

Aid and Attendance Exclusion: 

Estimated Authorization Level ............................................... 6 6 6 6 6 30 

Estimated Outlays .................................................................. 3 6 6 6 6 27 

Imputed Return on Assets: 

Estimated Authorization Level ............................................... 2 3 3 3 3 14 

Estimated Outlays .................................................................. 1 2 3 3 3 12 


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By fiscal year, in millions of dollars— 

2017 2018 2019 2020 2021 2017–2021 

Other Housing Assistance Provisions: 

Payment Standard for Rent: 

Estimated Authorization Level ............................................... 24 24 25 26 27 125 

Estimated Outlays .................................................................. 13 24 25 25 26 113 

Expansion of the Family Unification Program: 

Estimated Authorization Level ............................................... 4 6 5 5 6 27 

Estimated Outlays .................................................................. 2 5 6 5 6 24 

Moving Assistance: 

Estimated Authorization Level ............................................... 1 2 2 2 2 8 

Estimated Outlays .................................................................. 1 1 2 2 2 7 

Changes to FHA Insurance Requirementsa

Additional FHA Offsetting Collections: 

Estimated Authorization Level ............................................... ¥25 ¥23 ¥21 ¥20 ¥18 ¥107 

Estimated Outlays .................................................................. ¥25 ¥23 ¥21 ¥20 ¥18 ¥107 

Additional GNMA Offsetting Collections: 

Estimated Authorization Level ............................................... ¥2 ¥2 ¥2 ¥2 ¥2 ¥10 

Estimated Outlays .................................................................. ¥2 ¥2 ¥2 ¥2 ¥2 ¥10 

Total Changes: 

Estimated Authorization Level ...................................... ¥52 ¥77 ¥84 ¥53 ¥65 ¥331 

Estimated Outlays ......................................................... ¥41 ¥64 ¥80 ¥68 ¥58 ¥311 

Notes: FHA = Federal Housing Administration; GNMA = Government National Mortgage Association. Components may not sum to totals be- cause of rounding. a Using the fair-value approach, CBO estimates that implementing H.R. 3700 would decrease offsetting collections generated by FHA and 

GNMA by $117 million over the 2017–2021 period, assuming appropriation actions to allow FHA to increase the amount of mortgage guarantees it provides by an amount sufficient to meet the increased demand for mortgage guarantees under the bill. As shown in the table, using 

a FCRA approach, CBO estimates that implementing H.R. 3700 would increase offsetting collections generated by FHA and GNMA by $117 

million over the 2017–2021 period. 

Basis of estimate: For this estimate, CBO assumes that H.R. 

3700 will be enacted by the end of fiscal year 2016, spending will 

follow historical outlay patterns, and future appropriations will be 

consistent with the bill. The bill would require the changes to income determinations and allowances to take effect at the start of 

a calendar year; CBO expects that those changes would take effect 

beginning in January 2017. In cases where the tenant rent contribution would change, CBO assumes that appropriations will be 

adjusted to reflect the costs of such changes. In addition, CBO assumes that these changes would not affect the funding requirements for about 350,000 public housing or voucher units covered by 

Moving-to-Work agreements because those public housing authorities (PHA) are funded pursuant to their agreements, rather than 

the standard administrative formulas. 

Background 

Almost 5 million households receive assistance through HUD’s 

various rental assistance programs, including the Section 8 Housing Choice Voucher program, public housing, and other projectbased subsidy programs. To be eligible for assistance, family income must be below either 50 percent or 80 percent of the area median income, depending on the program. Each program has a minimum percentage of families receiving assistance who must be 

below 30 percent of the area median income. 

Tenants who receive assistance generally pay 30 percent of their 

adjusted monthly income towards rent. Funding from HUD covers 

the difference between what the tenant pays and the full rent for 

the unit (up to certain limits). In the case of public housing, HUD 

provides PHAs with operating and capital funding that allows 

them to subsidize rents. 


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Families participating in HUD’s rental assistance programs have 

their incomes certified when they enter the program and at least 

annually thereafter in most cases. Current law allows various adjustments to income (called allowances) prior to calculating a family’s rent payment. Families may deduct certain child care expenses 

and elderly and disabled households may deduct any medical expenses that exceed 3 percent of income. In addition, households 

may deduct $400 from gross income if they include an elderly or 

disabled member, and all households may deduct $480 for each dependent. As a result of these deductions, the average adjusted income is approximately 8 percent lower than the average gross income. 

Changes to allowances 

This bill would change how allowances are used to lower income 

to determine housing assistance; on net, CBO estimates that implementing these provisions would reduce outlays by $483 million over 

the 2017–2021 period, assuming appropriation actions consistent 

with the bill. 

Medical Expense Allowance. Elderly and disabled families can 

currently deduct the amount of unreimbursed medical expenses 

that exceed 3 percent of the family’s income. Based on data provided by HUD, CBO estimates that 16 percent of families claim an 

average allowance of $1,900 each (for a total of $1.3 billion). The 

bill would decrease the amount of medical expenses that can be deducted to the amount that exceeds 10 percent of the family’s income. CBO estimates that this change would cut the number of 

families claiming medical expenses by 40 percent and the total 

amount claimed by about 45 percent. CBO estimates that implementing that provision would reduce discretionary spending by 

$909 million over the 2017–2021 period. 

Child Care Allowance. Families may deduct any child care expenses necessary to enable a member of the family to be employed 

or attend school. Section 102 would only allow families to deduct 

child care expenses that exceed 5 percent of their annual family income. Based on data provided by HUD, CBO estimates that about 

4 percent of families (about 160,000) claim child care allowances of 

about $3,300 each. CBO estimates that implementing the new child 

care allowance would reduce outlays by $215 million over the 

2017–2021 period. 

Elderly and Disabled Allowance. Section 102 would increase the 

amount that can be deducted by elderly and disabled households 

from $400 to $525, and would inflate that amount each year, 

rounded down to the nearest multiple of $25. Based on data provided by HUD, CBO estimates that this deduction is claimed by 

just over half of households receiving assistance. About 1 percent 

of families claiming the allowance would not see any additional 

benefit from the increase because their adjusted incomes are already at zero. CBO estimates that increasing the elderly and disabled allowance would cost $404 million over the 2017–2021 period. 

Dependent Allowance. The bill also would increase the amount 

that can be deducted for dependents from $480 to $525, and would 

inflate that amount each year, rounded down to the nearest multiple of $25. Based on data provided by HUD, CBO estimates that 

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ents. About 9 percent of families claiming the allowance would not 

see any additional benefit from the increase because their adjusted 

incomes are already at zero. CBO estimates that increasing the dependent allowance would cost $237 million over the 2017–2021 period. 

Eligibility changes 

H.R. 3700 would affect how household income and assets are 

used to target assistance. On net, CBO estimates that implementing these provisions would increase outlays by $105 million 

over the 2017–2021 period, assuming appropriation actions consistent with those provisions. 

Asset Eligibility. Section 104 would make households with more 

than $100,000 in assets ineligible for assistance, but would leave 

the enforcement of this provision up to the discretion of the PHAs 

and property owners. Assets in retirement accounts would be not 

be subject to the asset limit. Based on data provided by HUD, CBO 

estimates that about 9,000 families would become ineligible for assistance under the bill. Because there is unmet demand for participation in HUD’s rental assistance programs, CBO expects that 

families made ineligible would be replaced by families on housing 

authority waiting lists. Replacing those newly ineligible families 

(who have higher than average incomes) with families with average 

income would cost the government an additional $1,500 per family 

in 2017. CBO estimates that implementing that provision would 

cost $59 million over the 2017–2021 period. 

Income Eligibility. Under current law, families with income over 

80 percent of the area median income at their initial certification 

are not eligible for assistance. Eligibility tests are not done after 

the initial certification (most incomes are certified each year to determine a tenant’s rent contribution); therefore, a family’s income 

can rise above 80 percent of the area median and the family can 

continue to receive assistance. Section 103 would require PHAs to 

terminate assistance for households in public housing whose income exceeds 120 percent of the median for two consecutive years. 

Alternatively, the PHA could charge the household the market rent 

for their unit. 

Based on data provided by HUD, CBO estimates that approximately 2,100 households that reside in public housing would lose 

their subsidy. Because there is unmet demand for participation in 

HUD’s rental assistance programs, CBO expects that families made 

ineligible would be replaced by families on waiting lists maintained 

by housing authorities. Replacing those newly ineligible families 

with families with average income would cost the government an 

additional $4,900 per family in 2017. CBO estimates that implementing that provision would cost $46 million over the 2017–2021 

period. 

Income determination changes 

Section 102 would require PHAs and property owners to change 

the way they calculate income for determining housing assistance. 

In total, those changes would increase spending subject to appropriation by $39 million over the 2017–2021 period, assuming appropriation of the necessary amounts. 


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Aid and Attendance Exclusion. Section 102 would exclude federal 

pensions of veterans who receive Aid and Attendance (A&A) from 

the calculations of adjusted income. Doing so would reduce affected 

veterans’ rent contributions, thereby increasing the cost of HUD’s 

assistance payments. Based on data from the Government Accountability Office, CBO estimates that about 6 percent of households receiving assistance include a veteran. Based on information from the 

Department of Veterans Affairs, CBO estimates that less than 1 

percent (about 1,600) of those households include a veteran receiving A&A and that those payments average about $16,000 per year. 

Excluding those amounts from calculations of adjusted income 

would lower tenants’ rent contributions by about $6 million per 

year (once fully phased in). CBO estimates that implementing that 

provision would cost $27 million over the 2017–2021 period. 

Imputed Return on Assets. Under current law, housing authorities and property owners calculate a tenant’s imputed rate of return on any assets over $5,000 by using an interest rate determined by HUD. If the imputed return on assets is greater than actual income from assets, the imputed return is included in the family’s income. Section 102 would increase the threshold for calculating imputed returns to $50,000. Based on data provided by 

HUD, CBO estimates that about 1 percent of families (about 

40,000) have imputed income from assets that would be excluded 

from their total income under the bill; asset income counted for determining housing assistance would decrease by about $8 million 

per year. CBO estimates that excluding the imputed return on assets with a value of less than $50,000 would cost $12 million over 

the 2017–2021 period. 

Other housing assistance provisions 

Payment Standard for Rent. Under current law, PHAs generally 

must set a payment standard that is between 90 and 110 percent 

of the fair market rent. The standard, in combination with a household’s income, determines the amount of the housing assistance 

payment (HAP) that the PHA pays to the landlord. If the fair market rent in an area decreases, a PHA that has set its payment 

standard at 110 percent would have to decrease the HAP. Section 

107 would allow a PHA to maintain the HAP at the prior year’s 

amount when the fair market rent in an area decreases. Based on 

data from HUD, CBO estimates that implementing this provision 

would cost $113 million over the 2017–2021 period. 

Expansion of the Family Unification Program. Section 110 would 

make adults ages 22 to 24 who left foster care after age 16 eligible 

for Family Unification Program vouchers. Under current law, only 

adults ages 18 to 21 who left foster care after age 16 are eligible 

for those vouchers. In 2015, the Congress appropriated about $6 

million for that program. Based on information from HUD, the department of Health and Human Services, and studies on outcomes 

of adults that were previously in foster care, CBO estimates that 

the Family Unification Program served about 0.4 percent of eligible 

adults in 2015. Assuming that the program serves the same proportion of eligible adults ages 22 to 24 and adjusting for anticipated inflation, CBO estimates that implementing that section 

would cost $24 million over the 2017–2021 period. 


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1The budgetary effects of guarantees by FHA and the Government National Mortgage Association (GNMA) are classified as discretionary because new guarantees under those programs 

are subject to annual appropriation actions. Under current law, the budgetary effects of these 

activities are calculated under the Federal Credit Reform Act (FCRA). As required in S. Con. 

Res. 11, the Concurrent Resolution on the Budget for Fiscal Year 2016, CBO has also prepared 

a cost estimate for this section of H.R. 3700 using a fair-value approach to estimating the impact 

on FHA and GNMA. That alternative is discussed under the heading, ‘‘Additional Information.’’ 

Moving Assistance. Under current law, voucher payments that 

are withheld because a unit failed inspection are retained by the 

PHA; HUD’s future payments to the PHA are then reduced by the 

amount withheld. Section 101 would allow PHAs to use voucher 

payments that are withheld because a unit failed inspection to pay 

for the relocation costs of the tenant that occupies the unit. Based 

on data provided by HUD and information provided by PHAs, CBO 

expects that about 1,000 households would receive assistance to 

move each year and that PHAs would provide about $1,500 per 

household. Thus, CBO estimates that implementing this provision 

would cost $7 million over the 2017–2021 period. 

Changes to FHA insurance requirement1

H.R. 3700 would change certain requirements that determine 

whether buyers of condominiums are eligible for FHA mortgage 

guarantees. The bill would reduce the amount of units in a condominium complex that must be owner occupied to qualify for an 

FHA guarantee from 50 percent to 35 percent. The bill also would 

eliminate a prohibition on providing FHA guarantees for units that 

are subject to certain fees that are assessed to owners who sell 

their condominiums. 

Based on information provided by FHA and industry representatives, CBO estimates that implementing H.R. 3700 would increase 

offsetting collections generated by FHA and the Government National Mortgage Association (GNMA) by $117 million over the 

2017–2021 period, assuming appropriation actions to allow FHA to 

increase the amount of mortgage guarantees it provides by an 

amount sufficient to meet the increased demand for mortgage guarantees under the bill. That estimate also accounts for uncertainty 

regarding administrative actions that may be taken by FHA under 

current law. 

Additional FHA Offsetting Collections. CBO estimates that, over 

the 2017–2021 period, implementing H.R. 3700 would increase offsetting collections for FHA’s single-family program by $214 million. 

Those additional offsetting receipts would stem from an increase in 

the volume of FHA loan guarantees. The increase in the volume of 

guarantees would occur because changes to FHA rules under the 

bill would allow additional condominium buyers to qualify for FHA 

guarantees. 

CBO estimates that under current law FHA will guarantee about 

$1 trillion in new mortgages over the 2017–2021 period. We estimate that, over the same period, enacting H.R. 3700 would increase mortgage guarantees from FHA’s single-family program by 

roughly $8 billion—an increase of about 0.75 percent. The combination of guarantee fees charged by FHA and estimated defaults and 

mortgage prepayments over the next five years yields an estimated 


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2 A negative subsidy cost for a federal credit program can occur if the net present value of 

upfront and annual fees charged for a loan guarantee are greater than the estimated cost of 

a default on that loan. 

average subsidy rate for FHA’s guarantees of ¥2.7 percent.2 Multiplying that subsidy rate by the additional volume of mortgage 

guarantees expected to be offered by FHA under the bill would result in additional estimated offsetting collections of $214 million 

over the 2017–2021 period. Because CBO estimates that there is a 

50 percent chance FHA will make similar rule changes under current law, we estimate that new offsetting collections under the bill 

would total $107 million over that period. 

Additional GNMA Offsetting Collections. Through its MortgageBacked Securities (MBS) program, GNMA is responsible for guaranteeing securities backed by pools of mortgages that are insured 

by federal agencies such as FHA. In exchange for a fee paid by 

lenders or issuers of the securities, GNMA guarantees the timely 

payment of scheduled principal and interest due on the pooled 

mortgages that back those securities. Because the value of the fees 

collected by GNMA is estimated to exceed the cost of loan defaults 

in each year, CBO estimates that the GNMA MBS program will 

have an average subsidy rate of ¥0.28 percent over the 2017–2021 

period, resulting in net receipts collections to the federal government. 

CBO estimates that each year about 90 percent of the new mortgage loan guarantees made by FHA would be included in GNMA’s 

MBS program. We also estimate that changes in FHA’s requirements for loan guarantees on condominiums under the bill would 

increase FHA’s loan-guarantee volume by $8 billion over the next 

5 years. Multiplying 90 percent of that amount by the subsidy rate 

(¥0.28 percent) results in additional offsetting collections by 

GNMA’s MBS program totaling $20 million over the 2017–2021 period. Because CBO estimates that there is a 50 percent chance that 

FHA will make similar rule changes under current law, we estimate that implementing the bill would increase offsetting collections from GNMA’s MBS program by $10 million over that period. 

Additional information: This section provides additional information on the estimated effects of title III of H.R. 3700 on the fairvalue costs of the FHA single-family, FHA multifamily, and GNMA 

programs. CBO is required to provide this information by S. Con. 

Res. 11. Under current law, the costs of those programs are measured in the budget according to the procedures established in the 

Federal Credit Reform Act (FCRA). 

The fair-value approach is an alternative to the approach specified in FCRA. Both the FCRA approach and the fair-value approach rely on the same projections of future cash flows for the 

guarantee programs, and both approaches take into account the 

lifetime cost of the new guarantees made in a given year (including 

the expected cost of defaults, net of fees collected). The fair-value 

estimates differ from the FCRA estimates by recognizing that the 

government’s assumption of financial risk has a cost that exceeds 

the average amount of losses that would be expected from defaults. 

In practice, the main difference between FCRA estimates and fairvalue estimates is the discount rates used to calculate the present 

value of estimated future guarantee costs and receipts. 


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Using the fair-value approach, CBO estimates that implementing 

H.R. 3700 would decrease offsetting collections generated by FHA 

and GNMA by $117 million over the 2017–2021 period, assuming 

appropriation actions to allow FHA to increase the amount of mortgage guarantees it provides by an amount sufficient to meet the increased demand for mortgage guarantees under the bill. Using a 

FCRA approach, CBO estimates that implementing H.R. 3700 

would increase offsetting collections generated by FHA and GNMA 

by $117 million over the 2017–2021 period. 

Pay-As-You-Go considerations: None. 

Increase in long term direct spending and deficits: CBO estimates that enacting H.R. 3700 would not increase net direct spending or on-budget deficits in any of the four consecutive 10-year periods beginning in 2026. 

Intergovernmental and private-sector impact: H.R. 3700 contains 

no intergovernmental or private-sector mandates as defined in 

UMRA. State, local, and tribal governments would benefit from 

housing assistance activities authorized in the bill. Any costs those 

governments incur to comply with grant requirements would result 

from conditions of federal assistance. 

Estimate prepared by: Federal costs: Elizabeth Cove Delisle (for 

public housing) and Jeff LaFave (for FHA); Impact on state, local, 

and tribal governments: J’nell Blanco Suchy; Impact on the private 

sector: Amy Petz. 

Estimate approved by: H. Samuel Papenfuss, Deputy Assistant 

Director for Budget Analysis. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act. 

EARMARK IDENTIFICATION

H.R. 3700 does not contain any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9 of rule 

XXI. 

DUPLICATION OF FEDERAL PROGRAMS

Pursuant to section 3(g) of H. Res. 5, 114th Cong. (2015), the 

Committee states that no provision of H.R. 3700 establishes or reauthorizes a program of the Federal Government known to be duplicative of another Federal program, a program that was included 

in any report from the Government Accountability Office to ConVerDate Sep 11 2014 05:50 Jan 29, 2016 Jkt 059006 PO 00000 Frm 00033 Fmt 6659 Sfmt 6602 E:\HR\OC\HR397.XXX HR397

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gress pursuant to section 21 of Public Law 111–139, or a program 

related to a program identified in the most recent Catalog of Federal Domestic Assistance. 

DISCLOSURE OF DIRECTED RULEMAKING

Pursuant to section 3(i) of H. Res. 5, 114th Cong. (2015), the 

Committee states that H.R. 3700 contains four directed 

rulemakings. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

TITLE I—SECTION 8 RENTAL ASSISTANCE AND PUBLIC HOUSING

Section 101. Inspection of dwelling units 

The section requires that a public housing authority (PHA) must 

conduct an initial inspection prior to any Section 8 voucher housing 

assistance payment being made to a tenant. If the unit has been 

inspected within the previous 24 months through an alternative inspection method under a Federal, State, or local housing program 

(including the HOME and Low-Income Housing Tax Credit programs), the tenant may occupy the unit for an interim period until 

the PHA determines, through an inspection, that the unit meets 

the housing quality standards. In the event that the unit does not 

meet the housing quality standards as a result of non-life-threatening conditions, the tenant may occupy the unit and the unit’s 

owner has 30 days to correct the deficiency. 

A PHA can determine that a dwelling unit is in non-compliance 

if (1) it fails inspection, (2) the PHA notifies the unit’s owner of its 

failure to comply, and (3) the failure to comply is not corrected 

within 24 hours for a life-threatening condition and within 30 days 

for a non-life-threatening condition. Further, a PHA may withhold 

assistance payments during the correction period for life-threatening and non-life-threatening conditions and shall abate all assistance amounts if the owner does not correct the deficiency during 

the appropriate correction period. The PHA shall recommence 

housing assistance payments to the owner once the deficiency is 

corrected. 

If a PHA abates assistance payments to the owner of the unit for 

failure to comply with the housing quality standards, the PHA 

must (1) notify the tenant that such abatement has commenced 

and that the tenant will have to move if the dwelling unit is not 

brought into compliance within 60 days and (2) allow the tenant to 

move to another unit and transfer the rental assistance to that 

unit. The owner of the unit may not terminate the tenant’s lease 

if the PHA withholds or abates rental assistance payments. If the 

PHA abates assistance, the tenant may terminate the lease by notifying the owner. 

A PHA shall terminate the housing assistance payments contract 

for the unit if during the abatement period the owner does not correct the deficiency within 60 days after the determination of noncompliance. Once a contract is terminated, the PHA shall provide 

the affected tenant at least 90 days to lease a new unit. If the family is unable to lease a new unit, the PHA shall provide the tenant 

a preference for occupancy in a unit that is owned or operated by 

the PHA. In addition, the PHA may provide additional assistance 


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to the tenants in finding a new residence, including payments of 

security deposits for the new unit and moving expenses. If the PHA 

determines that any damage to the unit that results in the unit’s 

failure to comply with housing quality standards is due to tenantcaused damages, the PHA does not have to provide relocation assistance to the tenant or exonerate the tenant from liability for 

such damages. 

These provisions would take effect once HUD issues a notice or 

regulations regarding implementation. 

Section 102. Income reviews 

This section provides that income reviews for assisted families in 

dwelling units assisted under the U.S. Housing Act of 1937 shall 

be made upon the initial provision of housing assistance for the 

family and annually thereafter, unless the family’s adjusted annual 

income or deductions decrease by 10 percent. 

In determining family income for initial occupancy, the PHA or 

owner shall use the income of the family as estimated by the agency or owner for the upcoming year. In determining family income 

for annual reviews, a PHA or owner shall use the prior year’s income but take into consideration any redetermination of income 

during the prior year. In addition, HUD shall, in consultation with 

other appropriate agencies, develop procedures to enable PHAs and 

owners to have access to income determinations for families made 

by other means-tested Federal programs that have comparable reliability. Also, no later than six months after the bill is enacted, the 

Secretary shall certify for Congress that the hardship provisions 

currently in statute for minimum rents are enforced and will continue to provide due consideration to the hardship circumstances of 

persons receiving housing assistance. 

In addition, this section defines ‘‘income’’ with respect to assisted 

families as income received from all sources by each member of the 

household who is 18 years or older, plus unearned income by each 

dependent who is less than 18 years old. Such term for income includes recurring gifts and receipts, actual income from assets, and 

profit or loss from a business. Excluded amounts for the definition 

of income are: (1) any imputed return on assets below $50,000; (2) 

any amounts that would be eligible for exclusion under section 

1613(a)(7) of the Social Security Act; (3) deferred disability benefits 

of the Department of Veterans Affairs; (4) expenses related to aid 

and attendance to veterans who are in need of regular aid and attendance; and (5) any exclusions from income as established by 

HUD. The income definition does not include earned income of any 

dependent who is attending school or any scholarship amounts related to school attendance. Income shall be determined without regard to any amounts in or from any Coverdell education savings 

accounts or any qualified tuition program under section 529 of the 

Internal Revenue Code of 1986. The HUD Secretary may not require a public housing agency or owner to maintain records of any 

amounts excluded from income. 

This section provides the following deductions for the purposes of 

defining an assisted family’s ‘adjusted income:’ (1) $525 for a family 

that is elderly or disabled; (2) $525 for each dependent; (3) any 

amount that exceeds 5 percent of annual family income that is 

used to pay for unreimbursed child care expenses; and (4) any 


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amount by which 10 percent of annual family income is exceeded 

by the sum of unreimbursed health and medical care expenses, unreimbursed attendant care, and auxiliary apparatus expenses. The 

Secretary of HUD may provide hardship exemptions for impacted 

families by regulation (such regulations shall include a requirement to notify tenants regarding any changes to the determination 

of adjusted income) and shall establish procedures to ensure that 

additional deductions as determined by the PHA does not materially increase Federal expenditures. This section gives the PHA the 

ability to establish a voucher payment standard of not more than 

120 percent of the fair market rent for a person with a disability. 

The section also provides conforming amendments for enhanced 

vouchers and project-based housing. In addition, if the Secretary of 

HUD determines that the income reviews under this section results 

in a material and disproportionate reduction in the rental income 

of certain PHAs, the Secretary may make appropriate adjustments 

in the formula income for such a reduction. This section requires 

that HUD submit a report to Congress on the changes made by 

this provision. 

Section 103. Limitation on public housing tenancy for over-income 

families 

Under this provision, for any tenant determined to have income 

in excess of 120 percent of the area median income for two consecutive years, a PHA would be required either to (1) charge the tenant 

either the greater of the fair market rent or the amount of taxpayer subsidy for the unit, or (2) terminate the tenancy of such tenant not later than 6 months after the tenant has exceeded the income limit for two years, as determined by the PHA. The provision 

gives the Secretary of HUD the ability to establish income limitations higher or lower than 120 percent of median income for those 

areas where there are unique local conditions, e.g. high cost or 

very-low-income rental market areas. 

Section 104. Limitation on eligibility for assistance based on assets 

This section specifies that any dwelling unit assisted under the 

U.S. Housing Act of 1937 may not be rented and assistance may 

not be provided to any family whose net family assets exceed 

$100,000, as adjusted for inflation, or a family who has a present 

ownership interest in real property that is suitable for occupancy 

by the family as a residence. Victims of domestic violence, individuals using housing assistance for homeownership opportunities, or 

a family that is offering such property for sale are exempt from the 

limitations in this section. 

Net family assets is defined as the net cash value of all assets 

after deducting reasonable costs that would be incurred in disposing of real property, savings, stocks, bonds, and other forms of 

capital investment. The term ‘net family assets’ does not include: 

(1) the value of personal property; (2) the value of any retirement 

account; (3) real property for which the family does not have the 

effective legal authority to sell; (4) any amounts recovered in any 

civil action or settlement based on a claim of malpractice, negligence that resulted in a family member being disabled; and (5) 

other exclusions the HUD Secretary may establish. 


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In the cases in which a trust fund has been established and the 

trust is not revocable by any member of the family, the value of 

the trust fund shall not be considered an asset of the family if the 

fund continues to be held in trust. When recertifying family income 

with respect to families residing in public housing units, the PHA 

may chose not to enforce the asset limitation in this provision. 

Section 105. Units owned by public housing agencies 

This provision defines the types of units owned by a PHA to be 

any dwelling unit that is located in a project that is owned by the 

PHA, by an entity wholly controlled by the PHA, or by a limited 

liability company or limited partnership where the PHA holds a 

controlling interest. Units will not be considered owned by a PHA 

if the agency only holds an interest in the ground lease, holds a security interest under a mortgage or deed of trust on the unit or 

holds a non-controlling interest in an entity that owns the unit. 

Section 106. PHA project-based assistance 

This section authorizes a PHA to attach vouchers to an apartment, rather than a tenant, a.k.a. project base voucher (PBV), up 

to a limit of 20 percent of its authorized voucher allocation. It also 

enables a PHA to provide up to an additional 10 percent of its authorized vouchers to create units targeting homeless individuals 

and families, veterans, elderly households or households with persons with disabilities, or units in areas where vouchers are difficult 

to use due to market conditions. Any units previously subject to 

federally required rent restrictions or receiving another type of 

long-term housing subsidy provided by the HUD Secretary shall 

not count toward the 20 percent limitation. 

The section also allows a PHA to provide PBV assistance to properties where the assistance does not exceed 25 percent of the units 

in a property or 25 units, whichever is greater. These limits would 

not apply to units that are exclusively made available to elderly 

families or to households eligible for supportive services. Further, 

in areas where vouchers are difficult to use, or in census tracts 

with a poverty rate of 20 percent or lower, PHAs may provide PBV 

assistance to up to 40 percent of units in a property. The limitations on the share of units in a property that may have projectbased assistance would only apply to newly assisted properties. 

Units of PBV assistance that are attached to units previously subject to federally required rent restrictions or receiving other projectbased assistance would be exempted from this cap. 

In addition, this section extends the permissible term of PBV 

contracts from 15 to 20 years, and in the event of insufficient funding would require PHAs to prioritize payments for units subject to 

a PBV contract if other cost-saving measures are available. The 

PHA and the owner may add eligible units within the same project 

to a housing assistance payments contract at any time during the 

term. In addition, the provision further states that an agency may 

enter into a housing assistance payments contract with an owner 

for housing under construction or recently constructed. This section 

extends tenant-based assistance for households to continue to reside in the property or to choose to move in the event the PBV contract is not extended or is terminated. 


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This section allows PHAs and owners to agree to limit the 

amount of a requested rent increase to the operating cost adjustment factor (OCAF) permitted for most properties with HUD section 8 contracts. It also allows owners to request an additional adjustment periodically subject to rent reasonableness. 

In addition, the section allows residents to place their names on 

site-specific waiting lists managed by owners, in addition to the 

waiting list established by the PHA. It allows a PHA to provide 

PBV assistance to improve, develop, or replace a public housing 

property or property that it controls or has an ownership interest 

in without having to use a competitive process, so long as it notifies 

residents and the public through its annual plan. 

This section clarifies that PHAs may use project-base HUD-Veterans Affairs Supportive Housing (HUD–VASH) and Family Unification Program (FUP) vouchers under the same policies and procedures applicable to general purpose vouchers. This change will facilitate the use of these vouchers—which provide stable affordable 

homes for homeless veterans and families involved with the child 

welfare system—for supportive housing and in areas where there 

is a shortage of suitable rental units. 

Section 107. Establishment of fair market rent 

This provision modifies the public notice requirements for proposed Fair Market Rents (FMRs) by moving the notifications to the 

HUD-designated website with notice of the availability of the data 

published in the Federal Register and eliminating publication in 

the Federal Register. HUD would continue to be required to publish in the Federal Register any proposed substantial methodological changes in advance and allow interested parties to request 

changes after final FMRs are published. Housing agencies are permitted to request exception payment standards subject to HUD established criteria. This provision also provides that a PHA would 

not be required to reduce any payment standard for a unit based 

on the fair market rent determination if the family occupying the 

unit before the FMR analysis continues to reside in the unit. 

Section 108. Collection of utility data 

This provision requires HUD to collect and publish utility consumption data to assist in establishment of tenant-paid utility allowances by PHAs, provided the data can be collected in a cost effective manner. HUD must also establish guidelines for use of the 

data in a manner that avoids unnecessary administrative burdens 

for PHAs. 

Section 109. Public housing Capital and Operating Funds 

This provision permits PHAs to establish a replacement reserve 

for capital fund activities. At the discretion of the Secretary of 

HUD, a PHA may hold in the replacement reserve funds originating from additional sources. Further, a PHA may hold, in its replacement reserve, only the amounts necessary to satisfy the anticipated capital needs of properties in its public housing portfolio. 

By regulation, the Secretary of HUD may establish a maximum reserve level that takes into consideration the size of the PHA’s public housing portfolio. In establishing the replacement reserve, the 

Secretary of HUD may allow the PHA to transfer more than 20 


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percent of its operating funds into its replacement reserve. This 

provision also gives PHAs the discretion to use up to 20 percent of 

their operating funds for eligible capital fund activities, provided 

that the use is outlined in the PHA’s annual plan. 

Section 110. Family Unification Program 

This provision extends the period for which a young adult, recently aging out of foster care, can use a family unification housing 

voucher from 18 to 36 months and increases the maximum age for 

an individual using a Family Unification Program (FUP) voucher 

to 24 years of age. This provision also states that the HUD Secretary shall, beginning 180 days after enactment, issue guidance to 

improve coordination between PHAs and public child welfare agencies in carrying out FUP. It requires that HUD shall provide guidance on: (1) identifying eligible recipients for assistance; (2) coordinating with other local youth and family homeless assistance providers; (3) implementing housing strategies to assist eligible families and youth; (4) aligning system goals to improve outcomes for 

families and youth; and (5) identifying resources that are available 

to eligible families and youth to provide supportive services. 

TITLE II—RURAL HOUSING

Section 201. Delegation of guaranteed rural housing loan approval 

This provision amends Section 502(h) of the Housing Act of 1949 

to authorize the Rural Housing Service single family housing guaranteed loan program (GLP) to delegate loan approval authority to 

preferred lenders, in accordance with standards established by the 

Secretary of Agriculture. 

TITLE III—FHA MORTGAGE INSURANCE FOR CONDOMINIUMS

Section 301. Modification of FHA requirements for mortgage insurance for condominiums 

This section requires the Secretary of HUD to streamline the 

FHA’s condominium project certification requirements so that recertification is substantially less burdensome than original certifications. More specifically, the Secretary must consider lengthening 

the time between certification and re-certifications. Also, this provision allows decisions on exemptions to current FHA commercial 

space requirements to be made at a HUD field office, and requires 

that any such exemption take into account factors relating to the 

local economy and specific condominium project. No later than 90 

days after the date of enactment, the Secretary of HUD shall issue 

regulations to implement the commercial space exemption requirements. 

In addition, this section states that existing standards of the 

Federal Housing Finance Agency (FHFA) relating to encumbrances 

under private transfer fee covenants for Fannie Mae and Freddie 

Mac shall apply to FHA insured condominium mortgages. If the 

FHFA changes its existing standards for those private transfer fee 

covenants after the date of enactment of this provision, the Secretary of HUD shall adopt FHFA’s changes. 

This section also requires that the Secretary of HUD shall, by 

rule, notice, or mortgagee letter, issue guidance regarding the percentage of units that must be occupied by the owners in order for 


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a condominium project to be acceptable to HUD for insurance of a 

mortgage within such condominium property. If the Secretary of 

HUD fails to issue guidance before the expiration of the 90 day period, the following provisions shall apply: (1) at least 35 percent of 

all family units must be occupied by the owners who intend to meet 

such occupancy requirement, and (2) the Secretary of HUD may increase the 35 percent requirement to a condominium project on a 

project-by-project or regional basis, provided that in determining 

such percentage for a project shall consider factors relating to the 

economy for the locality in which such project is located. 

TITLE IV—HOUSING REFORMS FOR THE HOMELESS AND FOR VETERANS

Section 401. Definition of geographic area for Continuum of Care 

Program 

This provision requires the Secretary of HUD to define the term 

‘‘geographic area’’ for purposes of the Continuum of Care program. 

Section 402. Inclusion of public housing agencies and local redevelopment authorities in emergency solutions grants 

This provision expands the scope of the Emergency Solutions 

Grants (ESGs) distribution to PHAs and Local Redevelopment Authorities (LRAs) so that any state receiving ESG funds can distribute all or a portion of such assistance to private nonprofits, 

PHAs or LRAs if the local government for the locality in which the 

project is located approves the project. 

Section 403. Special assistant for Veterans Affairs in the Department of Housing and Urban Development 

This provision requires HUD to transfer the position of Special 

Assistant for Veterans Affairs from the HUD Office of the Deputy 

Assistant Secretary for Special Needs to the Office of the Secretary. 

There, the Special Assistant would be responsible for ensuring that 

veterans have fair access to HUD housing and homeless assistance 

programs, coordinate all HUD programs and activities relating to 

veterans, and serve as a HUD liaison with the Department of Veterans Affairs. 

Section 404. Annual supplemental report on Veterans homelessness 

This provision requires the Secretaries of HUD and Veterans Affairs, in coordination with the U.S. Interagency Council on Homelessness, to submit annual reports to particular congressional committees regarding: the number of veterans provided assistance by 

HUD programs, coordination of services for veterans, and cost of 

administering programs to veterans. 

TITLE V—MISCELLANEOUS

Section 501. Inclusion of Disaster Housing Assistance Program in 

certain fraud and abuse prevention measures 

This provision requires that all recipients of HUD Disaster Assistance funds meet McKinney-Vento income verification and 

matching requirements. 


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41 

Section 502. Energy efficiency requirement under Self-Help Ownership Opportunity program 

This provision prohibits the Secretary of HUD from requiring 

that any dwelling in the Self-Help Ownership Opportunity Program (SHOP) be required to meet any energy efficiency standards 

other than those contained in the Cranston-Gonzalez National Affordable Housing Act. 

Section 503. Data exchange standardization for improved interoperability 

This provision streamlines data exchange standards to improve 

interoperability between state and federal agencies by requiring 

the Secretary of HUD to, through consultation, create data exchange standards such that agencies, such as HUD and RHS, are 

using the same data sets when administering and determining eligibility for its respective means-tested housing programs. The Secretary of HUD must issue a proposed rule within two years after 

enactment to identify federally-required data exchanges, specify the 

timing of exchanges to be standardized, address factors used in determining whether and when to standardize data exchanges, specify state implementation options, and outline future milestones. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

and existing law in which no change is proposed is shown in 

roman): 

UNITED STATES HOUSING ACT OF 1937 

TITLE I—GENERAL PROGRAM OF ASSISTED 

HOUSING 

* * * * * * * 

RENTAL PAYMENTS; DEFINITIONS

SEC. 3. (a)(1) Dwelling units assisted under this Act shall be 

rented only to families who are low-income families at the time of 

their initial occupancy of such units. Reviews of family income 

shall be made øat least annually¿ pursuant to paragraph (6) . Except as provided in paragraph (2) and subject to the requirement 

under paragraph (3), a family shall pay as rent for a dwelling unit 

assisted under this Act (other than a family assisted under section 

8(o) or (y) or paying rent under section 8(c)(3)(B)) the highest of the 

following amounts, rounded to the nearest dollar: 

(A) 30 per centum of the family’s monthly adjusted income; 

(B) 10 per centum of the family’s monthly income; or 

(C) if the family is receiving payments for welfare assistance 

from a public agency and a part of such payments, adjusted in 

accordance with the family’s actual housing costs, is specifiVerDate Sep 11 2014 05:50 Jan 29, 2016 Jkt 059006 PO 00000 Frm 00041 Fmt 6659 Sfmt 6601 E:\HR\OC\HR397.XXX HR397

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42 

cally designated by such agency to meet the family’s housing 

costs, the portion of such payments which is so designated. 

(2) RENTAL PAYMENTS FOR PUBLIC HOUSING FAMILIES.— (A) AUTHORITY FOR FAMILY TO SELECT.— (i) IN GENERAL.— A family residing in a public housing 

dwelling shall pay as monthly rent for the unit the amount 

determined under clause (i) or (ii) of subparagraph (B), 

subject to the requirement under paragraph (3) (relating to 

minimum rents). Each public housing agency shall provide 

for each family residing in a public housing dwelling unit 

owned, assisted, or operated by the agency to elect annually whether the rent paid by such family shall be determined under clause (i) or (ii) of subparagraph (B). A public 

housing agency may not at any time fail to provide both 

such rent options for any public housing dwelling unit 

owned, assisted, or operated by the agency. 

(ii) AUTHORITY TO RETAIN FLAT AND CEILING RENTS.— 

Notwithstanding clause (i) or any other provision of law, 

any public housing agency that is administering flat rents 

or ceiling rents pursuant to any authority referred to in 

section 519(d) of the Quality Housing and Work Responsibility Act of 1998 before the effective day of such Act may 

continue to charge rent in accordance with such rent provisions after such effective date, except that the agency shall 

provide for families residing in public housing dwelling 

units owned or operated by the agency to elect annually 

whether to pay rent under such provisions or in accordance with one of the rent options referred to in subparagraph (A). 

(B) ALLOWABLE RENT STRUCTURES.— 

(i) FLAT RENTS.— Each public housing agency shall establish, for each dwelling unit in public housing owned or 

operated by the agency, a flat rental amount for the dwelling unit, which— 

(I) shall not be lower than 80 percent of— 

(aa) the applicable fair market rental established under section 8(c) of this Act; or 

(bb) at the discretion of the Secretary, such 

other applicable fair market rental established by 

the Secretary that the Secretary determines more 

accurately reflects local market conditions and is 

based on an applicable market area that is geographically smaller than the applicable market 

area used for purposes of the applicable fair market rental under section 8(c); 

except that a public housing agency may apply to 

the Secretary for exception allowing for a flat 

rental amount for a property that is lower than 

the amount otherwise determined pursuant to 

item (aa) or (bb) and the Secretary may grant 

such exception if the Secretary determines that 

the fair market rental for the applicable market 

area pursuant to item (aa) or (bb) does not reflect 

the market value of the property and the proposed 

lower flat rental amount is based on a market 


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43 

analysis of the applicable market and complies 

with subclause (II) and 

(II) shall be designed in accordance with subparagraph (D) so that the rent structures do not create a 

disincentive for continued residency in public housing 

by families who are attempting to become economically self-sufficient through employment or who have 

attained a level of self-sufficiency through their own 

efforts. 

If a new flat rental amount for a dwelling unit will increase a family’s existing rental payment by more than 35 

percent, the new flat rental amount shall be phased in as 

necessary to ensure that the family’s existing rental payment does not increase by more than 35 percent annually. 

The preceding sentence shall not be construed to require 

establishment of rental amounts equal to 80 percent of the 

fair market rental in years when the fair market rental 

falls from the prior year. 

(ii) INCOME-BASED RENTS.— 

(I) IN GENERAL.— The monthly rental amount determined under this clause for a family shall be an 

amount, determined by the public housing agency, 

that does not exceed the greatest of the amounts 

(rounded to the nearest dollar) determined under subparagraphs (A), (B), and (C) of paragraph (1). This 

clause may not be construed to require a public housing agency to charge a monthly rent in the maximum 

amount permitted under this clause. 

(II) DISCRETION.— Subject to the limitation on 

monthly rental amount under subclause (I), a public 

housing agency may, in its discretion, implement a 

rent structure under this clause requiring that a portion of the rent be deposited to an escrow or savings 

account, imposing ceiling rents, or adopting income exclusions (such as those set forth in section 3(b)(5)(B)), 

or may establish another reasonable rent structure or 

amount. 

(C) SWITCHING RENT DETERMINATION METHODS BECAUSE OF

HARDSHIP CIRCUMSTANCES.— Notwithstanding subparagraph 

(A), in the case of a family that has elected to pay rent in the 

amount determined under subparagraph (B)(i), a public housing agency shall immediately provide for the family to pay rent 

in the amount determined under subparagraph (B)(ii) during 

the period for which such election was made upon a determination that the family is unable to pay the amount determined 

under subparagraph (B)(i) because of financial hardship, including— 

(i) situations in which the income of the family has decreased because of changed circumstances, loss of reduction of employment, death in the family, and reduction in 

or loss of income or other assistance; 

(ii) an increase, because of changed circumstances, in the 

family’s expenses for medical costs, child care, transportation, education, or similar items; and 


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44 

(iii) such other situations as may be determined by the 

agency. 

(D) ENCOURAGEMENT OF SELF-SUFFICIENCY.— The rental policy developed by each public housing agency shall encourage 

and reward employment and economic self-sufficiency. 

(E) INCOME REVIEWS.— Notwithstanding the second sentence 

of paragraph (1), in the case of families that are paying rent 

in the amount determined under subparagraph (B)(i), the 

agency shall review the income of such family not less than 

once every 3 years. 

(3) MINIMUM RENTAL AMOUNT.— (A) REQUIREMENT.— Notwithstanding paragraph (1) of this 

subsection, the method for rent determination elected pursuant 

to paragraph (2)(A) of this subsection by a family residing in 

public housing, section 8(o)(2) of this Act, or section 206(d) of 

the Housing and Urban-Rural Recovery Act of 1983 (including 

paragraph (5) of such section), the following entities shall require the following families to pay a minimum monthly rental 

amount (which amount shall include any amount allowed for 

utilities) of not more than $50 per month, as follows: 

(i) Each public housing agency shall require the payment 

of such minimum monthly rental amount, which amount 

shall be determined by the agency, by— 

(I) each family residing in a dwelling unit in public 

housing by the agency; 

(II) each family who is assisted under the certificate 

or moderate rehabilitation program under section 8; 

and 

(III) each family who is assisted under the voucher 

program under section 8, and the agency shall reduce 

the monthly assistance payment on behalf of such 

family as may be necessary to ensure payment of such 

minimum monthly rental amount. 

(ii) The Secretary shall require each family who is assisted under any other program for rental assistance under 

section 8 to pay such minimum monthly rental amount, 

which amount shall be determined by the Secretary. 

(B) EXCEPTION FOR HARDSHIP CIRCUMSTANCES.— (i) IN GENERAL.— Notwithstanding subparagraph (A), a 

public housing agency (or the Secretary, in the case of a 

family described in subparagraph (A)(ii)) shall immediately 

grant an exemption from application of the minimum 

monthly rental under such subparagraph to any family unable to pay such amount because of financial hardship, 

which shall include situations in which (I) the family has 

lost eligibility for or is awaiting an eligibility determination for a Federal, State, or local assistance program, including a family that includes a member who is an alien 

lawfully admitted for permanent residence under the Immigration and Nationality Act who would be entitled to 

public benefits but for title IV of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996; 

(II) the family would be evicted as a result of the imposition of the minimum rent requirement under subparagraph (A); (III) the income of the family has decreased beVerDate Sep 11 2014 05:50 Jan 29, 2016 Jkt 059006 PO 00000 Frm 00044 Fmt 6659 Sfmt 6601 E:\HR\OC\HR397.XXX HR397

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45 

cause of changed circumstance, including loss of employment; (IV) a death in the family has occurred; and (V) 

other situations as may be determined by the agency (or 

the Secretary, in the case of a family described in subparagraph (A)(ii)). 

(ii) WAITING PERIOD.— If a resident requests a hardship 

exemption under this subparagraph and the public housing agency (or the Secretary, in the case of a family described in subparagraph (A)(ii)) reasonably determines the 

hardship to be of a temporary nature, an exemption shall 

not be granted during the 90-day period beginning upon 

the making of a request for the exemption. A resident may 

not be evicted during such 90-day period for nonpayment 

of rent. In such a case, if the resident thereafter demonstrates that the financial hardship is of a long-term 

basis, the agency (or the Secretary) shall retroactively exempt the resident from the applicability of the minimum 

rent requirement for such 90-day period. 

(4) OCCUPANCY BY POLICE OFFICERS.— 

(A) IN GENERAL.— Subject to subparagraph (B) and notwithstanding any other provision of law, a public housing 

agency may, in accordance with the public housing agency 

plan for the agency, allow a police officer who is not otherwise eligible for residence in public housing to reside in a 

public housing dwelling unit. The number and location of 

units occupied by police officers under this paragraph and 

the terms and conditions of their tenancies shall be determined by the public housing agency. 

(B) INCREASED SECURITY.— A public housing agency may 

take the actions authorized in subparagraph (A) only for 

the purpose of increasing security for the residents of a 

public housing project. 

(C) DEFINITION.— In this paragraph, the term ‘‘police officer’’ means any person determined by a public housing 

agency to be, during the period of residence of that person 

in public housing, employed on a full-time basis as a duly 

licensed professional police officer by a Federal, State, or 

local government or by any agency thereof (including a 

public housing agency having an accredited police force). 

(5) OCCUPANCY BY OVER-INCOME FAMILIES IN CERTAIN PUBLIC

HOUSING.— 

(A) AUTHORITY.— Notwithstanding any other provision 

of law, a public housing agency that owns or operates less 

than 250 units may, on a month-to-month basis, lease a 

dwelling unit in a public housing project to an over-income 

family in accordance with this paragraph, but only if there 

are no eligible families applying for housing assistance 

from the public housing agency for that month and the 

agency provides not less than 30-day public notice of the 

availability of such assistance. 

(B) TERMS AND CONDITIONS.— The number and location 

of dwelling units of a public housing agency occupied 

under this paragraph by over-income families, and the 

terms and conditions of those tenancies, shall be determined by the public housing agency, except that— 


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46 

(i) notwithstanding paragraph (2), rent for a unit 

shall be in an amount that is not less than the costs 

to operate the unit; 

(ii) if an eligible family applies for residence after an 

over-income family moves in to the last available unit, 

the over-income family shall vacate the unit in accordance with notice of termination of tenancy provided by 

the agency, which shall be provided not less than 30 

days before such termination; and 

(iii) if a unit is vacant and there is no one on the 

waiting list, the public housing agency may allow an 

over-income family to gain immediate occupancy in 

the unit, while simultaneously providing reasonable 

public notice and outreach with regard to availability 

of the unit. 

(C) DEFINITION.— For purposes of this paragraph, the 

term ‘‘over-income family’’ means an individual or family 

that is not a low-income family at the time of initial occupancy. 

(6) REVIEWS OF FAMILY INCOME.— 

(A) FREQUENCY.— Reviews of family income for purposes 

of this section shall be made— 

(i) in the case of all families, upon the initial provision of housing assistance for the family; 

(ii) annually thereafter, except as provided in paragraph (1) with respect to fixed-income families; 

(iii) upon the request of the family, at any time the 

income or deductions (under subsection (b)(5)) of the 

family change by an amount that is estimated to result 

in a decrease of 10 percent (or such lower amount as 

the Secretary may, by notice, establish, or permit the 

public housing agency or owner to establish) or more in 

annual adjusted income; and 

(iv) at any time the income or deductions (under subsection (b)(5)) of the family change by an amount that 

is estimated to result in an increase of 10 percent or 

more in annual adjusted income, or such other amount 

as the Secretary may by notice establish, except that 

any increase in the earned income of a family shall not 

be considered for purposes of this clause (except that 

earned income may be considered if the increase corresponds to previous decreases under clause (iii)), except that a public housing agency or owner may elect 

not to conduct such review in the last three months of 

a certification period. 

(B) IN GENERAL.— Reviews of family income for purposes 

of this section shall be subject to the provisions of section 

904 of the Stewart B. McKinney Homeless Assistance 

Amendments Act of 1988 (42 U.S.C. 3544). 

(7) CALCULATION OF INCOME.— (A) USE OF CURRENT YEAR INCOME.— In determining 

family income for initial occupancy or provision of housing 

assistance pursuant to clause (i) of paragraph (6)(A) or pursuant to reviews pursuant to clause (iii) or (iv) of such 

paragraph, a public housing agency or owner shall use the 


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47 

income of the family as estimated by the agency or owner 

for the upcoming year. 

(B) USE OF PRIOR YEAR INCOME.— In determining family 

income for annual reviews pursuant to paragraph (6)(A)(ii), 

a public housing agency or owner shall, except as otherwise 

provided in this paragraph and paragraph (1), use the income of the family as determined by the agency or owner 

for the preceding year, taking into consideration any redetermination of income during such prior year pursuant to 

clause (iii) or (iv) of paragraph (6)(A). 

(C) OTHER INCOME.— In determining the income for any 

family based on the prior year’s income, with respect to 

prior year calculations of income not subject to subparagraph (B), a public housing agency or owner may make 

other adjustments as it considers appropriate to reflect current income. 

(D) SAFE HARBOR.— A public housing agency or owner 

may, to the extent such information is available to the public housing agency or owner, determine the family’s income 

prior to the application of any deductions based on timely 

income determinations made for purposes of other meanstested Federal public assistance programs (including the 

program for block grants to States for temporary assistance 

for needy families under part A of title IV of the Social Security Act, a program for Medicaid assistance under a 

State plan approved under title XIX of the Social Security 

Act, and the supplemental nutrition assistance program (as 

such term is defined in section 3 of the Food and Nutrition 

Act of 2008 (7 U.S.C. 2012))). The Secretary shall, in consultation with other appropriate Federal agencies, develop 

procedures to enable public housing agencies and owners to 

have access to such income determinations made by other 

means-tested Federal programs that the Secretary determines to have comparable reliability. Exchanges of such information shall be subject to the same limitations and tenant protections provided under section 904 of the Stewart 

B. McKinney Homeless Assistance Act Amendments of 1988 

(42 U.S.C. 3544) with respect to information obtained 

under the requirements of section 303(i) of the Social Security Act (42 U.S.C. 503(i)). 

(E) PHA AND OWNER COMPLIANCE.— A public housing 

agency or owner may not be considered to fail to comply 

with this paragraph or paragraph (6) due solely to any de 

minimis errors made by the agency or owner in calculating 

family incomes. 

(b) When used in this Act: 

(1) The term ‘‘low-income housing’’ means decent, safe, and sanitary dwellings assisted under this Act. The term ‘‘public housing’’ 

means low-income housing, and all necessary appurtenances thereto, assisted under this Act other than under section 8. The term 

‘‘public housing’’ includes dwelling units in a mixed finance project 

that are assisted by a public housing agency with capital or operating assistance. When used in reference to public housing, the 

term ‘‘low-income housing project’’ or ‘‘project’’ means (A) housing 


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48 

developed, acquired, or assisted by a public housing agency under 

this Act, and (B) the improvement of any such housing. 

(2)(A) The term low-income families means those families whose 

incomes do not exceed 80 per centum of the median income for the 

area, as determined by the Secretary with adjustments for smaller 

and larger families, except that the Secretary may establish income 

ceilings higher or lower than 80 per centum of the median for the 

area on the basis of the Secretary’s findings that such variations 

are necessary because of prevailing levels of construction costs or 

unusually high or low family incomes. 

(B) The term very low-income families means low-income families whose incomes do not exceed 50 per centum of the median family income for the area, as determined by the Secretary with adjustments for smaller and larger families, except that the Secretary 

may establish income ceilings higher or lower than 50 per centum 

of the median for the area on the basis of the Secretary’s findings 

that such variations are necessary because of unusually high or low 

family incomes. 

(C) The term extremely low-income families means very lowincome families whose incomes do not exceed the higher of— 

(i) the poverty guidelines updated periodically by the Department of Health and Human Services under the authority of section 673(2) of the Community Services Block 

Grant Act applicable to a family of the size involved (except that this clause shall not apply in the case of public 

housing agencies or projects located in Puerto Rico or any 

other territory or possession of the United States); or 

(ii) 30 percent of the median family income for the area, 

as determined by the Secretary, with adjustments for 

smaller and larger families (except that the Secretary may 

establish income ceilings higher or lower than 30 percent 

of the median for the area on the basis of the Secretary’s 

findings that such variations are necessary because of unusually high or low family incomes). 

(D) Such ceilings shall be established in consultation with the 

Secretary of Agriculture for any rural area, as defined in section 

520 of the Housing Act of 1949, taking into account the subsidy 

characteristics and types of programs to which such ceilings apply. 

In determining median incomes (of persons, families, or households) for an area or establishing any ceilings or limits based on 

income under this Act, the Secretary shall determine or establish 

area median incomes and income ceilings and limits for Westchester and Rockland Counties, in the State of New York, as if 

each such county were an area not contained within the metropolitan statistical area in which it is located. In determining such area 

median incomes or establishing such income ceilings or limits for 

the portion of such metropolitan statistical area that does not include Westchester or Rockland Counties, the Secretary shall determine or establish area median incomes and income ceilings and 

limits as if such portion included Westchester and Rockland Counties. In determining areas that are designated as difficult development areas for purposes of the low-income housing tax credit, the 

Secretary shall include Westchester and Rockland Counties, New 

York, in the New York City metropolitan area. 

(3) PERSONS AND FAMILIES.— 


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49 

(A) SINGLE PERSONS.— The term ‘‘families’’ includes families 

consisting of a single person in the case of (i) an elderly person, 

(ii) a disabled person, (iii) a displaced person, (iv) the remaining member of a tenant family, and (v) any other single persons. In no event may any single person under clause (v) of the 

first sentence be provided a housing unit assisted under this 

Act of 2 or more bedrooms. 

(B) FAMILIES.— The term ‘‘families’’ includes families with 

children and, in the cases of elderly families, near-elderly families, and disabled families, means families whose heads (or 

their spouses), or whose sole members, are elderly, near-elderly, or persons with disabilities, respectively. The term includes, 

in the cases of elderly families, near-elderly families, and disabled families, 2 or more elderly persons, near-elderly persons, 

or persons with disabilities living together, and 1 or more such 

persons living with 1 or more persons determined under the 

public housing agency plan to be essential to their care or wellbeing. 

(C) ABSENCE OF CHILDREN.— The temporary absence of a 

child from the home due to placement in foster care shall not 

be considered in determining family composition and family 

size. 

(D) ELDERLY PERSON.— The term ‘‘elderly person’’ means a 

person who is at least 62 years of age. 

(E) PERSON WITH DISABILITIES.— The term ‘‘person with disabilities’’ means a person who— 

(i) has a disability as defined in section 223 of the Social 

Security Act, 

(ii) is determined, pursuant to regulations issued by the 

Secretary, to have a physical, mental, or emotional impairment which (I) is expected to be of long-continued and indefinite duration, (II) substantially impedes his or her ability to live independently, and (III) is of such a nature that 

such ability could be improved by more suitable housing 

conditions, or 

(iii) has a developmental disability as defined in section 

102 of the Developmental Disabilities Assistance and Bill 

of Rights Act of 2000. 

Such term shall not exclude persons who have the disease of 

acquired immunodeficiency syndrome or any conditions arising 

from the etiologic agent for acquired immunodeficiency syndrome. Notwithstanding any other provision of law, no individual shall be considered a person with disabilities, for purposes of eligibility for low-income housing under this title, solely on the basis of any drug or alcohol dependence. The Secretary shall consult with other appropriate Federal agencies to 

implement the preceding sentence. 

(F) DISPLACED PERSON.— The term ‘‘displaced person’’ means 

a person displaced by governmental action, or a person whose 

dwelling has been extensively damaged or destroyed as a result of a disaster declared or otherwise formally recognized 

pursuant to Federal disaster relief laws. 

(G) NEAR-ELDERLY PERSON.— The term ‘‘near-elderly person’’ 

means a person who is at least 50 years of age but below the 

age of 62. 


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50 

ø(4) The term ‘‘income’’ means income from all sources of each 

member of the household, as determined in accordance with criteria prescribed by the Secretary, in consultation with the Secretary of Agriculture, except that any amounts not actually received by the family and any amounts which would be eligible for 

exclusion under section 1613(a)(7) of the Social Security Act (42 

U.S.C. 1382b(a)(7)) or any deferred Department of Veterans Affairs 

disability benefits that are received in a lump sum amount or in 

prospective monthly amounts may not be considered as income 

under this paragraph. 

ø(5) ADJUSTED INCOME.—The term ‘‘adjusted income’’ means, 

with respect to a family, the amount (as determined by the public 

housing agency) of the income of the members of the family residing in a dwelling unit or the persons on a lease, after any income 

exclusions as follows: 

ø(A) MANDATORY EXCLUSIONS.— In determining adjusted income, a public housing agency shall exclude from the annual 

income of a family the following amounts: 

ø(i) ELDERLY AND DISABLED FAMILIES.— $400 for any elderly or disabled family. 

ø(ii) MEDICAL EXPENSES.— The amount by which 3 percent of the annual family income is exceeded by the sum 

of— 

ø(I) unreimbursed medical expenses of any elderly 

family or disabled family; 

ø(II) unreimbursed medical expenses of any family 

that is not covered under subclause (I), except that 

this subclause shall apply only to the extent approved 

in appropriation Acts; and 

ø(III) unreimbursed reasonable attendant care and 

auxiliary apparatus expenses for each handicapped 

member of the family, to the extent necessary to enable any member of such family (including such handicapped member) to be employed. 

ø(iii) CHILD CARE EXPENSES.— Any reasonable child care 

expenses necessary to enable a member of the family to be 

employed or to further his or her education. 

ø(iv) MINORS, STUDENTS, AND PERSONS WITH DISABIL- ITIES.— $480 for each member of the family residing in the 

household (other than the head of the household or his or 

her spouse) who is less than 18 years of age or is attending 

school or vocational training on a full-time basis, or who 

is 18 years of age or older and is a person with disabilities. 

ø(v) CHILD SUPPORT PAYMENTS.— Any payment made by 

a member of the family for the support and maintenance 

of any child who does not reside in the household, except 

that the amount excluded under this clause may not exceed $480 for each child for whom such payment is made; 

except that this clause shall apply only to the extent approved in appropriations Acts. 

ø(vi) SPOUSAL SUPPORT EXPENSES.— Any payment made 

by a member of the family for the support and maintenance of any spouse or former spouse who does not reside 

in the household, except that the amount excluded under 

this clause shall not exceed the lesser of (I) the amount 


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51 

that such family member has a legal obligation to pay, or 

(II) $550 for each individual for whom such payment is 

made; except that this clause shall apply only to the extent 

approved in appropriations Acts. 

ø(vii) EARNED INCOME OF MINORS.— The amount of any 

earned income of a member of the family who is not— 

ø(I) 18 years of age or older; and 

ø(II) the head of the household (or the spouse of the 

head of the household). 

ø(B) PERMISSIVE EXCLUSIONS FOR PUBLIC HOUSING.— In determining adjusted income, a public housing agency may, in 

the discretion of the agency, establish exclusions from the annual income of a family residing in a public housing dwelling 

unit. Such exclusions may include the following amounts: 

ø(i) EXCESSIVE TRAVEL EXPENSES.— Excessive travel expenses in an amount not to exceed $25 per family per 

week, for employment- or education-related travel. 

ø(ii) EARNED INCOME.— An amount of any earned income of the family, established at the discretion of the 

public housing agency, which may be based on— 

ø(I) all earned income of the family, 

ø(II) the amount earned by particular members of 

the family; 

ø(III) the amount earned by families having certain 

characteristics; or 

ø(IV) the amount earned by families or members 

during certain periods or from certain sources. 

ø(iii) OTHERS.— Such other amounts for other purposes, 

as the public housing agency may establish.¿ 

(4) INCOME.— The term ‘‘income’’ means, with respect to a 

family, income received from all sources by each member of the 

household who is 18 years of age or older or is the head of 

household or spouse of the head of the household, plus unearned income by or on behalf of each dependent who is less 

than 18 years of age, as determined in accordance with criteria 

prescribed by the Secretary, in consultation with the Secretary 

of Agriculture, subject to the following requirements: 

(A) INCLUDED AMOUNTS.— Such term includes recurring 

gifts and receipts, actual income from assets, and profit or 

loss from a business. 

(B) EXCLUDED AMOUNTS.— Such term does not include— 

(i) any imputed return on assets, except to the extent 

that net family assets exceed $50,000, except that such 

amount (as it may have been previously adjusted) shall 

be adjusted for inflation annually by the Secretary in 

accordance with an inflationary index selected by the 

Secretary; 

(ii) any amounts that would be eligible for exclusion 

under section 1613(a)(7) of the Social Security Act (42 

U.S.C. 1382b(a)(7)); 

(iii) deferred disability benefits from the Department 

of Veterans Affairs that are received in a lump sum 

amount or in prospective monthly amounts; 

(iv) any expenses related to aid and attendance 

under section 1521 of title 38, United States Code, to 


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52 

veterans who are in need of regular aid and attendance; and 

(v) exclusions from income as established by the Secretary by regulation or notice, or any amount required 

by Federal law to be excluded from consideration as income. 

(C) EARNED INCOME OF STUDENTS.— Such term does not 

include— 

(i) earned income, up to an amount as the Secretary 

may by regulation establish, of any dependent earned 

during any period that such dependent is attending 

school or vocational training on a full-time basis; or 

(ii) any grant-in-aid or scholarship amounts related 

to such attendance used— 

(I) for the cost of tuition or books; or 

(II) in such amounts as the Secretary may allow, 

for the cost of room and board. 

(D) EDUCATIONAL SAVINGS ACCOUNTS.— Income shall be 

determined without regard to any amounts in or from, or 

any benefits from, any Coverdell education savings account 

under section 530 of the Internal Revenue Code of 1986 or 

any qualified tuition program under section 529 of such 

Code. 

(E) RECORDKEEPING.— The Secretary may not require a 

public housing agency or owner to maintain records of any 

amounts excluded from income pursuant to this subparagraph. 

(5) ADJUSTED INCOME.— The term ‘‘adjusted income’’ means, 

with respect to a family, the amount (as determined by the public housing agency or owner) of the income of the members of 

the family residing in a dwelling unit or the persons on a lease, 

after any deductions from income as follows: 

(A) ELDERLY AND DISABLED FAMILIES.— $525 in the case 

of any family that is an elderly family or a disabled family. 

(B) DEPENDENTS.— In the case of any family, $525 for 

each member who— 

(i) is less than 18 years of age or attending school or 

vocational training on a full-time basis; or 

(ii) is a person who is 18 years of age or older, resides in the household, and is certified as disabled and 

unable to work by the public housing agency of jurisdiction. 

(C) CHILD CARE.— The amount, if any, that exceeds 5 

percent of annual family income that is used to pay for unreimbursed child care expenses, which shall include child 

care for preschool-age children, for before- and after-care 

for children in school, and for other child care necessary to 

enable a member of the family to be employed or further his 

or her education. 

(D) HEALTH AND MEDICAL EXPENSES.— The amount, if 

any, by which 10 percent of annual family income is exceeded by the sum of— 

(i) in the case of any elderly or disabled family, any 

unreimbursed health and medical care expenses; and 


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53 

(ii) any unreimbursed reasonable attendant care and 

auxiliary apparatus expenses for each handicapped 

member of the family, if determined necessary by the 

public housing agency or owner to enable any member 

of such family to be employed. 

The Secretary shall, by regulation, provide hardship exemptions to the requirements of this subparagraph and 

subparagraph (C) for impacted families who demonstrate 

an inability to pay calculated rents because of financial 

hardship. Such regulations shall include a requirement to 

notify tenants regarding any changes to the determination 

of adjusted income pursuant to such subparagraphs based 

on the determination of the family’s claim of financial 

hardship exemptions required by the preceding sentence. 

Such regulations shall be promulgated in consultation with 

tenant organizations, industry participants, and the Secretary of Health and Human Services, with an adequate 

comment period provided for interested parties. 

(E) PERMISSIVE DEDUCTIONS.— Such additional deductions as a public housing agency may, at its discretion, establish, except that the Secretary shall establish procedures 

to ensure that such deductions do not materially increase 

Federal expenditures. 

The Secretary shall annually calculate the amounts of the deductions under subparagraphs (A) and (B), as such amounts 

may have been previously calculated, by applying an inflationary factor as the Secretary shall, by regulation, establish, 

except that the actual deduction determined for each year shall 

be established by rounding such amount to the next lowest multiple of $25. 

(6) PUBLIC HOUSING AGENCY.— 

(A) IN GENERAL.— Except as provided in subparagraph (B), 

the term ‘‘public housing agency’’ means any State, county, 

municipality, or other governmental entity or public body (or 

agency or instrumentality thereof) which is authorized to engage in or assist in the development or operation of public 

housing, or a consortium of such entities or bodies as approved 

by the Secretary. 

(B) SECTION 8 PROGRAM.— For purposes of the program for 

tenant-based assistance under section 8, such term includes— 

(i) a consortia of public housing agencies that the Secretary determines has the capacity and capability to administer a program for assistance under such section in an 

efficient manner; 

(ii) any other public or private nonprofit entity that, 

upon the effective date under section 503(a) of the Quality 

Housing and Work Responsibility Act of 1998, was administering any program for tenant-based assistance under 

section 8 of this Act (as in effect before the effective date 

of such Act), pursuant to a contract with the Secretary or 

a public housing agency; and 

(iii) with respect to any area in which no public housing 

agency has been organized or where the Secretary determines that a public housing agency is unwilling or unable 


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54 

to implement a program for tenant-based assistance section 8, or is not performing effectively— 

(I) the Secretary or another public or private nonprofit entity that by contract agrees to receive assistance amounts under section 8 and enter into housing 

assistance payments contracts with owners and perform the other functions of public housing agency 

under section 8; or 

(II) notwithstanding any provision of State or local 

law, a public housing agency for another area that 

contracts with the Secretary to administer a program 

for housing assistance under section 8, without regard 

to any otherwise applicable limitations on its area of 

operation. 

(7) The term ‘‘State’’ includes the several States, the District of 

Columbia, the Commonwealth of Puerto Rico, the territories and 

possessions of the United States, and the Trust Territory of the Pacific Islands. 

(8) The term ‘‘Secretary’’ means the Secretary of Housing and 

Urban Development. 

(9) DRUG-RELATED CRIMINAL ACTIVITY.—The term ‘‘drug-related 

criminal activity’’ means the illegal manufacture, sale, distribution, 

use, or possession with intent to manufacture, sell, distribute, or 

use, of a controlled substance (as such term is defined in section 

102 of the Controlled Substances Act). 

(10) MIXED-FINANCE PROJECT.—The term ‘‘mixed-finance project’’ 

means a public housing project that meets the requirements of section 35. 

(11) PUBLIC HOUSING AGENCY PLAN.—The term ‘‘public housing 

agency plan’’ means the plan of a public housing agency prepared 

in accordance with section 5A. 

(12) CAPITAL FUND.—The term ‘‘Capital Fund’’ means the fund 

established under section 9(d). 

(13) OPERATING FUND.—The term ‘‘Operating Fund’’ mean the 

fund established under section 9(e). 

(c) When used in reference to public housing: 

(1) The term ‘‘development’’ means any or all undertakings necessary for planning, land acquisition, demolition, construction, or 

equipment, in connection with a low-income housing project. The 

term ‘‘development cost’’ comprises the costs incurred by a public 

housing agency in such undertakings and their necessary financing 

(including the payment of carrying charges), and in otherwise carrying out the development of such project, but does not include the 

costs associated with the demolition of or remediation of environmental hazards associated with public housing units that will not 

be replaced on the project site, or other extraordinary site costs as 

determined by the Secretary. Construction activity in connection 

with a low-income housing project may be confined to the reconstruction, remodeling, or repair of existing buildings. 

(2) The term ‘‘operation’’ means any or all undertakings appropriate for management, operation, services, maintenance, security 

(including the cost of security personnel), or financing in connection 

with a low-income housing project. The term also means the financing of tenant programs and services for families residing in low-income housing projects, particularly where there is maximum feaVerDate Sep 11 2014 05:50 Jan 29, 2016 Jkt 059006 PO 00000 Frm 00054 Fmt 6659 Sfmt 6601 E:\HR\OC\HR397.XXX HR397

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sible participation of the tenants in the development and operation 

of such tenant programs and services. As used in this paragraph, 

the term ‘‘tenant programs and services’’ includes the development 

and maintenance of tenant organizations which participate in the 

management of low-income housing projects; the training of tenants to manage and operate such projects and the utilization of 

their services in project management and operation; counseling on 

household management, housekeeping, budgeting, money management, child care, and similar matters; advice as to resources for job 

training and placement, education, welfare, health, and other community services; services which are directly related to meeting tenant needs and providing a wholesome living environment; and referral to appropriate agencies in the community when necessary for 

the provision of such services. To the maximum extent available 

and appropriate, existing public and private agencies in the community shall be used for the provision of such services. 

(3) The term ‘‘acquisition cost’’ means the amount prudently required to be expended by a public housing agency in acquiring 

property for a low-income housing project. 

ø(d) DISALLOWANCE OF EARNED INCOME FROM RENT DETERMINA- TIONS.— 

ø(1) IN GENERAL.— Notwithstanding any other provision of 

law, the rent payable under subsection (a) by a family described in paragraph (3) of this subsection may not be increased as a result of the increased income due to such employment during the 12-month period beginning on the date on 

which the employment is commenced. 

ø(2) PHASE-IN OF RENT INCREASES.— Upon the expiration of 

the 12-month period referred to in paragraph (1), the rent payable by a family described in paragraph (3) may be increased 

due to the continued employment of the family member described in paragraph (3)(B), except that during the 12-month 

period beginning upon such expiration the amount of the increase may not be greater than 50 percent of the amount of the 

total rent increase that would be applicable but for this paragraph. 

ø(3) ELIGIBLE FAMILIES.— A family described in this paragraph is a family— 

ø(A) that— 

ø(i) occupies a dwelling unit in a public housing 

project; or 

ø(ii) receives assistance under section 8; and 

ø(B)(i) whose income increases as a result of employment 

of a member of the family who was previously unemployed 

for 1 or more years; 

ø(ii) whose earned income increases during the participation of a family member in any family self-sufficiency or 

other job training program; or 

ø(iii) who is or was, within 6 months, assisted under any 

State program for temporary assistance for needy families 

funded under part A of title IV of the Social Security Act 

and whose earned income increases. 

ø(4) APPLICABILITY.— This subsection and subsection (e) 

shall apply beginning upon October 1, 1999, except that this 

subsection and subsection (e) shall apply with respect to any 


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56 

family described in paragraph 3(A)(ii) only to the extent provided in advance in appropriations Acts. 

ø(e) INDIVIDUAL SAVINGS ACCOUNTS.— ø(1) IN GENERAL.— In lieu of a disallowance of earned income under subsection (d), upon the request of a family that 

qualifies under subsection (d), a public housing agency may establish an individual savings account in accordance with this 

subsection for that family. 

ø(2) DEPOSITS TO ACCOUNT.— The public housing agency 

shall deposit in any savings account established under this 

subsection an amount equal to the total amount that otherwise 

would be applied to the family’s rent payment under subsection (a) as a result of employment. 

ø(3) WITHDRAWAL FROM ACCOUNT.— Amounts deposited in a 

savings account established under this subsection may only be 

withdrawn by the family for the purpose of— 

ø(A) purchasing a home; 

ø(B) paying education costs of family members; 

ø(C) moving out of public or assisted housing; or 

ø(D) paying any other expense authorized by the public 

housing agency for the purpose of promoting the economic 

self-sufficiency of residents of public and assisted housing.¿ 

ø(f)¿ (d) AVAILABILITY OF INCOME MATCHING INFORMATION.— (1) DISCLOSURE TO PHA.— A public housing agency, or the 

owner responsible for determining the participant’s eligibility 

or level of benefits, shall require any family described in paragraph (2) who receives information regarding income, earnings, 

wages, or unemployment compensation from the Department of 

Housing and Urban Development pursuant to income 

verification procedures of the Department to disclose such information, upon receipt of the information, to the public housing agency that owns or operates the public housing dwelling 

unit in which such family resides or that provides the housing 

assistance under this Act on behalf of such family, as applicable, or to the owner responsible for determining the participant’s eligibility or level of benefits. 

(2) FAMILIES COVERED.— A family described in this paragraph is a family that resides in a dwelling unit— 

(A) that is a public housing dwelling unit; 

(B) for which tenant-based assistance is provided under 

section 8, or 

(C) for which project-based assistance is provided under section 8, section 202, or section 811. 

* * * * * * * 

LOWER INCOME HOUSING ASSISTANCE

SEC. 8. (a) For the purpose of aiding lower-income families in obtaining a decent place to live and of promoting economically mixed 

housing, assistance payments may be made with respect to existing 

housing in accordance with the provisions of this section. 

(b) OTHER EXISTING HOUSING PROGRAMS.—(1) IN GENERAL.— The 

Secretary is authorized to enter into annual contributions contracts 

with public housing agencies pursuant to which such agencies may 


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57 

enter into contracts to make assistance payments to owners of existing dwelling units in accordance with this section. In areas 

where no public housing agency has been organized or where the 

Secretary determines that a public housing agency is unable to implement the provisions of this section, the Secretary is authorized 

to enter into such contracts and to perform the other functions assigned to a public housing agency by this section. 

(2) The Secretary is authorized to enter into annual contributions 

contracts with public housing agencies for the purpose of replacing 

public housing transferred in accordance with title III of this Act. 

Each contract entered into under this subsection shall be for a 

term of not more than 60 months. 

(c)(1) (A) An assistance contract entered into pursuant to this 

section shall establish the maximum monthly rent (including utilities and all maintenance and management charges) which the 

owner is entitled to receive for each dwelling unit with respect to 

which such assistance payments are to be made. The maximum 

monthly rent shall not exceed by more than 10 per centum the fair 

market rental established by the Secretary periodically but not less 

than annually for existing or newly constructed rental dwelling 

units of various sizes and types in the market area suitable for occupancy by persons assisted under this section, except that the 

maximum monthly rent may exceed the fair market rental (A) by 

more than 10 but not more than 20 per centum where the Secretary determines that special circumstances warrant such higher 

maximum rent or that such higher rent is necessary to the implementation of a housing strategy as defined in section 105 of the 

Cranston-Gonzalez National Affordable Housing Act, or (B) by such 

higher amount as may be requested by a tenant and approved by 

the public housing agency in accordance with paragraph (3)(B). In 

the case of newly constructed and substantially rehabilitated units, 

the exception in the preceding sentence shall not apply to more 

than 20 per centum of the total amount of authority to enter into 

annual contributions contracts for such units which is allocated to 

an area and obligated with respect to any fiscal year beginning on 

or after October 1, 1980. øProposed fair market rentals for an area 

shall be published in the Federal Register with reasonable time for 

public comment, and shall become effective upon the date of publication in final form in the Federal Register.¿ Each fair market 

rental in effect under this subsection shall be adjusted to be effective on October 1 of each year to reflect changes, based on the most 

recent available data trended so the rentals will be current for the 

year to which they apply, of rents for existing or newly constructed 

rental dwelling units, as the case may be, of various sizes and 

types in the market area suitable for occupancy by persons assisted 

under this section. Notwithstanding any other provision of this section, after the date of enactment of the Housing and Community 

Development Act of 1977, the Secretary shall prohibit high-rise elevator projects for families with children unless there is no practical 

alternative. øThe Secretary shall establish separate fair market 

rentals under this paragraph for Westchester County in the State 

of New York.¿øThe Secretary shall also establish separate fair 

market rentals under this paragraph for Monroe County in the 

Commonwealth of Pennsylvania. In establishing fair market rentals for the remaining portion of the market area in which Monroe 


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58 

County is located, the Secretary shall establish the fair market 

rentals as if such portion included Monroe County.¿ If units assisted under this section are exempt from local rent control while 

they are so assisted or otherwise, the maximum monthly rent for 

such units shall be reasonable in comparison with other units in 

the market area that are exempt from local rent control. 

(B) Fair market rentals for an area shall be published not less 

than annually by the Secretary on the site of the Department on the 

World Wide Web and in any other manner specified by the Secretary. Notice that such fair market rentals are being published 

shall be published in the Federal Register, and such fair market 

rentals shall become effective no earlier than 30 days after the date 

of such publication. The Secretary shall establish a procedure for 

public housing agencies and other interested parties to comment on 

such fair market rentals and to request, within a time specified by 

the Secretary, reevaluation of the fair market rentals in a jurisdiction before such rentals become effective. The Secretary shall cause 

to be published for comment in the Federal Register notices of proposed material changes in the methodology for estimating fair market rentals and notices specifying the final decisions regarding such 

proposed substantial methodological changes and responses to public comments. 

(2)(A) The assistance contract shall provide for adjustment annually or more frequently in the maximum monthly rents for units 

covered by the contract to reflect changes in the fair market rentals 

established in the housing area for similar types and sizes of dwelling units or, if the Secretary determines, on the basis of a reasonable formula. However, where the maximum monthly rent, for a 

unit in a new construction, substantial rehabilitation, or moderate 

rehabilitation project, to be adjusted using an annual adjustment 

factor exceeds the fair market rental for an existing dwelling unit 

in the market area, the Secretary shall adjust the rent only to the 

extent that the owner demonstrates that the adjusted rent would 

not exceed the rent for an unassisted unit of similar quality, type, 

and age in the same market area, as determined by the Secretary. 

The immediately foregoing sentence shall be effective only during 

fiscal year 1995, fiscal year 1996 prior to April 26, 1996, and fiscal 

years 1997 and 1998, and during fiscal year 1999 and thereafter. 

Except for assistance under the certificate program, for any unit occupied by the same family at the time of the last annual rental adjustment, where the assistance contract provides for the adjustment of the maximum monthly rent by applying an annual adjustment factor and where the rent for a unit is otherwise eligible for 

an adjustment based on the full amount of the factor, 0.01 shall be 

subtracted from the amount of the factor, except that the factor 

shall not be reduced to less than 1.0. In the case of assistance 

under the certificate program, 0.01 shall be subtracted from the 

amount of the annual adjustment factor (except that the factor 

shall not be reduced to less than 1.0), and the adjusted rent shall 

not exceed the rent for a comparable unassisted unit of similar 

quality, type, and age in the market area. The immediately foregoing two sentences shall be effective only during fiscal year 1995, 

fiscal year 1996 prior to April 26, 1996, and fiscal years 1997 and 

1998, and during fiscal year 1999 and thereafter. In establishing 

annual adjustment factors for units in new construction and subVerDate Sep 11 2014 05:50 Jan 29, 2016 Jkt 059006 PO 00000 Frm 00058 Fmt 6659 Sfmt 6601 E:\HR\OC\HR397.XXX HR397

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stantial rehabilitation projects, the Secretary shall take into account the fact that debt service is a fixed expense. The immediately 

foregoing sentence shall be effective only during fiscal year 1998. 

(B) The contract shall further provide for the Secretary to make 

additional adjustments in the maximum monthly rent for units 

under contract to the extent he determines such adjustments are 

necessary to reflect increases in the actual and necessary expenses 

of owning and maintaining the units which have resulted from substantial general increases in real property taxes, utility rates, or 

similar costs which are not adequately compensated for by the adjustment in the maximum monthly rent authorized by subparagraph (A). The Secretary shall make additional adjustments in the 

maximum monthly rent for units under contract (subject to the 

availability of appropriations for contract amendments) to the extent the Secretary determines such adjustments are necessary to 

reflect increases in the actual and necessary expenses of owning 

and maintaining the units that have resulted from the expiration 

of a real property tax exemption. Where the Secretary determines 

that a project assisted under this section is located in a community 

where drug-related criminal activity is generally prevalent and the 

project’s operating, maintenance, and capital repair expenses have 

been substantially increased primarily as a result of the prevalence 

of such drug-related activity, the Secretary may (at the discretion 

of the Secretary and subject to the availability of appropriations for 

contract amendments for this purpose), on a project by project 

basis, provide adjustments to the maximum monthly rents, to a 

level no greater than 120 percent of the project rents, to cover the 

costs of maintenance, security, capital repairs, and reserves required for the owner to carry out a strategy acceptable to the Secretary for addressing the problem of drug-related criminal activity. 

Any rent comparability standard required under this paragraph 

may be waived by the Secretary to so implement the preceding sentence. The Secretary may (at the discretion of the Secretary and 

subject to the availability of appropriations for contract amendments), on a project by project basis for projects receiving projectbased assistance, provide adjustments to the maximum monthly 

rents to cover the costs of evaluating and reducing lead-based paint 

hazards, as defined in section 1004 of the Residential Lead-Based 

Paint Hazard Reduction Act of 1992. 

(C) Adjustments in the maximum rents under subparagraphs (A) 

and (B) shall not result in material differences between the rents 

charged for assisted units and unassisted units of similar quality, 

type, and age in the same market area, as determined by the Secretary. In implementing the limitation established under the preceding sentence, the Secretary shall establish regulations for conducting comparability studies for projects where the Secretary has 

reason to believe that the application of the formula adjustments 

under subparagraph (A) would result in such material differences. 

The Secretary shall conduct such studies upon the request of any 

owner of any project, or as the Secretary determines to be appropriate by establishing, to the extent practicable, a modified annual 

adjustment factor for such market area, as the Secretary shall designate, that is geographically smaller than the applicable housing 

area used for the establishment of the annual adjustment factor 

under subparagraph (A). The Secretary shall establish such modiVerDate Sep 11 2014 05:50 Jan 29, 2016 Jkt 059006 PO 00000 Frm 00059 Fmt 6659 Sfmt 6601 E:\HR\OC\HR397.XXX HR397

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fied annual adjustment factor on the basis of the results of a study 

conducted by the Secretary of the rents charged, and any change 

in such rents over the previous year, for assisted units and unassisted units of similar quality, type, and age in the smaller market 

area. Where the Secretary determines that such modified annual 

adjustment factor cannot be established or that such factor when 

applied to a particular project would result in material differences 

between the rents charged for assisted units and unassisted units 

of similar quality, type, and age in the same market area, the Secretary may apply an alternative methodology for conducting comparability studies in order to establish rents that are not materially 

different from rents charged for comparable unassisted units. If the 

Secretary or appropriate State agency does not complete and submit to the project owner a comparability study not later than 60 

days before the anniversary date of the assistance contract under 

this section, the automatic annual adjustment factor shall be applied. The Secretary may not reduce the contract rents in effect on 

or after April 15, 1987, for newly constructed, substantially rehabilitated, or moderately rehabilitated projects assisted under this 

section (including projects assisted under this section as in effect 

prior to November 30, 1983), unless the project has been refinanced 

in a manner that reduces the periodic payments of the owner. Any 

maximum monthly rent that has been reduced by the Secretary 

after April 14, 1987, and prior to the enactment of this sentence 

shall be restored to the maximum monthly rent in effect on April 

15, 1987. For any project which has had its maximum monthly 

rents reduced after April 14, 1987, the Secretary shall make assistance payments (from amounts reserved for the original contract) to 

the owner of such project in an amount equal to the difference between the maximum monthly rents in effect on April 15, 1987, and 

the reduced maximum monthly rents, multiplied by the number of 

months that the reduced maximum monthly rents were in effect. 

(3) The amount of the monthly assistance payment with respect 

to any dwelling unit shall be the difference between the maximum 

monthly rent which the contract provides that the owner is to receive for the unit and the rent the family is required to pay under 

section 3(a) of this Act. øReviews of family income shall be made 

no less frequently than annually.¿ 

(4) The assistance contract shall provide that assistance payments may be made only with respect to a dwelling unit under 

lease for occupancy by a family determined to be a lower income 

family at the time it initially occupied such dwelling unit, except 

that such payments may be made with respect to unoccupied units 

for a period not exceeding sixty days (A) in the event that a family 

vacates a dwelling unit before the expiration date of the lease for 

occupancy or (B) where a good faith effort is being made to fill an 

unoccupied unit, and, subject to the provisions of the following sentence, such payments may be made, in the case of a newly constructed or substantially rehabilitated project, after such sixty-day 

period in an amount equal to the debt service attributable to such 

an unoccupied dwelling unit for a period not to exceed one year, if 

a good faith effort is being made to fill the unit and the unit provides decent, safe, and sanitary housing. No such payment may be 

made after such sixty-day period if the Secretary determines that 

the dwelling unit is in a project which provides the owner with revVerDate Sep 11 2014 05:50 Jan 29, 2016 Jkt 059006 PO 00000 Frm 00060 Fmt 6659 Sfmt 6601 E:\HR\OC\HR397.XXX HR397

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enues exceeding the costs incurred by such owner with respect to 

such project. 

(5) The Secretary shall take such steps as may be necessary, including the making of contracts for assistance payments in 

amounts in excess of the amounts required at the time of the initial 

renting of dwelling units, the reservation of annual contributions 

authority for the purpose of amending housing assistance contracts, 

or the allocation of a portion of new authorizations for the purpose 

of amending housing assistance contracts, to assure that assistance 

payments are increased on a timely basis to cover increases in 

maximum monthly rents or decreases in family incomes. 

(8)(A) Not less than one year before termination of any contract 

under which assistance payments are received under this section, 

other than a contract for tenant-based assistance under this section, an owner shall provide written notice to the Secretary and the 

tenants involved of the proposed termination. The notice shall also 

include a statement that, if the Congress makes funds available, 

the owner and the Secretary may agree to a renewal of the contract, thus avoiding termination, and that in the event of termination the Department of Housing and Urban Development will 

provide tenant-based rental assistance to all eligible residents, enabling them to choose the place they wish to rent, which is likely 

to include the dwelling unit in which they currently reside. Any 

contract covered by this paragraph that is renewed may be renewed for a period of up to 1 year or any number or years, with 

payments subject to the availability of appropriations for any year. 

(B) In the event the owner does not provide the notice required, 

the owner may not evict the tenants or increase the tenants’ rent 

payment until such time as the owner has provided the notice and 

1 year has elapsed. The Secretary may allow the owner to renew 

the terminating contract for a period of time sufficient to give tenants 1 year of advance notice under such terms and conditions as 

the Secretary may require. 

(C) Any notice under this paragraph shall also comply with any 

additional requirements established by the Secretary. 

(D) For purposes of this paragraph, the term ‘‘termination’’ 

means the expiration of the assistance contract or an owner’s refusal to renew the assistance contract, and such term shall include 

termination of the contract for business reasons. 

(d)(1) Contracts to make assistance payments entered into by a 

public housing agency with an owner of existing housing units 

shall provide (with respect to any unit) that— 

(A) the selection of tenants shall be the function of the 

owner, subject to the annual contributions contract between the Secretary and the agency, except that with respect to the certificate and moderate rehabilitation programs only, for the purpose of selecting families to be assisted, the public housing agency may establish local preferences, consistent with the public housing agency plan 

submitted under section 5A (42 U.S.C. 1437c–1) by the 

public housing agency; 

(B)(i) the lease between the tenant and the owner shall be 

for at least one year or the term of such contract, whichever 

is shorter, and shall contain other terms and conditions specified by the Secretary; 


SSpencer on DSK4SPTVN1PROD with REPORTS
62 

(ii) during the term of the lease, the owner shall not terminate the tenancy except for serious or repeated violation of the 

terms and conditions of the lease, for violation of applicable 

Federal, State, or local law, or for other good cause; 

(iii) during the term of the lease, any criminal activity that 

threatens the health, safety, or right to peaceful enjoyment of 

the premises by other tenants, any criminal activity that 

threatens the health, safety, or right to peaceful enjoyment of 

their residences by persons residing in the immediate vicinity 

of the premises, or any drug-related criminal activity on or 

near such premises, engaged in by a tenant of any unit, any 

member of the tenant’s household, or any guest or other person 

under the tenant’s control, shall be cause for termination of 

tenancy; 

(iv) any termination of tenancy shall be preceded by the owner’s provision of written notice to the tenant specifying the 

grounds for such action; and 

(v) it shall be cause for termination of the tenancy of a 

tenant if such tenant— 

(I) is fleeing to avoid prosecution, or custody or confinement after conviction, under the laws of the place 

from which the individual flees, for a crime, or attempt to commit a crime, which is a felony under the 

laws of the place from which the individual flees, or 

which, in the case of the State of New Jersey, is a high 

misdemeanor under the laws of such State; or 

(II) is violating a condition of probation or parole imposed under Federal or State law; 

(C) maintenance and replacement (including redecoration) 

shall be in accordance with the standard practice for the building concerned as established by the owner and agreed to by the 

agency; and 

(D) the agency and the owner shall carry out such other appropriate terms and conditions as may be mutually agreed to 

by them. 

(2)(A) Each contract for an existing structure entered into under 

this section shall be for a term of not less than one month nor more 

than one hundred and eighty months. The Secretary shall permit 

public housing agencies to enter into contracts for assistance payments of less than 12 months duration in order to avoid disruption 

in assistance to eligible families if the annual contributions contract is within 1 year of its expiration date. 

(B)(i) In determining the amount of assistance provided under an 

assistance contract for project-based assistance under this paragraph or a contract for assistance for housing constructed or substantially rehabilitated pursuant to assistance provided under section 8(b)(2) of this Act (as such section existed immediately before 

October 1, 1983), the Secretary may consider and annually adjust, 

with respect to such project, for the cost of employing or otherwise 

retaining the services of one or more service coordinators under 

section 661 of the Housing and Community Development Act of 

1992 to coordinate the provision of any services within the project 

for residents of the project who are elderly or disabled families. 

(ii) The budget authority available under section 5(c) for assistance under this section is authorized to be increased by 


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63 

$15,000,000 on or after October 1, 1992, and by $15,000,000 on or 

after October 1, 1993. Amounts made available under this subparagraph shall be used to provide additional amounts under annual 

contributions contracts for assistance under this section which 

shall be made available through assistance contracts only for the 

purpose of providing service coordinators under clause (i) for 

projects receiving project-based assistance under this paragraph 

and to provide additional amounts under contracts for assistance 

for projects constructed or substantially rehabilitated pursuant to 

assistance provided under section 8(b)(2) of this Act (as such section existed immediately before October 1, 1983) only for such purpose. 

(C) An assistance contract for project-based assistance under 

this paragraph shall provide that the owner shall ensure and 

maintain compliance with subtitle C of title VI of the Housing 

and Community Development Act of 1992 and any regulations 

issued under such subtitle. 

(D) An owner of a covered section 8 housing project (as such 

term is defined in section 659 of the Housing and Community 

Development Act of 1992) may give preference for occupancy of 

dwelling units in the project, and reserve units for occupancy, 

in accordance with subtitle D of title VI of the Housing and 

Community Development Act of 1992. 

(3) Notwithstanding any other provision of law, with the approval of the Secretary the public housing agency administering a 

contract under this section with respect to existing housing units 

may exercise all management and maintenance responsibilities 

with respect to those units pursuant to a contract between such 

agency and the owner of such units. 

(4) A public housing agency that serves more than one unit of 

general local government may, at the discretion of the agency, in 

allocating assistance under this section, give priority to disabled 

families that are not elderly families. 

(5) CALCULATION OF LIMIT.— Any contract entered into under 

section 514 of the Multifamily Assisted Housing Reform and 

Affordability Act of 1997 shall be excluded in computing the 

limit on project-based assistance under this subsection. 

(6) TREATMENT OF COMMON AREAS.—The Secretary may not provide any assistance amounts pursuant to an existing contract for 

project-based assistance under this section for a housing project 

and may not enter into a new or renewal contract for such assistance for a project unless the owner of the project provides consent, 

to such local law enforcement agencies as the Secretary determines 

appropriate, for law enforcement officers of such agencies to enter 

common areas of the project at any time and without advance notice upon a determination of probable cause by such officers that 

criminal activity is taking place in such areas. 

(e)(1) Nothing in this Act shall be deemed to prohibit an owner 

from pledging, or offering as security for any loan or obligation, a 

contract for assistance payments entered into pursuant to this section: Provided, That such security is in connection with a project 

constructed or rehabilitated pursuant to authority granted in this 

section, and the terms of the financing or any refinancing have 

been approved by the Secretary. 

(f) As used in this section— 


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64 

(1) the term ‘‘owner’’ means any private person or entity, including a cooperative, an agency of the Federal Government, or 

a public housing agency, having the legal right to lease or sublease dwelling units; 

(2) the terms ‘‘rent’’ or ‘‘rental’’ mean, with respect to members of a cooperative, the charges under the occupancy agreements between such members and the cooperative; 

(3) the term ‘‘debt service’’ means the required payments for 

principal and interest made with respect to a mortgage secured 

by housing assisted under this Act; 

(4) the term ‘‘participating jurisdiction’’ means a State or 

unit of general local government designated by the Secretary 

to be a participating jurisdiction under title II of the CranstonGonzalez National Affordable Housing Act; 

(5) the term ‘‘drug-related criminal activity’’ means the illegal manufacture, sale, distribution, use, or possession with intent to manufacture, sell, distribute, or use, of a controlled substance (as defined in section 102 of the Controlled Substances 

Act (21 U.S.C. 802)); 

(6) the term ‘‘project-based assistance’’ means rental assistance under subsection (b) that is attached to the structure pursuant to subsection (d)(2) or (o)(13); and 

(7) the term ‘‘tenant-based assistance’’ means rental assistance under subsection (o) that is not project-based assistance 

and that provides for the eligible family to select suitable housing and to move to other suitable housing. 

(g) Notwithstanding any other provision of this Act, assistance 

payments under this section may be provided, in accordance with 

regulations prescribed by the Secretary, with respect to some or all 

of the units in any project approved pursuant to section 202 of the 

Housing Act of 1959. 

(h) Sections 5(e) and 6 and any other provisions of this Act which 

are inconsistent with the provisions of this section shall not apply 

to contracts for assistance entered into under this section. 

(i) The Secretary may not consider the receipt by a public housing agency of assistance under section 811(b)(1) of the CranstonGonzalez National Affordable Housing Act, or the amount received, 

in approving assistance for the agency under this section or determining the amount of such assistance to be provided. 

(k) The Secretary shall establish procedures which are appropriate and necessary to assure that income data provided to public 

housing agencies and owners by families applying for or receiving 

assistance under this section is complete and accurate. In establishing such procedures, the Secretary shall randomly, regularly, 

and periodically select a sample of families to authorize the Secretary to obtain information on these families for the purpose of income verification, or to allow those families to provide such information themselves. Such information may include, but is not limited to, data concerning unemployment compensation and Federal 

income taxation and data relating to benefits made available under 

the Social Security Act, the Food and Nutrition Act of 2008, or title 

38, United States Code. Any such information received pursuant to 

this subsection shall remain confidential and shall be used only for 

the purpose of verifying incomes in order to determine eligibility of 


SSpencer on DSK4SPTVN1PROD with REPORTS
65 

families for benefits (and the amount of such benefits, if any) under 

this section. 

(o) VOUCHER PROGRAM.— 

(1) AUTHORITY.— 

(A) IN GENERAL.— The Secretary may provide assistance 

to public housing agencies for tenant-based assistance 

using a payment standard established in accordance with 

subparagraph (B). The payment standard shall be used to 

determine the monthly assistance that may be paid for any 

family, as provided in paragraph (2). 

(B) ESTABLISHMENT OF PAYMENT STANDARD.— Except as 

provided under subparagraph (D), the payment standard 

for each size of dwelling unit in a market area shall not 

exceed 110 percent of the fair market rental established 

under subsection (c) for the same size of dwelling unit in 

the same market area and shall be not less than 90 percent of that fair market rental, except that no public housing agency shall be required as a result of a reduction in 

the fair market rental to reduce the payment standard applied to a family continuing to reside in a unit for which 

the family was receiving assistance under this section at 

the time the fair market rental was reduced. The Secretary 

shall allow public housing agencies to request exception 

payment standards within fair market rental areas subject 

to criteria and procedures established by the Secretary . 

(C) SET-ASIDE.— The Secretary may set aside not more 

than 5 percent of the budget authority made available for 

assistance under this subsection as an adjustment pool. 

The Secretary shall use amounts in the adjustment pool to 

make adjusted payments to public housing agencies under 

subparagraph (A), to ensure continued affordability, if the 

Secretary determines that additional assistance for such 

purpose is necessary, based on documentation submitted 

by a public housing agency. 

(D) APPROVAL.— The Secretary may require a public 

housing agency to submit the payment standard of the 

public housing agency to the Secretary for approval, if the 

payment standard is less than 90 percent of the fair market rental or exceeds 110 percent of the fair market rental, 

except that a public housing agency may establish a payment standard of not more than 120 percent of the fair 

market rent where necessary as a reasonable accommodation for a person with a disability, without approval of the 

Secretary. A public housing agency may use a payment 

standard that is greater than 120 percent of the fair market 

rent as a reasonable accommodation for a person with a 

disability, but only with the approval of the Secretary. In 

connection with the use of any increased payment standard 

established or approved pursuant to either of the preceding 

two sentences as a reasonable accommodation for a person 

with a disability, the Secretary may not establish additional requirements regarding the amount of adjusted income paid by such person for rent . 

(E) REVIEW.— The Secretary— 


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66 

(i) shall monitor rent burdens and review any payment standard that results in a significant percentage 

of the families occupying units of any size paying more 

than 30 percent of adjusted income for rent; and 

(ii) may require a public housing agency to modify 

the payment standard of the public housing agency 

based on the results of that review. 

(2) AMOUNT OF MONTHLY ASSISTANCE PAYMENT.— Subject to 

the requirement under section 3(a)(3) (relating to minimum 

rental amount), the monthly assistance payment for a family 

receiving assistance under this subsection shall be determined 

as follows: 

(A) TENANT-BASED ASSISTANCE; RENT NOT EXCEEDING

PAYMENT STANDARD.— For a family receiving tenant-based 

assistance, if the rent for the family (including the amount 

allowed for tenant-paid utilities) does not exceed the applicable payment standard established under paragraph (1), 

the monthly assistance payment for the family shall be 

equal to the amount by which the rent (including the 

amount allowed for tenant-paid utilities) exceeds the 

greatest of the following amounts, rounded to the nearest 

dollar: 

(i) 30 percent of the monthly adjusted income of the 

family. 

(ii) 10 percent of the monthly income of the family. 

(iii) If the family is receiving payments for welfare 

assistance from a public agency and a part of those 

payments, adjusted in accordance with the actual 

housing costs of the family, is specifically designated 

by that agency to meet the housing costs of the family, 

the portion of those payments that is so designated. 

(B) TENANT-BASED ASSISTANCE; RENT EXCEEDING PAYMENT STANDARD.— For a family receiving tenant-based assistance, if the rent for the family (including the amount 

allowed for tenant-paid utilities) exceeds the applicable 

payment standard established under paragraph (1), the 

monthly assistance payment for the family shall be equal 

to the amount by which the applicable payment standard 

exceeds the greatest of amounts under clauses (i), (ii), and 

(iii) of subparagraph (A). 

(C) FAMILIES RECEIVING PROJECT-BASED ASSISTANCE.— 

For a family receiving project-based assistance, the rent 

that the family is required to pay shall be determined in 

accordance with section 3(a)(1), and the amount of the 

housing assistance payment shall be determined in accordance with subsection (c)(3) of this section. 

(D) UTILITY ALLOWANCE.— 

(i) GENERAL.— In determining the monthly assistance payment for a family under subparagraphs (A) 

and (B), the amount allowed for tenant-paid utilities 

shall not exceed the appropriate utility allowance for 

the family unit size as determined by the public housing agency regardless of the size of the dwelling unit 

leased by the family. 


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67 

(ii) EXCEPTION FOR FAMILIES IN INCLUDING PERSONS

WITH DISABILITIES.— Notwithstanding subparagraph 

(A), upon request by a family that includes a person 

with disabilities, the public housing agency shall approve a utility allowance that is higher than the applicable amount on the utility allowance schedule if a 

higher utility allowance is needed as a reasonable accommodation to make the program accessible to and 

usable by the family member with a disability. 

(3) 40 PERCENT LIMIT.— At the time a family initially receives tenant-based assistance under this section with respect 

to any dwelling unit, the total amount that a family may be 

required to pay for rent may not exceed 40 percent of the 

monthly adjusted income of the family. 

(4) ELIGIBLE FAMILIES.— To be eligible to receive assistance 

under this subsection, a family shall, at the time a family initially receives assistance under this subsection, be a low-income family that is— 

(A) a very low-income family; 

(B) a family previously assisted under this title; 

(C) a low-income family that meets eligibility criteria 

specified by the public housing agency; 

(D) a family that qualifies to receive a voucher in connection with a homeownership program approved under 

title IV of the Cranston-Gonzalez National Affordable 

Housing Act; or 

(E) a family that qualifies to receive a voucher under 

section 223 or 226 of the Low-Income Housing Preservation and Resident Homeownership Act of 1990. 

(5) øANNUAL REVIEW¿ REVIEWS OF FAMILY INCOME.— 

(A) IN GENERAL.— Reviews of family incomes for purposes of this section shall be subject to øthe provisions of¿ 

paragraphs (1), (6), and (7) of section 3(a) and to section 

904 of the Stewart B. McKinney Homeless Assistance 

Amendments Act of 1988 øand shall be conducted upon the 

initial provision of housing assistance for the family and 

thereafter not less than annually.¿. 

(B) PROCEDURES.— Each public housing agency administering assistance under this subsection shall establish 

procedures that are appropriate and necessary to ensure 

that income data provided to the agency and owners by 

families applying for or receiving assistance from the agency is complete and accurate. øEach public housing agency 

shall, not less frequently than annually, conduct a review 

of the family income of each family receiving assistance 

under this subsection.¿ 

(6) SELECTION OF FAMILIES AND DISAPPROVAL OF OWNERS.— 

(A) PREFERENCES.— 

(i) AUTHORITY TO ESTABLISH.— Each public housing 

agency may establish a system for making tenantbased assistance under this subsection available on behalf of eligible families that provides preference for 

such assistance to eligible families having certain 

characteristics, which may include a preference for 

families residing in public housing who are victims of 


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68 

a crime of violence (as such term is defined in section 

16 of title 18, United States Code) that has been reported to an appropriate law enforcement agency. 

(ii) CONTENT.— Each system of preferences established pursuant to this subparagraph shall be based 

upon local housing needs and priorities, as determined 

by the public housing agency using generally accepted 

data sources, including any information obtained pursuant to an opportunity for public comment as provided under section 5A(f) and under the requirements 

applicable to the comprehensive housing affordability 

strategy for the relevant jurisdiction. 

(B) SELECTION OF TENANTS.— Each housing assistance 

payment contract entered into by the public housing agency and the owner of a dwelling unit) shall provide that the 

screening and selection of families for those units shall be 

the function of the owner. In addition, the public housing 

agency may elect to screen applicants for the program in 

accordance with such requirements as the Secretary may 

establish. 

(C) PHA DISAPPROVAL OF OWNERS.— In addition to other 

grounds authorized by the Secretary, a public housing 

agency may elect not to enter into a housing assistance 

payments contract under this subsection with an owner 

who refuses, or has a history of refusing, to take action to 

terminate tenancy for activity engaged in by the tenant, 

any member of the tenant’s household, any guest, or any 

other person under the control of any member of the 

household that— 

(i) threatens the health or safety of, or right to 

peaceful enjoyment of the premises by, other tenants 

or employees of the public housing agency, owner, or 

other manager of the housing; 

(ii) threatens the health or safety of, or right to 

peaceful enjoyment of the residences by, persons residing in the immediate vicinity of the premises; or 

(iii) is drug-related or violent criminal activity. 

(7) LEASES AND TENANCY.— Each housing assistance payment contract entered into by the public housing agency and 

the owner of a dwelling unit— 

(A) shall provide that the lease between the tenant and 

the owner shall be for a term of not less than 1 year, except that the public housing agency may approve a shorter 

term for an initial lease between the tenant and the dwelling unit owner if the public housing agency determines 

that such shorter term would improve housing opportunities for the tenant and if such shorter term is considered 

to be a prevailing local market practice; 

(B) shall provide that the dwelling unit owner shall offer 

leases to tenants assisted under this subsection that— 

(i) are in a standard form used in the locality by the 

dwelling unit owner; and 

(ii) contain terms and conditions that— 

(I) are consistent with State and local law; and 


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69 

(II) apply generally to tenants in the property 

who are not assisted under this section; 

(C) shall provide that during the term of the lease, the 

owner shall not terminate the tenancy except for serious 

or repeated violation of the terms and conditions of the 

lease, for violation of applicable Federal, State, or local 

law, or for other good cause, and in the case of an owner 

who is an immediate successor in interest pursuant to 

foreclosure during the term of the lease vacating the property prior to sale shall not constitute other good cause, except that the owner may terminate the tenancy effective 

on the date of transfer of the unit to the owner if the 

owner— 

(i) will occupy the unit as a primary residence; and 

(ii) has provided the tenant a notice to vacate at 

least 90 days before the effective date of such notice.; 

(D) shall provide that during the term of the lease, any 

criminal activity that threatens the health, safety, or right 

to peaceful enjoyment of the premises by other tenants, 

any criminal activity that threatens the health, safety, or 

right to peaceful enjoyment of their residences by persons 

residing in the immediate vicinity of the premises, or any 

violent or drug-related criminal activity on or near such 

premises, engaged in by a tenant of any unit, any member 

of the tenant’s household, or any guest or other person 

under the tenant’s control, shall be cause for termination 

of tenancy; 

(E) shall provide that any termination of tenancy under 

this subsection shall be preceded by the provision of written notice by the owner to the tenant specifying the 

grounds for that action, and any relief shall be consistent 

with applicable State and local law; and 

(F) may include any addenda required by the Secretary 

to set forth the provisions of this subsection. In the case 

of any foreclosure on any federally-related mortgage loan 

(as that term is defined in section 3 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2602)) or on any 

residential real property in which a recipient of assistance 

under this subsection resides, the immediate successor in 

interest in such property pursuant to the foreclosure shall 

assume such interest subject to the lease between the prior 

owner and the tenant and to the housing assistance payments contract between the prior owner and the public 

housing agency for the occupied unit, except that this provision and the provisions related to foreclosure in subparagraph (C) shall not shall not affect any State or local law 

that provides longer time periods or other additional protections for tenants. 

(8) INSPECTION OF UNITS BY PHA’S.— 

ø(A) IN GENERAL.— Except as provided in paragraph 

(11), for each dwelling unit for which a housing assistance 

payment contract is established under this subsection, the 

public housing agency shall inspect the unit before any assistance payment is made to determine whether the dwellVerDate Sep 11 2014 05:50 Jan 29, 2016 Jkt 059006 PO 00000 Frm 00069 Fmt 6659 Sfmt 6601 E:\HR\OC\HR397.XXX HR397

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70 

ing unit meets the housing quality standards under subparagraph (B).¿ 

(A) INITIAL INSPECTION.— (i) IN GENERAL.— For each dwelling unit for which 

a housing assistance payment contract is established 

under this subsection, the public housing agency (or 

other entity pursuant to paragraph (11)) shall inspect 

the unit before any assistance payment is made to determine whether the dwelling unit meets the housing 

quality standards under subparagraph (B), except as 

provided in clause (ii) or (iii) of this subparagraph. 

(ii) CORRECTION OF NON-LIFE-THREATENING CONDITIONS.— In the case of any dwelling unit that is determined, pursuant to an inspection under clause (i), not 

to meet the housing quality standards under subparagraph (B), assistance payments may be made for the 

unit notwithstanding subparagraph (C) if failure to 

meet such standards is a result only of non-life-threatening conditions, as such conditions are established by 

the Secretary. A public housing agency making assistance payments pursuant to this clause for a dwelling 

unit shall, 30 days after the beginning of the period for 

which such payments are made, withhold any assistance payments for the unit if any deficiency resulting 

in noncompliance with the housing quality standards 

has not been corrected by such time. The public housing agency shall recommence assistance payments 

when such deficiency has been corrected, and may use 

any payments withheld to make assistance payments 

relating to the period during which payments were 

withheld. 

(iii) USE OF ALTERNATIVE INSPECTION METHOD FOR

INTERIM PERIOD.— In the case of any property that 

within the previous 24 months has met the requirements of an inspection that qualifies as an alternative 

inspection method pursuant to subparagraph (E), a 

public housing agency may authorize occupancy before 

the inspection under clause (i) has been completed, and 

may make assistance payments retroactive to the beginning of the lease term after the unit has been determined pursuant to an inspection under clause (i) to 

meet the housing quality standards under subparagraph (B). This clause may not be construed to exempt 

any dwelling unit from compliance with the requirements of subparagraph (D). 

(B) HOUSING QUALITY STANDARDS.— The housing quality 

standards under this subparagraph are standards for safe 

and habitable housing established— 

(i) by the Secretary for purposes of this subsection; 

or 

(ii) by local housing codes or by codes adopted by 

public housing agencies that— 

(I) meet or exceed housing quality standards, 

except that the Secretary may waive the requirement under this subclause to significantly inVerDate Sep 11 2014 05:50 Jan 29, 2016 Jkt 059006 PO 00000 Frm 00070 Fmt 6659 Sfmt 6601 E:\HR\OC\HR397.XXX HR397

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crease access to affordable housing and to expand 

housing opportunities for families assisted under 

this subsection, except where such waiver could 

adversely affect the health or safety of families assisted under this subsection; and 

(II) do not severely restrict housing choice 

(C) INSPECTION.— The determination required under 

subparagraph (A) shall be made by the public housing 

agency (or other entity, as provided in paragraph (11)) pursuant to an inspection of the dwelling unit conducted before any assistance payment is made for the unit. Inspections of dwelling units under this subparagraph shall be 

made before the expiration of the 15-day period beginning 

upon a request by the resident or landlord to the public 

housing agency or, in the case of any public housing agency that provides assistance under this subsection on behalf 

of more than 1250 families, before the expiration of a reasonable period beginning upon such request. The performance of the agency in meeting the 15-day inspection deadline shall be taken into consideration in assessing the performance of the agency. 

(D) BIENNIAL INSPECTIONS.— 

(i) REQUIREMENT.— Each public housing agency providing assistance under this subsection (or other entity, as provided in paragraph (11)) shall, for each assisted dwelling unit, make inspections not less often 

than biennially during the term of the housing assistance payments contract for the unit to determine 

whether the unit is maintained in accordance with the 

requirements under subparagraph (A). 

(ii) USE OF ALTERNATIVE INSPECTION METHOD.— The 

requirements under clause (i) may be complied with 

by use of inspections that qualify as an alternative inspection method pursuant to subparagraph (E). 

(iii) RECORDS.— The public housing agency (or other 

entity) shall retain the records of the inspection for a 

reasonable time, as determined by the Secretary, and 

shall make the records available upon request to the 

Secretary, the Inspector General for the Department 

of Housing and Urban Development, and any auditor 

conducting an audit under section 5(h). 

(iv) MIXED-FINANCE PROPERTIES.— The Secretary 

may adjust the frequency of inspections for mixed-finance properties assisted with vouchers under paragraph (13) to facilitate the use of the alternative inspections in subparagraph (E). 

(E) ALTERNATIVE INSPECTION METHOD.— An inspection 

of a property shall qualify as an alternative inspection 

method for purposes of this subparagraph if— 

(i) the inspection was conducted pursuant to requirements under a Federal, State, or local housing 

program (including the Home investment partnership 

program under title II of the Cranston-Gonzalez National Affordable Housing Act and the low-income 


SSpencer on DSK4SPTVN1PROD with REPORTS
72 

housing tax credit program under section 42 of the Internal Revenue Code of 1986); and 

(ii) pursuant to such inspection, the property was 

determined to meet the standards or requirements regarding housing quality or safety applicable to properties assisted under such program, and, if a non-Federal standard or requirement was used, the public 

housing agency has certified to the Secretary that 

such standard or requirement provides the same (or 

greater) protection to occupants of dwelling units 

meeting such standard or requirement as would the 

housing quality standards under subparagraph (B). 

(F) INTERIM INSPECTIONS.— Upon notification to the public housing agency, by a family (on whose behalf tenantbased rental assistance is provided under this subsection) 

or by a government official, that the dwelling unit for 

which such assistance is provided does not comply with the 

housing quality standards under subparagraph (B), the 

public housing agency shall inspect the dwelling unit— 

(i) in the case of any condition that is life-threatening, within 24 hours after the agency’s receipt of 

such notification, unless waived by the Secretary in 

extraordinary circumstances; and 

(ii) in the case of any condition that is not lifethreatening, within a reasonable time frame, as determined by the Secretary. 

(G) ENFORCEMENT OF HOUSING QUALITY STANDARDS.— (i) DETERMINATION OF NONCOMPLIANCE.— A dwelling unit that is covered by a housing assistance payments contract under this subsection shall be considered, for purposes of subparagraphs (D) and (F), to be 

in noncompliance with the housing quality standards 

under subparagraph (B) if— 

(I) the public housing agency or an inspector authorized by the State or unit of local government 

determines upon inspection of the unit that the 

unit fails to comply with such standards; 

(II) the agency or inspector notifies the owner of 

the unit in writing of such failure to comply; and 

(III) the failure to comply is not corrected— 

(aa) in the case of any such failure that is 

a result of life-threatening conditions, within 

24 hours after such notice has been provided; 

and 

(bb) in the case of any such failure that is 

a result of non-life-threatening conditions, 

within 30 days after such notice has been provided or such other reasonable longer period 

as the public housing agency may establish. 

(ii) WITHHOLDING OF ASSISTANCE AMOUNTS DURING

CORRECTION.— The public housing agency may withhold assistance amounts under this subsection with respect to a dwelling unit for which a notice pursuant to 

clause (i)(II), of failure to comply with housing quality 

standards under subparagraph (B) as determined purVerDate Sep 11 2014 05:50 Jan 29, 2016 Jkt 059006 PO 00000 Frm 00072 Fmt 6659 Sfmt 6603 E:\HR\OC\HR397.XXX HR397

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73 

suant to an inspection conducted under subparagraph 

(D) or (F), has been provided. If the unit is brought 

into compliance with such housing quality standards 

during the periods referred to in clause (i)(III), the public housing agency shall recommence assistance payments and may use any amounts withheld during the 

correction period to make assistance payments relating 

to the period during which payments were withheld. 

(iii) ABATEMENT OF ASSISTANCE AMOUNTS.— The 

public housing agency shall abate all of the assistance 

amounts under this subsection with respect to a dwelling unit that is determined, pursuant to clause (i) of 

this subparagraph, to be in noncompliance with housing quality standards under subparagraph (B). Upon 

completion of repairs by the public housing agency or 

the owner sufficient so that the dwelling unit complies 

with such housing quality standards, the agency shall 

recommence payments under the housing assistance 

payments contract to the owner of the dwelling unit. 

(iv) NOTIFICATION.— If a public housing agency providing assistance under this subsection abates rental 

assistance payments pursuant to clause (iii) with respect to a dwelling unit, the agency shall, upon commencement of such abatement— 

(I) notify the tenant and the owner of the dwelling unit that— 

(aa) such abatement has commenced; and 

(bb) if the dwelling unit is not brought into 

compliance with housing quality standards 

within 60 days after the effective date of the 

determination of noncompliance under clause 

(i) or such reasonable longer period as the 

agency may establish, the tenant will have to 

move; and 

(II) issue the tenant the necessary forms to allow 

the tenant to move to another dwelling unit and 

transfer the rental assistance to that unit. 

(v) PROTECTION OF TENANTS.— An owner of a dwelling unit may not terminate the tenancy of any tenant 

because of the withholding or abatement of assistance 

pursuant to this subparagraph. During the period that 

assistance is abated pursuant to this subparagraph, 

the tenant may terminate the tenancy by notifying the 

owner. 

(vi) TERMINATION OF LEASE OR ASSISTANCE PAYMENTS CONTRACT.— If assistance amounts under this 

section for a dwelling unit are abated pursuant to 

clause (iii) and the owner does not correct the noncompliance within 60 days after the effective date of the 

determination of noncompliance under clause (i), or 

such other reasonable longer period as the public housing agency may establish, the agency shall terminate 

the housing assistance payments contract for the dwelling unit. 

(vii) RELOCATION.— 


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74 

(I) LEASE OF NEW UNIT.— The agency shall provide the family residing in such a dwelling unit a 

period of 90 days or such longer period as the public housing agency determines is reasonably necessary to lease a new unit, beginning upon termination of the contract, to lease a new residence 

with tenant-based rental assistance under this section. 

(II) AVAILABILITY OF PUBLIC HOUSING UNITS.— If 

the family is unable to lease such a new residence 

during such period, the public housing agency 

shall, at the option of the family, provide such 

family a preference for occupancy in a dwelling 

unit of public housing that is owned or operated by 

the agency that first becomes available for occupancy after the expiration of such period. 

(III) ASSISTANCE IN FINDING UNIT.— The public 

housing agency may provide assistance to the family in finding a new residence, including use of up 

to two months of any assistance amounts withheld 

or abated pursuant to clause (ii) or (iii), respectively, for costs directly associated with relocation 

of the family to a new residence, which shall include security deposits as necessary and may include reimbursements for reasonable moving expenses incurred by the household, as established 

by the Secretary. The agency may require that a 

family receiving assistance for a security deposit 

shall remit, to the extent of such assistance, the 

amount of any security deposit refunds made by 

the owner of the dwelling unit for which the lease 

was terminated. 

(viii) TENANT-CAUSED DAMAGES.— If a public housing agency determines that any damage to a dwelling 

unit that results in a failure of the dwelling unit to 

comply with housing quality standards under subparagraph (B), other than any damage resulting from ordinary use, was caused by the tenant, any member of the 

tenant’s household, or any guest or other person under 

the tenant’s control, the agency may waive the applicability of this subparagraph, except that this clause 

shall not exonerate a tenant from any liability otherwise existing under applicable law for damages to the 

premises caused by such tenant. 

(ix) APPLICABILITY.— This subparagraph shall apply 

to any dwelling unit for which a housing assistance 

payments contract is entered into or renewed after the 

date of the effectiveness of the regulations implementing this subparagraph. 

ø(G)¿ (H) INSPECTION GUIDELINES.— The Secretary shall 

establish procedural guidelines and performance standards 

to facilitate inspections of dwelling units and conform such 

inspections with practices utilized in the private housing 

market. Such guidelines and standards shall take into consideration variations in local laws and practices of public 


SSpencer on DSK4SPTVN1PROD with REPORTS
75 

housing agencies and shall provide flexibility to authorities 

appropriate to facilitate efficient provision of assistance 

under this subsection. 

(9) VACATED UNITS.— If an assisted family vacates a dwelling unit for which rental assistance is provided under a housing assistance payment contract before the expiration of the 

term of the lease for the unit, rental assistance pursuant to 

such contract may not be provided for the unit after the month 

during which the unit was vacated. 

(10) RENT.— (A) REASONABLENESS.— The rent for dwelling units for 

which a housing assistance payment contract is established under this subsection shall be reasonable in comparison with rents charged for comparable dwelling units 

in the private, unassisted local market. 

(B) NEGOTIATIONS.— A public housing agency (or other 

entity, as provided in paragraph (11)) shall, at the request 

of a family receiving tenant-based assistance under this 

subsection, assist that family in negotiating a reasonable 

rent with a dwelling unit owner. A public housing agency 

(or such other entity) shall review the rent for a unit 

under consideration by the family (and all rent increases 

for units under lease by the family) to determine whether 

the rent (or rent increase) requested by the owner is reasonable. If a public housing agency (or other such entity) 

determines that the rent (or rent increase) for a dwelling 

unit is not reasonable, the public housing agency (or other 

such entity) shall not make housing assistance payments 

to the owner under this subsection with respect to that 

unit. 

(C) UNITS EXEMPT FROM LOCAL RENT CONTROL.— If a 

dwelling unit for which a housing assistance payment contract is established under this subsection is exempt from 

local rent control provisions during the term of that contract, the rent for that unit shall be reasonable in comparison with other units in the market area that are exempt 

from local rent control provisions. 

(D) TIMELY PAYMENTS.— Each public housing agency 

shall make timely payment of any amounts due to a dwelling unit owner under this subsection. The housing assistance payment contract between the owner and the public 

housing agency may provide for penalties for the late payment of amounts due under the contract, which shall be 

imposed on the public housing agency in accordance with 

generally accepted practices in the local housing market. 

(E) PENALTIES.— Unless otherwise authorized by the 

Secretary, each public housing agency shall pay any penalties from administrative fees collected by the public 

housing agency, except that no penalty shall be imposed if 

the late payment is due to factors that the Secretary determines are beyond the control of the public housing agency. 

(F) TAX CREDIT PROJECTS.— In the case of a dwelling 

unit receiving tax credits pursuant to section 42 of the Internal Revenue Code of 1986 or for which assistance is 

provided under subtitle A of title II of the Cranston GonVerDate Sep 11 2014 05:50 Jan 29, 2016 Jkt 059006 PO 00000 Frm 00075 Fmt 6659 Sfmt 6601 E:\HR\OC\HR397.XXX HR397

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zalez National Affordable Housing Act of 1990, for which 

a housing assistance contract not subject to paragraph (13) 

of this subsection is established, rent reasonableness shall 

be determined as otherwise provided by this paragraph, 

except that— 

(i) comparison with rent for units in the private, unassisted local market shall not be required if the rent 

is equal to or less than the rent for other comparable 

units receiving such tax credits or assistance in the 

project that are not occupied by families assisted with 

tenant-based assistance under this subsection; and 

(ii) the rent shall not be considered reasonable for 

purposes of this paragraph if it exceeds the greater 

of— 

(I) the rents charged for other comparable units 

receiving such tax credits or assistance in the 

project that are not occupied by families assisted 

with tenant-based assistance under this subsection; and 

(II) the payment standard established by the 

public housing agency for a unit of the size involved. 

ø(11) LEASING OF UNITS OWNED BY PHA.—If¿ 

(11) LEASING OF UNITS OWNED BY PHA.— (A) INSPECTIONS AND RENT DETERMINATIONS.—If an eligible family assisted under this subsection leases a dwelling unit (other than a public housing dwelling unit) that 

is owned by a public housing agency administering assistance under this subsection, the Secretary shall require the 

unit of general local government or another entity approved by the Secretary, to make inspections required 

under paragraph (8) and rent determinations required 

under paragraph (10). The agency shall be responsible for 

any expenses of such inspections and determinations. 

(B) UNITS OWNED BY PHA.— For purposes of this subsection, the term ‘‘owned by a public housing agency’’ 

means, with respect to a dwelling unit, that the dwelling 

unit is in a project that is owned by such agency, by an entity wholly controlled by such agency, or by a limited liability company or limited partnership in which such agency 

(or an entity wholly controlled by such agency) holds a controlling interest in the managing member or general partner. A dwelling unit shall not be deemed to be owned by 

a public housing agency for purposes of this subsection because the agency holds a fee interest as ground lessor in the 

property on which the unit is situated, holds a security interest under a mortgage or deed of trust on the unit, or 

holds a non-controlling interest in an entity which owns the 

unit or in the managing member or general partner of an 

entity which owns the unit. 

(12) ASSISTANCE FOR RENTAL OF MANUFACTURED HOUSING.— 

(A) IN GENERAL.— A public housing agency may make 

assistance payments in accordance with this subsection on 

behalf of a family that utilizes a manufactured home as a 


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77 

principal place of residence. Such payments may be made 

only for the rental of the real property on which the manufactured home owned by any such family is located. 

(B) RENT CALCULATION.— 

(i) CHARGES INCLUDED.— For assistance pursuant to 

this paragraph, the rent for the space on which a manufactured home is located and with respect to which 

assistance payments are to be made shall include 

maintenance and management charges and tenantpaid utilities. 

(ii) PAYMENT STANDARD.— The public housing agency shall establish a payment standard for the purpose 

of determining the monthly assistance that may be 

paid for any family under this paragraph. The payment standard may not exceed an amount approved or 

established by the Secretary. 

(iii) MONTHLY ASSISTANCE PAYMENT.— The monthly 

assistance payment for a family assisted under this 

paragraph shall be determined in accordance with 

paragraph (2). 

(13) PHA PROJECT-BASED ASSISTANCE.— 

(A) IN GENERAL.— A public housing agency may use 

amounts provided under an annual contributions contract 

under this subsection to enter into a housing assistance 

payment contract with respect to an existing, newly constructed, or rehabilitated østructure¿ project , that is attached to the østructure¿ project , subject to the limitations and requirements of this paragraph. 

ø(B) PERCENTAGE LIMITATION.— Not more than 20 percent of the funding available for tenant-based assistance 

under this section that is administered by the agency may 

be attached to structures pursuant to this paragraph.¿ 

(B) PERCENTAGE LIMITATION.— 

(i) IN GENERAL.— Subject to clause (ii), a public 

housing agency may use for project-based assistance 

under this paragraph not more than 20 percent of the 

authorized units for the agency. 

(ii) EXCEPTION.— A public housing agency may use 

up to an additional 10 percent of the authorized units 

for the agency for project-based assistance under this 

paragraph, to provide units that house individuals and 

families that meet the definition of homeless under section 103 of the McKinney-Vento Homeless Assistance 

Act (42 U.S.C. 11302), that house families with veterans, that provide supportive housing to persons with 

disabilities or elderly persons, or that are located in 

areas where vouchers under this subsection are difficult to use, as specified in subparagraph (D)(ii)(II). 

Any units of project-based assistance that are attached 

to units previously subject to federally required rent restrictions or receiving another type of long-term housing subsidy provided by the Secretary shall not count 

toward the percentage limitation under clause (i) of 

this subparagraph. The Secretary may, by regulation, 


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78 

establish additional categories for the exception under 

this clause. 

(C) CONSISTENCY WITH PHA PLAN AND OTHER GOALS.— A 

public housing agency may approve a housing assistance 

payment contract pursuant to this paragraph only if the 

contract is consistent with— 

(i) the public housing agency plan for the agency approved under section 5A; and 

(ii) the goal of deconcentrating poverty and expanding housing and economic opportunities. 

ø(D) INCOME MIXING REQUIREMENT.— ø(i) IN GENERAL.— Not more than 25 percent of the 

dwelling units in any project may be assisted under a 

housing assistance payment contract for project-based 

assistance pursuant to this paragraph. For purposes of 

this subparagraph, the term ‘‘project’’ means a single 

building, multiple contiguous buildings, or multiple 

buildings on contiguous parcels of land. 

ø(ii) EXCEPTIONS.— The limitation under clause (i) 

shall not apply in the case of assistance under a contract for housing consisting of single family properties 

or for dwelling units that are specifically made available for households comprised of elderly families, disabled families, and families receiving supportive services.¿ 

(D) INCOME-MIXING REQUIREMENT.— (i) IN GENERAL.— Except as provided in clause (ii), 

not more than the greater of 25 dwelling units or 25 

percent of the dwelling units in any project may be assisted under a housing assistance payment contract for 

project-based assistance pursuant to this paragraph. 

For purposes of this subparagraph, the term ‘‘project’’ 

means a single building, multiple contiguous buildings, or multiple buildings on contiguous parcels of 

land. 

(ii) EXCEPTIONS.— (I) CERTAIN FAMILIES.— The limitation under 

clause (i) shall not apply to dwelling units assisted 

under a contract that are exclusively made available to elderly families or to households eligible for 

supportive services that are made available to the 

assisted residents of the project, according to 

standards for such services the Secretary may establish. 

(II) CERTAIN AREAS.— With respect to areas in 

which tenant-based vouchers for assistance under 

this subsection are difficult to use, as determined 

by the Secretary, and with respect to census tracts 

with a poverty rate of 20 percent or less, clause (i) 

shall be applied by substituting ‘‘40 percent’’ for 

‘‘25 percent’’, and the Secretary may, by regulation, 

establish additional conditions. 

(III) CERTAIN CONTRACTS.— The limitation 

under clause (i) shall not apply with respect to 

contracts or renewal of contracts under which a 


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79 

greater percentage of the dwelling units in a 

project were assisted under a housing assistance 

payment contract for project-based assistance pursuant to this paragraph on the date of the enactment of the Housing Opportunity Through Modernization Act of 2015. 

(IV) CERTAIN PROPERTIES.— Any units of 

project-based assistance under this paragraph that 

are attached to units previously subject to federally 

required rent restrictions or receiving other projectbased assistance provided by the Secretary shall 

not count toward the percentage limitation imposed by this subparagraph (D). 

(iii) ADDITIONAL MONITORING AND OVERSIGHT REQUIREMENTS.— The Secretary may establish additional 

requirements for monitoring and oversight of projects 

in which more than 40 percent of the dwelling units 

are assisted under a housing assistance payment contract for project-based assistance pursuant to this paragraph. 

(E) RESIDENT CHOICE REQUIREMENT.— A housing assistance payment contract pursuant to this paragraph shall 

provide as follows: 

(i) MOBILITY.— Each low-income family occupying a 

dwelling unit assisted under the contract may move 

from the housing at any time after the family has occupied the dwelling unit for 12 months. 

(ii) CONTINUED ASSISTANCE.— Upon such a move, 

the public housing agency shall provide the low-income family with tenant-based rental assistance under 

this section or such other tenant-based rental assistance that is subject to comparable income, assistance, 

rent contribution, affordability, and other requirements, as the Secretary shall provide by regulation. If 

such rental assistance is not immediately available to 

fulfill the requirement under the preceding sentence 

with respect to a low-income family, such requirement 

may be met by providing the family priority to receive 

the next voucher or other tenant-based rental assistance amounts that become available under the program used to fulfill such requirement. 

ø(F) CONTRACT TERM.— A housing assistance payment 

contract pursuant to this paragraph between a public 

housing agency and the owner of a structure may have a 

term of up to 15 years, subject to the availability of sufficient appropriated funds for the purpose of renewing expiring contracts for assistance payments, as provided in appropriations Acts and in the agency’s annual contributions 

contract with the Secretary, and to annual compliance 

with the inspection requirements under paragraph (8), except that the agency shall not be required to make annual 

inspections of each assisted unit in the development. The 

contract may specify additional conditions for its continuation. If the units covered by the contract are owned by 

the agency, the term of the contract shall be agreed upon 


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80 

by the agency and the unit of general local government or 

other entity approved by the Secretary in the manner provided under paragraph (11).¿ 

(F) CONTRACT TERM.— (i) TERM.— A housing assistance payment contract 

pursuant to this paragraph between a public housing 

agency and the owner of a project may have a term of 

up to 20 years, subject to— 

(I) the availability of sufficient appropriated 

funds for the purpose of renewing expiring contracts for assistance payments, as provided in appropriation Acts and in the agency’s annual contributions contract with the Secretary, provided 

that in the event of insufficient appropriated 

funds, payments due under contracts under this 

paragraph shall take priority if other cost-saving 

measures that do not require the termination of an 

existing contract are available to the agency; and 

(II) compliance with the inspection requirements 

under paragraph (8), except that the agency shall 

not be required to make biennial inspections of 

each assisted unit in the development. 

(ii) ADDITION OF ELIGIBLE UNITS.— Subject to the 

limitations of subparagraphs (B) and (D), the agency 

and the owner may add eligible units within the same 

project to a housing assistance payments contract at 

any time during the term thereof without being subject 

to any additional competitive selection procedures. 

(iii) HOUSING UNDER CONSTRUCTION OR RECENTLY

CONSTRUCTED.— An agency may enter into a housing 

assistance payments contract with an owner for any 

unit that does not qualify as existing housing and is 

under construction or recently has been constructed 

whether or not the agency has executed an agreement 

to enter into a contract with the owner, provided that 

the owner demonstrates compliance with applicable requirements prior to execution of the housing assistance 

payments contract. This clause shall not subject a 

housing assistance payments contract for existing housing under this paragraph to such requirements or otherwise limit the extent to which a unit may be assisted 

as existing housing. 

(iv) ADDITIONAL CONDITIONS.— The contract may 

specify additional conditions, including with respect to 

continuation, termination, or expiration, and shall 

specify that upon termination or expiration of the contract without extension, each assisted family may elect 

to use its assistance under this subsection to remain in 

the same project if its unit complies with the inspection 

requirements under paragraph (8), the rent for the unit 

is reasonable as required by paragraph (10)(A), and 

the family pays its required share of the rent and the 

amount, if any, by which the unit rent (including the 

amount allowed for tenant-based utilities) exceeds the 

applicable payment standard. 


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(G) EXTENSION OF CONTRACT TERM.— A public housing 

agency may enter into a contract with the owner of a 

østructure¿ project assisted under a housing assistance 

payment contract pursuant to this paragraph to extend the 

term of the underlying housing assistance payment contract for such period as the agency determines to be appropriate to achieve long-term affordability of the housing or 

to expand housing opportunities. Such contract may, at the 

election of the public housing agency and the owner of the 

østructure¿ project , specify that such contract shall be extended for renewal terms of up to ø15 years¿ 20 years 

each, if the agency makes the determination required by 

this subparagraph and the owner is in compliance with the 

terms of the contract. Such a contract shall provide that 

the extension of such term shall be contingent upon the future availability of appropriated funds for the purpose of 

renewing expiring contracts for assistance payments, as 

provided in appropriations Acts, and may obligate the 

owner to have such extensions of the underlying housing 

assistance payment contract accepted by the owner and 

the successors in interest of the owner. A public housing 

agency may agree to enter into such a contract at the time 

it enters into the initial agreement for a housing assistance payment contract or at any time thereafter that is before the expiration of the housing assistance payment contract. 

(H) RENT CALCULATION.— A housing assistance payment 

contract pursuant to this paragraph shall establish rents 

for each unit assisted in an amount that does not exceed 

110 percent of the applicable fair market rental (or any exception payment standard approved by the Secretary pursuant to paragraph (1)(D)), except that if a contract covers 

a dwelling unit that has been allocated low-income housing 

tax credits pursuant to section 42 of the Internal Revenue 

Code of 1986 (26 U.S.C. 42) and is not located in a qualified census tract (as such term is defined in subsection (d) 

of such section 42), the rent for such unit may be established at any level that does not exceed the rent charged 

for comparable units in the building that also receive the 

low-income housing tax credit but do not have additional 

rental assistance, except that in the case of a contract unit 

that has been allocated low-income housing tax credits and 

for which the rent limitation pursuant to such section 42 

is less than the amount that would otherwise be permitted 

under this subparagraph, the rent for such unit may, in 

the sole discretion of a public housing agency, be established at the higher section 8 rent, subject only to paragraph (10)(A). The rents established by housing assistance 

payment contracts pursuant to this paragraph may vary 

from the payment standards established by the public 

housing agency pursuant to paragraph (1)(B), but shall be 

subject to paragraph (10)(A). 

ø(I) RENT ADJUSTMENTS.— A housing assistance payments contract pursuant to this paragraph shall provide 

for rent adjustments, except that— 


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82 

ø(i) the adjusted rent for any unit assisted shall be 

reasonable in comparison with rents charged for comparable dwelling units in the private, unassisted, local 

market and may not exceed the maximum rent permitted under subparagraph (H), except that the contract may provide that the maximum rent permitted 

for a dwelling unit shall not be less than the initial 

rent for the dwelling unit under the initial housing assistance payments contract covering the unit; and 

ø(ii) the provisions of subsection (c)(2)(C) shall not 

apply.¿ 

(I) RENT ADJUSTMENTS.— A housing assistance payments 

contract pursuant to this paragraph entered into after the 

date of the enactment of the Housing Opportunity Through 

Modernization Act of 2015 shall provide for annual rent 

adjustments upon the request of the owner, except that— 

(i) by agreement of the parties, a contract may allow 

a public housing agency to adjust the rent for covered 

units using an operating cost adjustment factor established by the Secretary pursuant to section 524(c) of the 

Multifamily Assisted Housing Reform and Affordability Act of 1997 (which shall not result in a negative 

adjustment), in which case the contract may require an 

additional adjustment, if requested, up to the reasonable rent periodically during the term of the contract, 

and shall require such an adjustment, if requested, 

upon extension pursuant to subparagraph (G); 

(ii) the adjusted rent shall not exceed the maximum 

rent permitted under subparagraph (H); 

(iii) the contract may provide that the maximum rent 

permitted for a dwelling unit shall not be less than the 

initial rent for the dwelling unit under the initial housing assistance payments contract covering the units; 

and 

(iv) the provisions of subsection (c)(2)(C) shall not 

apply. 

(J) TENANT SELECTION.— A public housing agency 

øshall¿ may select families to receive project-based assistance pursuant to this paragraph from its waiting list for 

assistance under this subsection or may permit owners to 

select applicants from site-based waiting lists as specified 

in this subparagraph . Eligibility for such project-based assistance shall be subject to the provisions of section 16(b) 

that apply to tenant-based assistance. øThe agency may 

establish preferences or criteria for selection for a unit assisted under this paragraph that are consistent with the 

public housing agency plan for the agency approved under 

section 5A.¿ The agency or owner may establish preferences 

or criteria for selection for a unit assisted under this paragraph that are consistent with the public housing agency 

plan for the agency approved under section 5A and that 

give preference to families who qualify for voluntary services, including disability-specific services, offered in conjunction with assisted units. Any family that rejects an 

offer of project-based assistance under this paragraph or 


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83 

that is rejected for admission to a østructure¿ project by 

the owner or manager of a østructure¿ project assisted 

under this paragraph shall retain its place on the waiting 

list as if the offer had not been made. øThe owner or manager of a structure assisted under this paragraph shall not 

admit any family to a dwelling unit assisted under a contract pursuant to this paragraph other than a family referred by the public housing agency from its waiting list. 

Subject to its waiting list policies and selection preferences, a public housing agency may place on its waiting 

list a family referred by the owner or manager of a structure and may maintain a separate waiting list for assistance under this paragraph, but only if all families on the 

agency’s waiting list for assistance under this subsection 

are permitted to place their names on the separate list.¿ 

A public housing agency may establish and utilize procedures for owner-maintained site-based waiting lists, under 

which applicants may apply at, or otherwise designate to 

the public housing agency, the project or projects in which 

they seek to reside, except that all eligible applicants on the 

waiting list of an agency for assistance under this subsection shall be permitted to place their names on such separate list, subject to policies and procedures established by 

the Secretary. All such procedures shall comply with title 

VI of the Civil Rights Act of 1964, the Fair Housing Act, 

section 504 of the Rehabilitation Act of 1973, and other applicable civil rights laws. The owner or manager of a 

project assisted under this paragraph shall not admit any 

family to a dwelling unit assisted under a contract pursuant to this paragraph other than a family referred by the 

public housing agency from its waiting list, or a family on 

a site-based waiting list that complies with the requirements of this subparagraph. A public housing agency shall 

disclose to each applicant all other options in the selection 

of a project in which to reside that are provided by the public housing agency and are available to the applicant. 

(K) VACATED UNITS.— Notwithstanding paragraph (9), a 

housing assistance payment contract pursuant to this 

paragraph may provide as follows: 

(i) PAYMENT FOR VACANT UNITS.— That the public 

housing agency may, in its discretion, continue to provide assistance under the contract, for a reasonable 

period not exceeding 60 days, for a dwelling unit that 

becomes vacant, but only: (I) if the vacancy was not 

the fault of the owner of the dwelling unit; and (II) the 

agency and the owner take every reasonable action to 

minimize the likelihood and extent of any such vacancy. Rental assistance may not be provided for a vacant unit after the expiration of such period. 

(ii) REDUCTION OF CONTRACT.— That, if despite reasonable efforts of the agency and the owner to fill a 

vacant unit, no eligible family has agreed to rent the 

unit within 120 days after the owner has notified the 

agency of the vacancy, the agency may reduce its 

housing assistance payments contract with the owner 


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84 

by the amount equivalent to the remaining months of 

subsidy attributable to the vacant unit. Amounts 

deobligated pursuant to such a contract provision shall 

be available to the agency to provide assistance under 

this subsection. 

Eligible applicants for assistance under this subsection 

may enforce provisions authorized by this subparagraph. 

(L) USE IN COOPERATIVE HOUSING AND ELEVATOR BUILD- INGS.— A public housing agency may enter into a housing 

assistance payments contract under this paragraph with 

respect to— 

(i) dwelling units in cooperative housing; and 

(ii) notwithstanding subsection (c), dwelling units in 

a high-rise elevator project, including such a project 

that is occupied by families with children, without review and approval of the contract by the Secretary. 

(M) REVIEWS.— 

(i) SUBSIDY LAYERING.— A subsidy layering review 

in accordance with section 102(d) of the Department of 

Housing and Urban Development Reform Act of 1989 

(42 U.S.C. 3545(d)) shall not be required for assistance 

under this paragraph in the case of a housing assistance payments contract for an existing østructure¿ 

project , or if a subsidy layering review has been conducted by the applicable State or local agency. 

(ii) ENVIRONMENTAL REVIEW.— A public housing 

agency shall not be required to undertake any environmental review before entering into a housing assistance payments contract under this paragraph for 

an existing østructure¿ project , except to the extent 

such a review is otherwise required by law or regulation relating to funding other than housing assistance 

payments . (N) STRUCTURE OWNED BY AGENCY.— A public housing 

agency engaged in an initiative to improve, develop, or replace a public housing property or site may attach assistance to an existing, newly constructed, or rehabilitated 

structure in which the agency has an ownership interest or 

which the agency has control of without following a competitive process, provided that the agency has notified the 

public of its intent through its public housing agency plan 

and subject to the limitations and requirements of this 

paragraph. 

(O) SPECIAL PURPOSE VOUCHERS.— A public housing 

agency that administers vouchers authorized under subsection (o)(19) or (x) of this section may provide such assistance in accordance with the limitations and requirements 

of this paragraph, without additional requirements for approval by the Secretary. 

(14) INAPPLICABILITY TO TENANT-BASED ASSISTANCE.— Subsection (c) shall not apply to tenant-based assistance under 

this subsection. 

(15) HOMEOWNERSHIP OPTION.— 

(A) IN GENERAL.— A public housing agency providing assistance under this subsection may, at the option of the 


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85 

agency, provide assistance for homeownership under subsection (y). 

(B) ALTERNATIVE ADMINISTRATION.— A public housing 

agency may contract with a nonprofit organization to administer a homeownership program under subsection (y). 

(16) RENTAL VOUCHERS FOR RELOCATION OF WITNESSES AND

VICTIMS OF CRIME.— (A) WITNESSES.— Of amounts made available for assistance under this subsection in each fiscal year, the Secretary, in consultation with the Inspector General, shall 

make available such sums as may be necessary for the relocation of witnesses in connection with efforts to combat 

crime in public and assisted housing pursuant to requests 

from law enforcement or prosecution agencies. 

(B) VICTIMS OF CRIME.— 

(i) IN GENERAL.— Of amounts made available for assistance under this section in each fiscal year, the Secretary shall make available such sums as may be necessary for the relocation of families residing in public 

housing who are victims of a crime of violence (as that 

term is defined in section 16 of title 18, United States 

Code) that has been reported to an appropriate law 

enforcement agency. 

(ii) NOTICE.— A public housing agency that receives 

amounts under this subparagraph shall establish procedures for providing notice of the availability of that 

assistance to families that may be eligible for that assistance. 

(17) DEED RESTRICTIONS.— Assistance under this subsection 

may not be used in any manner that abrogates any local deed 

restriction that applies to any housing consisting of 1 to 4 

dwelling units. This paragraph may not be construed to affect 

the provisions or applicability of the Fair Housing Act. 

(18) RENTAL ASSISTANCE FOR ASSISTED LIVING FACILITIES.— 

(A) IN GENERAL.— A public housing agency may make 

assistance payments on behalf of a family that uses an assisted living facility as a principal place of residence and 

that uses such supportive services made available in the 

facility as the agency may require. Such payments may be 

made only for covering costs of rental of the dwelling unit 

in the assisted living facility and not for covering any portion of the cost of residing in such facility that is attributable to service relating to assisted living. 

(B) RENT CALCULATION.— 

(i) CHARGES INCLUDED.— For assistance pursuant to 

this paragraph, the rent of the dwelling unit that is an 

assisted living facility with respect to which assistance 

payments are made shall include maintenance and 

management charges related to the dwelling unit and 

tenant-paid utilities. Such rent shall not include any 

charges attributable to services relating to assisted living. 

(ii) PAYMENT STANDARD.— In determining the 

monthly assistance that may be paid under this paragraph on behalf of any family residing in an assisted 


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86 

living facility, the public housing agency shall utilize 

the payment standard established under paragraph 

(1), for the market area in which the assisted living facility is located, for the applicable size dwelling unit. 

(iii) MONTHLY ASSISTANCE PAYMENT.— The monthly 

assistance payment for a family assisted under this 

paragraph shall be determined in accordance with 

paragraph (2) (using the rent and payment standard 

for the dwelling unit as determined in accordance with 

this subsection), except that a family may be required 

at the time the family initially receives such assistance to pay rent in an amount exceeding 40 percent of 

the monthly adjusted income of the family by such an 

amount or percentage that is reasonable given the 

services and amenities provided and as the Secretary 

deems appropriate.. 

(C) DEFINITION.— For the purposes of this paragraph, 

the term ‘‘assisted living facility’’ has the meaning given 

that term in section 232(b) of the National Housing Act (12 

U.S.C. 1715w(b)), except that such a facility may be contained within a portion of a larger multifamily housing 

project. 

(19) RENTAL VOUCHERS FOR VETERANS AFFAIRS SUPPORTED

HOUSING PROGRAM.— (A) SET ASIDE.— Subject to subparagraph (C), the Secretary shall set aside, from amounts made available for 

rental assistance under this subsection, the amounts specified in subparagraph (B) for use only for providing such assistance through a supported housing program administered in conjunction with the Department of Veterans Affairs. Such program shall provide rental assistance on behalf of homeless veterans who have chronic mental illnesses or chronic substance use disorders, shall require 

agreement of the veteran to continued treatment for such 

mental illness or substance use disorder as a condition of 

receipt of such rental assistance, and shall ensure such 

treatment and appropriate case management for each veteran receiving such rental assistance. 

(B) AMOUNT.— The amount specified in this subparagraph is— 

(i) for fiscal year 2007, the amount necessary to provide 500 vouchers for rental assistance under this subsection; 

(ii) for fiscal year 2008, the amount necessary to 

provide 1,000 vouchers for rental assistance under this 

subsection; 

(iii) for fiscal year 2009, the amount necessary to 

provide 1,500 vouchers for rental assistance under this 

subsection; 

(iv) for fiscal year 2010, the amount necessary to 

provide 2,000 vouchers for rental assistance under this 

subsection; and 

(v) for fiscal year 2011, the amount necessary to provide 2,500 vouchers for rental assistance under this 

subsection. 


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87 

(C) FUNDING THROUGH INCREMENTAL ASSISTANCE.— In 

any fiscal year, to the extent that this paragraph requires 

the Secretary to set aside rental assistance amounts for 

use under this paragraph in an amount that exceeds the 

amount set aside in the preceding fiscal year, such requirement shall be effective only to such extent or in such 

amounts as are or have been provided in appropriation 

Acts for such fiscal year for incremental rental assistance 

under this subsection. 

(20) COLLECTION OF UTILITY DATA.— 

(A) PUBLICATION.— The Secretary shall, to the extent 

that data can be collected cost effectively, regularly publish 

such data regarding utility consumption and costs in local 

areas as the Secretary determines will be useful for the establishment of allowances for tenant-paid utilities for families assisted under this subsection. 

(B) USE OF DATA.— The Secretary shall provide such 

data in a manner that— 

(i) avoids unnecessary administrative burdens for 

public housing agencies and owners; and 

(ii) protects families in various unit sizes and building types, and using various utilities, from high rent 

and utility cost burdens relative to income. 

(p) In order to assist elderly families (as defined in section 

3(b)(3)) who elect to live in a shared housing arrangement in which 

they benefit as a result of sharing the facilities of a dwelling with 

others in a manner that effectively and efficiently meets their housing needs and thereby reduces their costs of housing, the Secretary 

shall permit assistance provided under the existing housing and 

moderate rehabilitation programs to be used by such families in 

such arrangements. In carrying out this subsection, the Secretary 

shall issue minimum habitability standards for the purpose of assuring decent, safe, and sanitary housing for such families while 

taking into account the special circumstances of shared housing. 

(q) ADMINISTRATIVE FEES.— 

(1) FEE FOR ONGOING COSTS OF ADMINISTRATION.— 

(A) IN GENERAL.— The Secretary shall establish fees for 

the costs of administering the tenant-based assistance, certificate, voucher, and moderate rehabilitation programs 

under this section. 

(B) FISCAL YEAR 1999.— 

(i) CALCULATION.— For fiscal year 1999, the fee for 

each month for which a dwelling unit is covered by an 

assistance contract shall be— 

(I) in the case of a public housing agency that, 

on an annual basis, is administering a program 

for not more than 600 dwelling units, 7.65 percent 

of the base amount; and 

(II) in the case of an agency that, on an annual 

basis, is administering a program for more than 

600 dwelling units (aa) for the first 600 units, 7.65 

percent of the base amount, and (bb) for any additional dwelling units under the program, 7.0 percent of the base amount. 


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88 

(ii) BASE AMOUNT.— For purposes of this subparagraph, the base amount shall be the higher of— 

(I) the fair market rental established under section 8(c) of this Act (as in effect immediately before the effective date under section 503(a) of the 

Quality Housing and Work Responsibility Act of 

1998) for fiscal year 1993 for a 2-bedroom existing 

rental dwelling unit in the market area of the 

agency, and 

(II) the amount that is the lesser of (aa) such 

fair market rental for fiscal year 1994, or (bb) 

103.5 percent of the amount determined under 

clause (i), 

adjusted based on changes in wage data or other objectively measurable data that reflect the costs of administering the program, as determined by the Secretary. 

The Secretary may require that the base amount be 

not less than a minimum amount and not more than 

a maximum amount. 

(C) SUBSEQUENT FISCAL YEARS.— For subsequent fiscal 

years, the Secretary shall publish a notice in the Federal 

Register, for each geographic area, establishing the 

amount of the fee that would apply for public housing 

agencies administering the program, based on changes in 

wage data or other objectively measurable data that reflect 

the costs of administering the program, as determined by 

the Secretary. 

(D) INCREASE.— The Secretary may increase the fee if 

necessary to reflect the higher costs of administering small 

programs and programs operating over large geographic 

areas. 

(E) DECREASE.— The Secretary may decrease the fee for 

units owned by a public housing agency to reflect reasonable costs of administration. 

(2) FEE FOR PRELIMINARY EXPENSES.— The Secretary shall 

also establish reasonable fees (as determined by the Secretary) 

for— 

(A) the costs of preliminary expenses, in the amount of $500, for a public housing agency, except that such fee 

shall apply to an agency only in the first year that the 

agency administers a tenant-based assistance program 

under this section, and only if, immediately before the effective date under section 503(a) of the Quality Housing 

and Work Responsibility Act of 1998, the agency was not 

administering a tenant-based assistance program under 

the United States Housing Act of 1937 (as in effect immediately before such effective date), in connection with its 

initial increment of assistance received; 

(B) the costs incurred in assisting families who experience difficulty (as determined by the Secretary) in obtaining appropriate housing under the programs; and 

(C) extraordinary costs approved by the Secretary. 

(3) TRANSFER OF FEES IN CASES OF CONCURRENT GEOGRAPHICAL JURISDICTION.— In each fiscal year, if any public 

housing agency provides tenant-based assistance under this 


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section on behalf of a family who uses such assistance for a 

dwelling unit that is located within the jurisdiction of such 

agency but is also within the jurisdiction of another public 

housing agency, the Secretary shall take such steps as may be 

necessary to ensure that the public housing agency that provides the services for a family receives all or part of the administrative fee under this section (as appropriate). 

(4) APPLICABILITY.— This subsection shall apply to fiscal 

year 1999 and fiscal years thereafter. 

(r) PORTABILITY.—(1) IN GENERAL.— (A) Any family receiving tenant-based assistance under subsection (o) may receive such assistance to rent an eligible dwelling unit if the dwelling unit to which 

the family moves is within any area in which a program is being 

administered under this section. 

(B)(i) Notwithstanding subparagraph (A) and subject to any exceptions established under clause (ii) of this subparagraph, a public 

housing agency may require that any family not living within the 

jurisdiction of the public housing agency at the time the family applies for assistance from the agency shall, during the 12-month period beginning on the date of initial receipt of housing assistance 

made available on behalf of the family from such agency, lease and 

occupy an eligible dwelling unit located within the jurisdiction 

served by the agency. 

(ii) The Secretary may establish such exceptions to the authority 

of public housing agencies established under clause (i). 

(2) The public housing agency having authority with respect to 

the dwelling unit to which a family moves under this subsection 

shall have the responsibility of carrying out the provisions of this 

subsection with respect to the family. 

(3) In providing assistance under subsection (o) for any fiscal 

year, the Secretary shall give consideration to any reduction in the 

number of resident families incurred by a public housing agency in 

the preceding fiscal year as a result of the provisions of this subsection. The Secretary shall establish procedures for the compensation of public housing agencies that issue vouchers to families that 

move into or out of the jurisdiction of the public housing agency 

under portability procedures. The Secretary may reserve amounts 

available for assistance under subsection (o) to compensate those 

public housing agencies. 

(4) The provisions of this subsection may not be construed to restrict any authority of the Secretary under any other provision of 

law to provide for the portability of assistance under this section. 

(5) LEASE VIOLATIONS.—A family may not receive a voucher from 

a public housing agency and move to another jurisdiction under the 

tenant-based assistance program if the family has moved out of the 

assisted dwelling unit of the family in violation of a lease, except 

that a family may receive a voucher from a public housing agency 

and move to another jurisdiction under the tenant-based assistance 

program if the family has complied with all other obligations of the 

section 8 program and has moved out of the assisted dwelling unit 

in order to protect the health or safety of an individual who is or 

has been the victim of domestic violence, dating violence, or stalking and who reasonably believed he or she was imminently threatened by harm from further violence if he or she remained in the 

assisted dwelling unit. 


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(s) In selecting families for the provision of assistance under this 

section (including subsection (o)), a public housing agency may not 

exclude or penalize a family solely because the family resides in a 

public housing project. 

(t) ENHANCED VOUCHERS.— (1) IN GENERAL.— Enhanced voucher assistance under this 

subsection for a family shall be voucher assistance under subsection (o), except that under such enhanced voucher assistance— 

(A) subject only to subparagraph (D), the assisted family 

shall pay as rent no less than the amount the family was 

paying on the date of the eligibility event for the project 

in which the family was residing on such date; 

(B) the assisted family may elect to remain in the same 

project in which the family was residing on the date of the 

eligibility event for the project, and if, during any period 

the family makes such an election and continues to so reside, the rent for the dwelling unit of the family in such 

project exceeds the applicable payment standard established pursuant to subsection (o) for the unit, the amount 

of rental assistance provided on behalf of the family shall 

be determined using a payment standard that is equal to 

the rent for the dwelling unit (as such rent may be increased from time-to-time), subject to paragraph (10)(A) of 

subsection (o) and any other reasonable limit prescribed by 

the Secretary, except that a limit shall not be considered 

reasonable for purposes of this subparagraph if it adversely affects such assisted families; 

(C) subparagraph (B) of this paragraph shall not apply 

and the payment standard for the dwelling unit occupied 

by the family shall be determined in accordance with subsection (o) if— 

(i) the assisted family moves, at any time, from such 

project; or 

(ii) the voucher is made available for use by any 

family other than the original family on behalf of 

whom the voucher was provided; and 

(D) if the øincome¿ annual adjusted income of the assisted family declines to a significant extent, the percentage of øincome¿ annual adjusted income paid by the family for rent shall not exceed the greater of 30 percent or 

the percentage of øincome¿ annual adjusted income paid 

at the time of the eligibility event for the project. 

(2) ELIGIBILITY EVENT.— For purposes of this subsection, the 

term ‘‘eligibility event’’ means, with respect to a multifamily 

housing project, the prepayment of the mortgage on such housing project, the voluntary termination of the insurance contract 

for the mortgage for such housing project (including any such 

mortgage prepayment during fiscal year 1996 or a fiscal year 

thereafter or any insurance contract voluntary termination 

during fiscal year 1996 or a fiscal year thereafter), the termination or expiration of the contract for rental assistance under 

section 8 of the United States Housing Act of 1937 for such 

housing project (including any such termination or expiration 

during fiscal years after fiscal year 1994 prior to the effective 


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91 

date of the Departments of Veterans Affairs and Housing and 

Urban Development, and Independent Agencies Appropriations 

Act, 2001), or the transaction under which the project is preserved as affordable housing, that, under paragraphs (3) and 

(4) of section 515(c), section 524(d) of the Multifamily Assisted 

Housing Reform and Affordability Act of 1997 (42 U.S.C. 1437f 

note), section 223(f) of the Low-Income Housing Preservation 

and Resident Homeownership Act of 1990 (12 U.S.C. 4113(f)), 

or section 201(p) of the Housing and Community Development 

Amendments of 1978 (12 U.S.C. 1715z–1a(p)), results in tenants in such housing project being eligible for enhanced voucher assistance under this subsection. 

(3) TREATMENT OF ENHANCED VOUCHERS PROVIDED UNDER

OTHER AUTHORITY.— 

(A) IN GENERAL.— Notwithstanding any other provision 

of law, any enhanced voucher assistance provided under 

any authority specified in subparagraph (B) shall (regardless of the date that the amounts for providing such assistance were made available) be treated, and subject to the 

same requirements, as enhanced voucher assistance under 

this subsection. 

(B) IDENTIFICATION OF OTHER AUTHORITY.— The authority specified in this subparagraph is the authority under— 

(i) the 10th, 11th, and 12th provisos under the ‘‘Preserving Existing Housing Investment’’ account in title 

II of the Departments of Veterans Affairs and Housing 

and Urban Development, and Independent Agencies 

Appropriations Act, 1997 (Public Law 104–204; 110 

Stat. 2884), pursuant to such provisos, the first proviso under the ‘‘Housing Certificate Fund’’ account in 

title II of the Departments of Veterans Affairs and 

Housing and Urban Development, and Independent 

Agencies Appropriations Act, 1998 (Public Law 105– 

65; 111 Stat. 1351), or the first proviso under the 

‘‘Housing Certificate Fund’’ account in title II of the 

Departments of Veterans Affairs and Housing and 

Urban Development, and Independent Agencies Appropriations Act, 1999 (Public Law 105–276; 112 Stat. 

2469); and 

(ii) paragraphs (3) and (4) of section 515(c) of the 

Multifamily Assisted Housing Reform and Affordability Act of 1997 (42 U.S.C. 1437f note), as in effect 

before the enactment of this Act. 

(4) AUTHORIZATION OF APPROPRIATIONS.— There are authorized to be appropriated for each of fiscal years 2000, 2001, 

2002, 2003, and 2004 such sums as may be necessary for enhanced voucher assistance under this subsection. 

(u) In the case of low-income families living in rental projects rehabilitated under section 17 of this Act or section 533 of the Housing Act of 1949 before rehabilitation— 

(1) vouchers under this section shall be made for families 

who are required to move out of their units because of the 

physical rehabilitation activities or because of overcrowding; 

(2) at the discretion of each public housing agency or other 

agency administering the allocation of assistance or vouchers 


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92 

under this section may be made for families who would have 

to pay more than 30 percent of their adjusted income for rent 

after rehabilitation whether they choose to remain in, or to 

move from, the project; and 

(3) the Secretary shall allocate assistance for vouchers under 

this section to ensure that sufficient resources are available to 

address the physical or economic displacement, or potential 

economic displacement, of existing tenants pursuant to paragraphs (1) and (2). 

(v) The Secretary may extend expiring contracts entered into 

under this section for project-based loan management assistance to 

the extent necessary to prevent displacement of low-income families receiving such assistance as of September 30, 1996. 

(x) FAMILY UNIFICATION.— 

(1) INCREASE IN BUDGET AUTHORITY.— The budget authority 

available under section 5(c) for assistance under section 8(b) is 

authorized to be increased by $100,000,000 on or after October 

1, 1992, and by $104,200,000 on or after October 1, 1993. 

(2) USE OF FUNDS.— The amounts made available under this 

subsection shall be used only in connection with tenant-based 

assistance under section 8 on behalf of (A) any family (i) who 

is otherwise eligible for such assistance, and (ii) who the public 

child welfare agency for the jurisdiction has certified is a family for whom the lack of adequate housing is a primary factor 

in the imminent placement of the family’s child or children in 

out-of-home care or the delayed discharge of a child or children 

to the family from out-of-home care and (B) for a period not to 

exceed ø18¿ 36 months, otherwise eligible youths who have attained at least 18 years of age and not more than ø21¿ 24 

years of age and who have left foster care, or will leave foster 

care within 90 days, in accordance with a transition plan described in section 475(5)(H) of the Social Security Act, and is 

homeless or is at risk of becoming homeless at age 16 or older. 

(3) ALLOCATION.— The amounts made available under this 

subsection shall be allocated by the Secretary through a national competition among applicants based on demonstrated 

need for assistance under this subsection. To be considered for 

assistance, an applicant shall submit to the Secretary a written proposal containing a report from the public child welfare 

agency serving the jurisdiction of the applicant that describes 

how a lack of adequate housing in the jurisdiction is resulting 

in the initial or prolonged separation of children from their 

families, and how the applicant will coordinate with the public 

child welfare agency to identify eligible families and provide 

the families with assistance under this subsection. 

(4) COORDINATION BETWEEN PUBLIC HOUSING AGENCIES AND

PUBLIC CHILD WELFARE AGENCIES.— The Secretary shall, not 

later than the expiration of the 180-day period beginning on the 

date of the enactment of the Housing Opportunity Through 

Modernization Act of 2015 and after consultation with other appropriate Federal agencies, issue guidance to improve coordination between public housing agencies and public child welfare 

agencies in carrying out the program under this subsection, 

which shall provide guidance on— 


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93 

(A) identifying eligible recipients for assistance under 

this subsection; 

(B) coordinating with other local youth and family providers in the community and participating in the Continuum of Care program established under subtitle C of 

title IV of the McKinney-Vento Homeless Assistance Act (42 

U.S.C. 11381 et seq.); 

(C) implementing housing strategies to assist eligible 

families and youth; 

(D) aligning system goals to improve outcomes for families and youth and reducing lapses in housing for families 

and youth; and 

(E) identifying resources that are available to eligible 

families and youth to provide supportive services available 

through parts B and E of title IV of the Social Security Act 

(42 U.S.C. 621 et seq.; 670 et seq.) or that the head of 

household of a family or youth may be entitled to receive 

under section 477 of the Social Security Act (42 U.S.C. 

677). 

ø(4)¿ (5) DEFINITIONS.— For purposes of this subsection: 

(A) APPLICANT.— The term ‘‘applicant’’ means a public 

housing agency or any other agency responsible for administering assistance under section 8. 

(B) PUBLIC CHILD WELFARE AGENCY.— The term ‘‘public 

child welfare agency’’ means the public agency responsible 

under applicable State law for determining that a child is 

at imminent risk of placement in out-of-home care or that 

a child in out-of-home care under the supervision of the 

public agency may be returned to his or her family. 

(y) HOMEOWNERSHIP OPTION.— 

(1) USE OF ASSISTANCE FOR HOMEOWNERSHIP.— A public 

housing agency providing tenant-based assistance on behalf of 

an eligible family under this section may provide assistance for 

an eligible family that purchases a dwelling unit (including a 

unit under a lease-purchase agreement) that will be owned by 

1 or more members of the family, and will be occupied by the 

family, if the family— 

(A) is a first-time homeowner, or owns or is acquiring 

shares in a cooperative; 

(B) demonstrates that the family has income from employment or other sources (other than public assistance, 

except that the Secretary may provide for the consideration of public assistance in the case of an elderly family 

or a disabled family), as determined in accordance with requirements of the Secretary, that is not less than twice the 

payment standard established by the public housing agency (or such other amount as may be established by the 

Secretary); 

(C) except as provided by the Secretary, demonstrates at 

the time the family initially receives tenant-based assistance under this subsection that one or more adult members of the family have achieved employment for the period as the Secretary shall require; 

(D) participates in a homeownership and housing counseling program provided by the agency; and 


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94 

(E) meets any other initial or continuing requirements 

established by the public housing agency in accordance 

with requirements established by the Secretary. 

(2) DETERMINATION OF AMOUNT OF ASSISTANCE.— 

(A) MONTHLY EXPENSES NOT EXCEEDING PAYMENT STANDARD.— If the monthly homeownership expenses, as determined in accordance with requirements established by the 

Secretary, do not exceed the payment standard, the 

monthly assistance payment shall be the amount by which 

the homeownership expenses exceed the highest of the following amounts, rounded to the nearest dollar: 

(i) 30 percent of the monthly adjusted income of the 

family. 

(ii) 10 percent of the monthly income of the family. 

(iii) If the family is receiving payments for welfare 

assistance from a public agency, and a portion of those 

payments, adjusted in accordance with the actual 

housing costs of the family, is specifically designated 

by that agency to meet the housing costs of the family, 

the portion of those payments that is so designated. 

(B) MONTHLY EXPENSES EXCEED PAYMENT STANDARD.— If 

the monthly homeownership expenses, as determined in 

accordance with requirements established by the Secretary, exceed the payment standard, the monthly assistance payment shall be the amount by which the applicable 

payment standard exceeds the highest of the amounts 

under clauses (i), (ii), and (iii) of subparagraph (A). 

(3) INSPECTIONS AND CONTRACT CONDITIONS.— 

(A) IN GENERAL.— Each contract for the purchase of a 

unit to be assisted under this section shall— 

(i) provide for pre-purchase inspection of the unit by 

an independent professional; and 

(ii) require that any cost of necessary repairs be paid 

by the seller. 

(B) ANNUAL INSPECTIONS NOT REQUIRED.— The requirement under subsection (o)(8)(A)(ii) for annual inspections 

shall not apply to units assisted under this section. 

(4) OTHER AUTHORITY OF THE SECRETARY.— The Secretary 

may— 

(A) limit the term of assistance for a family assisted 

under this subsection; and 

(B) modify the requirements of this subsection as the 

Secretary determines to be necessary to make appropriate 

adaptations for lease-purchase agreements. 

(5) INAPPLICABILITY OF CERTAIN PROVISIONS.— Assistance 

under this subsection shall not be subject to the requirements 

of the following provisions: 

(A) Subsection (c)(3)(B) of this section. 

(B) Subsection (d)(1)(B)(i) of this section. 

(C) Any other provisions of this section governing maximum amounts payable to owners and amounts payable by 

assisted families. 

(D) Any other provisions of this section concerning contracts between public housing agencies and owners. 


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95 

(E) Any other provisions of this Act that are inconsistent 

with the provisions of this subsection. 

(6) REVERSION TO RENTAL STATUS.— (A) FHA-INSURED MORTGAGES.— If a family receiving assistance under this subsection for occupancy of a dwelling 

defaults under a mortgage for the dwelling insured by the 

Secretary under the National Housing Act, the family may 

not continue to receive rental assistance under this section 

unless the family (i) transfers to the Secretary marketable 

title to the dwelling, (ii) moves from the dwelling within 

the period established or approved by the Secretary, and 

(iii) agrees that any amounts the family is required to pay 

to reimburse the escrow account under section 23(d)(3) 

may be deducted by the public housing agency from the assistance payment otherwise payable on behalf of the family. 

(B) OTHER MORTGAGES.— If a family receiving assistance 

under this subsection defaults under a mortgage not insured under the National Housing Act, the family may not 

continue to receive rental assistance under this section unless it complies with requirements established by the Secretary. 

(C) ALL MORTGAGES.— A family receiving assistance 

under this subsection that defaults under a mortgage may 

not receive assistance under this subsection for occupancy 

of another dwelling owned by one or more members of the 

family. 

(7) DOWNPAYMENT ASSISTANCE.— (A) AUTHORITY.— A public housing agency may, in lieu 

of providing monthly assistance payments under this subsection on behalf of a family eligible for such assistance 

and at the discretion of the public housing agency, provide 

assistance for the family in the form of a single grant to 

be used only as a contribution toward the downpayment 

required in connection with the purchase of a dwelling for 

fiscal year 2000 and each fiscal year thereafter to the extent provided in advance in appropriations Acts. 

(B) AMOUNT.— The amount of a downpayment grant on 

behalf of an assisted family may not exceed the amount 

that is equal to the sum of the assistance payments that 

would be made during the first year of assistance on behalf 

of the family, based upon the income of the family at the 

time the grant is to be made. 

(8) DEFINITION OF FIRST-TIME HOMEOWNER.— For purposes of 

this subsection, the term ‘‘first-time homeowner’’ means— 

(A) a family, no member of which has had a present 

ownership interest in a principal residence during the 3 

years preceding the date on which the family initially receives assistance for homeownership under this subsection; 

and 

(B) any other family, as the Secretary may prescribe. 

(z) TERMINATION OF SECTION 8 CONTRACTS AND REUSE OF RECAP- TURED BUDGET AUTHORITY.— 

(1) GENERAL AUTHORITY.— The Secretary may reuse any 

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count of expiration or termination of a housing assistance payments contract only for one or more of the following: 

(A) TENANT-BASED ASSISTANCE.— Pursuant to a contract 

with a public housing agency, to provide tenant-based assistance under this section to families occupying units formerly assisted under the terminated contract. 

(B) PROJECT-BASED ASSISTANCE.— Pursuant to a contract 

with an owner, to attach assistance to one or more structures under this section, for relocation of families occupying units formerly assisted under the terminated contract. 

(2) FAMILIES OCCUPYING UNITS FORMERLY ASSISTED UNDER

TERMINATED CONTRACT.— Pursuant to paragraph (1), the Secretary shall first make available tenant- or project-based assistance to families occupying units formerly assisted under 

the terminated contract. The Secretary shall provide projectbased assistance in instances only where the use of tenantbased assistance is determined to be infeasible by the Secretary. 

(aa) REFINANCING INCENTIVE.— 

(1) IN GENERAL.— The Secretary may pay all or a part of the 

up front costs of refinancing for each project that— 

(A) is constructed, substantially rehabilitated, or moderately rehabilitated under this section; 

(B) is subject to an assistance contract under this section; and 

(C) was subject to a mortgage that has been refinanced 

under section 223(a)(7) or section 223(f) of the National 

Housing Act to lower the periodic debt service payments of 

the owner. 

(2) SHARE FROM REDUCED ASSISTANCE PAYMENTS.— The Secretary may pay the up front cost of refinancing only— 

(A) to the extent that funds accrue to the Secretary from 

the reduced assistance payments that results from the refinancing; and 

(B) after the application of amounts in accordance with 

section 1012 of the Stewart B. McKinney Homeless Assistance Amendments Act of 1988. 

(bb) TRANSFER, REUSE, AND RESCISSION OF BUDGET AUTHOR- ITY.— 

(1) TRANSFER OF BUDGET AUTHORITY.— If an assistance contract under this section, other than a contract for tenant-based 

assistance, is terminated or is not renewed, or if the contract 

expires, the Secretary shall, in order to provide continued assistance to eligible families, including eligible families receiving the benefit of the project-based assistance at the time of 

the termination, transfer any budget authority remaining in 

the contract to another contract. The transfer shall be under 

such terms as the Secretary may prescribe. 

(2) REUSE AND RESCISSION OF CERTAIN RECAPTURED BUDGET

AUTHORITY.— Notwithstanding paragraph (1), if a projectbased assistance contract for an eligible multifamily housing 

project subject to actions authorized under title I is terminated 

or amended as part of restructuring under section 517 of the 

Multifamily Assisted Housing Reform and Affordability Act of 


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97 

1997, the Secretary shall recapture the budget authority not 

required for the terminated or amended contract and use such 

amounts as are necessary to provide housing assistance for the 

same number of families covered by such contract for the remaining term of such contract, under a contract providing for 

project-based or tenant-based assistance. The amount of budget 

authority saved as a result of the shift to project-based or tenant-based assistance shall be rescinded. 

(cc) LAW ENFORCEMENT AND SECURITY PERSONNEL.— (1) IN GENERAL.— Notwithstanding any other provision of 

this Act, in the case of assistance attached to a structure, for 

the purpose of increasing security for the residents of a project, 

an owner may admit, and assistance under this section may be 

provided to, police officers and other security personnel who 

are not otherwise eligible for assistance under the Act. 

(2) RENT REQUIREMENTS.— With respect to any assistance 

provided by an owner under this subsection, the Secretary 

may— 

(A) permit the owner to establish such rent requirements and other terms and conditions of occupancy that 

the Secretary considers to be appropriate; and 

(B) require the owner to submit an application for those 

rent requirements, which application shall include such information as the Secretary, in the discretion of the Secretary, determines to be necessary. 

(3) APPLICABILITY.— This subsection shall apply to fiscal 

year 1999 and fiscal years thereafter. 

(dd) TENANT-BASED CONTRACT RENEWALS.—Subject to amounts 

provided in appropriation Acts, starting in fiscal year 1999, the 

Secretary shall renew all expiring tenant-based annual contribution contracts under this section by applying an inflation factor 

based on local or regional factors to an allocation baseline. The allocation baseline shall be calculated by including, at a minimum, 

amounts sufficient to ensure continued assistance for the actual 

number of families assisted as of October 1, 1997, with appropriate 

upward adjustments for incremental assistance and additional families authorized subsequent to that date. 

* * * * * * * 

SEC. 9. PUBLIC HOUSING CAPITAL AND OPERATING FUNDS. 

(a) MERGER INTO CAPITAL FUND.—Except as otherwise provided 

in the Quality Housing and Work Responsibility Act of 1998, any 

assistance made available for public housing under section 14 of 

this Act before October 1, 1999, shall be merged into the Capital 

Fund established under subsection (d). 

(b) MERGER INTO OPERATING FUND.—Except as otherwise provided in the Quality Housing and Work Responsibility Act of 1998, 

any assistance made available for public housing under section 9 

of this Act before October 1, 1999, shall be merged into the Operating Fund established under subsection (e). 

(c) ALLOCATION AMOUNT.— (1) IN GENERAL.— For fiscal year 2000 and each fiscal year 

thereafter, the Secretary shall allocate amounts in the Capital 

Fund and Operating Funds for assistance for public housing 

agencies eligible for such assistance. The Secretary shall deterVerDate Sep 11 2014 05:50 Jan 29, 2016 Jkt 059006 PO 00000 Frm 00097 Fmt 6659 Sfmt 6601 E:\HR\OC\HR397.XXX HR397

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mine the amount of the allocation for each eligible agency, 

which shall be, for any fiscal year beginning after the effective 

date of the formulas described in subsections (d)(2) and (e)(2)— 

(A) for assistance from the Capital Fund, the amount determined for the agency under the formula under subsection (d)(2); and 

(B) for assistance from the Operating Fund, the amount 

determined for the agency under the formula under subsection (e)(2). 

(2) FUNDING.— There are authorized to be appropriated for 

assistance for public housing agencies under this section the 

following amounts: 

(A) CAPITAL FUND.— For allocations of assistance from 

the Capital Fund, $3,000,000,000 for fiscal year 1999, and 

such sums as may be necessary for fiscal years 2000, 2001, 

2002, and 2003. 

(B) OPERATING FUND.— For allocations of assistance 

from the Operating Fund, $2,900,000,000 for fiscal year 

1999, and such sums as may be necessary for each of fiscal 

years 2000, 2001, 2002, and 2003. 

(d) CAPITAL FUND.— (1) IN GENERAL.— The Secretary shall establish a Capital 

Fund for the purpose of making assistance available to public 

housing agencies to carry out capital and management activities, including— 

(A) the development, financing, and modernization of 

public housing projects, including the redesign, reconstruction, and reconfiguration of public housing sites and buildings (including accessibility improvements) and the development of mixed-finance projects; 

(B) vacancy reduction; 

(C) addressing deferred maintenance needs and the replacement of obsolete utility systems and dwelling equipment; 

(D) planned code compliance; 

(E) management improvements, including the establishment and initial operation of computer centers in and 

around public housing through a Neighborhood Networks 

initiative, for the purpose of enhancing the self-sufficiency, 

employability, and economic self-reliance of public housing 

residents by providing them with onsite computer access 

and training resources; 

(F) demolition and replacement; 

(G) resident relocation; 

(H) capital expenditures to facilitate programs to improve the empowerment and economic self-sufficiency of 

public housing residents and to improve resident participation; 

(I) capital expenditures to improve the security and safety of residents; 

(J) homeownership activities, including programs under 

section 32; 

(K) improvement of energy and water-use efficiency by 

installing fixtures and fittings that conform to the American Society of Mechanical Engineers/American National 


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99 

Standards Institute standards A112.19.2–1998 and 

A112.18.1–2000, or any revision thereto, applicable at the 

time of installation, and by increasing energy efficiency 

and water conservation by such other means as the Secretary determines are appropriate; and 

(L) integrated utility management and capital planning 

to maximize energy conservation and efficiency measures. 

(2) FORMULA.— The Secretary shall develop a formula for determining the amount of assistance provided to public housing 

agencies from the Capital Fund for a fiscal year, which shall 

include a mechanism to reward performance. The formula may 

take into account such factors as— 

(A) the number of public housing dwelling units owned, 

assisted, or operated by the public housing agency, the 

characteristics and locations of the projects, and the characteristics of the families served and to be served (including the incomes of the families); 

(B) the need of the public housing agency to carry out 

rehabilitation and modernization activities, replacement 

housing, and reconstruction, construction, and demolition 

activities related to public housing dwelling units owned, 

assisted, or operated by the public housing agency, including backlog and projected future needs of the agency; 

(C) the cost of constructing and rehabilitating property 

in the area; 

(D) the need of the public housing agency to carry out 

activities that provide a safe and secure environment in 

public housing units owned, assisted, or operated by the 

public housing agency; 

(E) any record by the public housing agency of exemplary performance in the operation of public housing, as 

indicated by the system of performance indicators established pursuant to section 6(j); and 

(F) any other factors that the Secretary determines to be 

appropriate. 

(3) CONDITIONS ON USE FOR DEVELOPMENT AND MODERNIZA- TION.— 

(A) DEVELOPMENT.— Except as otherwise provided in 

this Act, any public housing developed using amounts provided under this subsection, or under section 14 as in effect before the effective date under section 503(a) of the 

Quality Housing and Work Responsibility Act of 1998, 

shall be operated under the terms and conditions applicable to public housing during the 40-year period that begins 

on the date on which the project (or stage of the project) 

becomes available for occupancy. 

(B) MODERNIZATION.— Except as otherwise provided in 

this Act, any public housing or portion thereof that is modernized using amounts provided under this subsection or 

under section 14 (as in effect before the effective date 

under section 503(a) of the Quality Housing and Work Responsibility Act of 1998) shall be maintained and operated 

under the terms and conditions applicable to public housing during the 20-year period that begins on the latest 

date on which modernization is completed. 


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(C) APPLICABILITY OF LATEST EXPIRATION DATE.— Public 

housing subject to this paragraph or to any other provision 

of law mandating the operation of the housing as public 

housing or under the terms and conditions applicable to 

public housing for a specified length of time, shall be maintained and operated as required until the latest such expiration date. 

(e) OPERATING FUND.— 

(1) IN GENERAL.— The Secretary shall establish an Operating Fund for the purpose of making assistance available to 

public housing agencies for the operation and management of 

public housing, including— 

(A) procedures and systems to maintain and ensure the 

efficient management and operation of public housing 

units (including amounts sufficient to pay for the reasonable costs of review by an independent auditor of the documentation or other information maintained pursuant to 

section 6(j)(6) by a public housing agency or resident management corporation to substantiate the performance of 

that agency or corporation); 

(B) activities to ensure a program of routine preventative maintenance; 

(C) anticrime and antidrug activities, including the costs 

of providing adequate security for public housing residents, 

including above-baseline police service agreements; 

(D) activities related to the provision of services, including service coordinators for elderly persons or persons with 

disabilities; 

(E) activities to provide for management and participation in the management and policy making of public housing by public housing residents; 

(F) the costs of insurance; 

(G) the energy costs associated with public housing 

units, with an emphasis on energy conservation; 

(H) the costs of administering a public housing work program under section 12, including the costs of any related 

insurance needs; 

(I) the costs of repaying, together with rent contributions, debt incurred to finance the rehabilitation and development of public housing units, which shall be subject to 

such reasonable requirements as the Secretary may establish; 

(J) the costs associated with the operation and management of mixed finance projects, to the extent appropriate; 

and 

(K) the costs of operating computer centers in public 

housing through a Neighborhood Networks initiative described in subsection (d)(1)(E), and of activities related to 

that initiative. 

(2) FORMULA.— 

(A) IN GENERAL.— The Secretary shall establish a formula for determining the amount of assistance provided to 

public housing agencies from the Operating Fund for a fiscal year. The formula may take into account— 


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(i) standards for the costs of operating and reasonable projections of income, taking into account the 

characteristics and locations of the public housing 

projects and characteristics of the families served and 

to be served (including the incomes of the families), or 

the costs of providing comparable services as determined in accordance with criteria or a formula representing the operations of a prototype well-managed 

public housing project; 

(ii) the number of public housing dwelling units 

owned, assisted, or operated by the public housing 

agency; 

(iii) the number of public housing dwelling units 

owned, assisted, or operated by the public housing 

agency that are chronically vacant and the amount of 

assistance appropriate for those units; 

(iv) to the extent quantifiable, the extent to which 

the public housing agency provides programs and activities designed to promote the economic self-sufficiency and management skills of public housing residents; 

(v) the need of the public housing agency to carry 

out anti-crime and anti-drug activities, including providing adequate security for public housing residents; 

(vi) the amount of public housing rental income foregone by the public housing agency as a result of escrow savings accounts under section 23(d)(2) for families participating in a family self-sufficiency program 

of the agency under such section 23; and 

(vii) any other factors that the Secretary determines to 

be appropriate. 

(B) INCENTIVE TO INCREASE CERTAIN RENTAL INCOME.— 

The formula shall provide an incentive to encourage public 

housing agencies to facilitate increases in earned income 

by families in occupancy. Any such incentive shall provide 

that the agency shall benefit from increases in such rental 

income and that such amounts accruing to the agency pursuant to such benefit may be used only for low-income 

housing or to benefit the residents of the public housing 

agency. 

(C) TREATMENT OF SAVINGS.— 

(i) IN GENERAL.— The treatment of utility and waste 

management costs under the formula shall provide 

that a public housing agency shall receive the full financial benefit from any reduction in the cost of utilities or waste management resulting from any contract 

with a third party to undertake energy conservation 

improvements in one or more of its public housing 

projects. 

(ii) THIRD PARTY CONTRACTS.— Contracts described 

in clause (i) may include contracts for equipment conversions to less costly utility sources, projects with 

resident-paid utilities, and adjustments to frozen base 

year consumption, including systems repaired to meet 


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applicable building and safety codes and adjustments 

for occupancy rates increased by rehabilitation. 

(iii) TERM OF CONTRACT.— The total term of a contract described in clause (i) shall not exceed 20 years 

to allow longer payback periods for retrofits, including 

windows, heating system replacements, wall insulation, site-based generation, advanced energy savings 

technologies, including renewable energy generation, 

and other such retrofits. 

(iv) EXISTING CONTRACTS.— The term of a contract 

described in clause (i) that, as of the date of enactment 

of this clause, is in repayment and has a term of not 

more than 12 years, may be extended to a term of not 

more than 20 years to permit additional energy conservation improvements without requiring the reprocurement of energy performance contractors. 

(3) CONDITION ON USE.— No portion of any public housing 

project operated using amounts provided under this subsection, 

or under this section as in effect before the effective date under 

section 503(a) of the Quality Housing and Work Responsibility 

Act of 1998, may be disposed of before the expiration of the 10- 

year period beginning upon the conclusion of the fiscal year for 

which such amounts were provided, except as otherwise provided in this Act. 

(f) NEGOTIATED RULEMAKING PROCEDURE.—The formulas under 

subsections (d)(2) and (e)(2) shall be developed according to procedures for issuance of regulations under the negotiated rulemaking 

procedure under subchapter III of chapter 5 of title 5, United 

States Code. 

(g) LIMITATIONS ON USE OF FUNDS.— 

(1) FLEXIBILITY øFOR CAPITAL FUND AMOUNTS¿ IN USE OF

FUNDS .— 

(A) FLEXIBILITY FOR CAPITAL FUND AMOUNTS.—Of any 

amounts appropriated for fiscal year 2000 or any fiscal 

year thereafter that are allocated for fiscal year 2000 or 

any fiscal year thereafter from the Capital Fund for any 

public housing agency, the agency may use not more than 

20 percent for activities that are eligible under subsection 

(e) for assistance with amounts from the Operating Fund, 

but only if the public housing agency plan for the agency 

provides for such use. 

(B) FLEXIBILITY FOR OPERATING FUND AMOUNTS.— Of 

any amounts appropriated for fiscal year 2016 or any fiscal 

year thereafter that are allocated for fiscal year 2016 or any 

fiscal year thereafter from the Operating Fund for any public housing agency, the agency may use not more than 20 

percent for activities that are eligible under subsection (d) 

for assistance with amounts from the Capital Fund, but 

only if the public housing plan under section 5A for the 

agency provides for such use. 

(2) FULL FLEXIBILITY FOR SMALL PHA’S.— Of any amounts allocated for any fiscal year for any public housing agency that 

owns or operates less than 250 public housing dwelling units, 

is not designated pursuant to section 6(j)(2) as a troubled public housing agency, and (in the determination of the Secretary) 


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is operating and maintaining its public housing in a safe, 

clean, and healthy condition, the agency may use any such 

amounts for any eligible activities under subsections (d)(1) and 

(e)(1), regardless of the fund from which the amounts were allocated and provided. This subsection shall take effect on the 

date of the enactment of the Quality Housing and Work Responsibility Act of 1998. 

(3) LIMITATION ON NEW CONSTRUCTION.— 

(A) IN GENERAL.— Except as provided in subparagraphs 

(B) and (C), a public housing agency may not use any of 

the amounts allocated for the agency from the Capital 

Fund or Operating Fund for the purpose of constructing 

any public housing unit, if such construction would result 

in a net increase from the number of public housing units 

owned, assisted, or operated by the public housing agency 

on October 1, 1999, including any public housing units demolished as part of any revitalization effort. 

(B) EXCEPTION REGARDING USE OF ASSISTANCE.— A public housing agency may use amounts allocated for the 

agency from the Capital Fund or Operating Fund for the 

construction and operation of housing units that are available and affordable to low-income families in excess of the 

limitations on new construction set forth in subparagraph 

(A), but the formulas established under subsections (d)(2) 

and (e)(2) shall not provide additional funding for the specific purpose of allowing construction and operation of 

housing in excess of those limitations (except to the extent 

provided in subparagraph (C)). 

(C) EXCEPTION REGARDING FORMULAS.— Subject to reasonable limitations set by the Secretary, the formulas established under subsections (d)(2) and (e)(2) may provide 

additional funding for the operation and modernization 

costs (but not the initial development costs) of housing in 

excess of amounts otherwise permitted under this paragraph, and such amounts may be so used, if— 

(i) such units are part of a mixed-finance project or 

otherwise leverage significant additional private or 

public investment; and 

(ii) the estimated cost of the useful life of the project 

is less than the estimated cost of providing tenantbased assistance under section 8(o) for the same period of time. 

(h) TECHNICAL ASSISTANCE.—To the extent amounts are provided 

in advance in appropriations Acts, the Secretary may make grants 

or enter into contracts or cooperative agreements in accordance 

with this subsection for purposes of providing, either directly or indirectly— 

(1) technical assistance to public housing agencies, resident 

councils, resident organizations, and resident management corporations, including assistance relating to monitoring and inspections; 

(2) training for public housing agency employees and residents; 

(3) data collection and analysis; 


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(4) training, technical assistance, and education to public 

housing agencies that are— 

(A) at risk of being designated as troubled under section 

6(j), to assist such agencies from being so designated; and 

(B) designated as troubled under section 6(j), to assist 

such agencies in achieving the removal of that designation; 

(5) contract expertise; 

(6) training and technical assistance to assist in the oversight and management of public housing or tenant-based assistance; 

(7) clearinghouse services in furtherance of the goals and activities of this subsection; and 

(8) assistance in connection with the establishment and operation of computer centers in public housing through a Neighborhood Networks initiative described in subsection (d)(1)(E). 

As used in this subsection, the terms ‘‘training’’ and ‘‘technical assistance’’ shall include training or technical assistance and the cost 

of necessary travel for participants in such training or technical assistance, by or to officials and employees of the Department and of 

public housing agencies, and to residents and to other eligible 

grantees. 

(i) ELIGIBILITY OF UNITS ACQUIRED FROM PROCEEDS OF SALES

UNDER DEMOLITION OR DISPOSITION PLAN.—If a public housing 

agency uses proceeds from the sale of units under a homeownership program in accordance with section 32 to acquire additional 

units to be sold to low-income families, the additional units shall 

be counted as public housing for purposes of determining the 

amount of the allocation to the agency under this section until sale 

by the agency, but in no case longer than 5 years. 

(j) PENALTY FOR SLOW EXPENDITURE OF CAPITAL FUNDS.— 

(1) OBLIGATION OF AMOUNTS.— Except as provided in paragraph (4) and subject to paragraph (2), a public housing agency 

shall obligate any assistance received under this section not 

later than 24 months after, as applicable— 

(A) the date on which the funds become available to the 

agency for obligation in the case of modernization; or 

(B) the date on which the agency accumulates adequate 

funds to undertake modernization, substantial rehabilitation, or new construction of units. 

(2) EXTENSION OF TIME PERIOD FOR OBLIGATION.— The Secretary— 

(A) may, extend the time period under paragraph (1) for 

a public housing agency, for such period as the Secretary 

determines to be necessary, if the Secretary determines 

that the failure of the agency to obligate assistance in a 

timely manner is attributable to— 

(i) litigation; 

(ii) obtaining approvals of the Federal Government 

or a State or local government; 

(iii) complying with environmental assessment and 

abatement requirements; 

(iv) relocating residents; 

(v) an event beyond the control of the public housing 

agency; or 


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(vi) any other reason established by the Secretary by 

notice published in the Federal Register; 

(B) shall disregard the requirements of paragraph (1) 

with respect to any unobligated amounts made available to 

a public housing agency, to the extent that the total of 

such amounts does not exceed 10 percent of the original 

amount made available to the public housing agency; and 

(C) may, with the prior approval of the Secretary, extend 

the time period under paragraph (1), for an additional period not to exceed 12 months, based on— 

(i) the size of the public housing agency; 

(ii) the complexity of capital program of the public 

housing agency; 

(iii) any limitation on the ability of the public housing agency to obligate the amounts allocated for the 

agency from the Capital Fund in a timely manner as 

a result of State or local law; or 

(iv) such other factors as the Secretary determines 

to be relevant. 

(3) EFFECT OF FAILURE TO COMPLY.— 

(A) PROHIBITION OF NEW ASSISTANCE.— A public housing 

agency shall not be awarded assistance under this section 

for any month during any fiscal year in which the public 

housing agency has funds unobligated in violation of paragraph (1) or (2). 

(B) WITHHOLDING OF ASSISTANCE.— During any fiscal 

year described in subparagraph (A), the Secretary shall 

withhold all assistance that would otherwise be provided 

to the public housing agency. If the public housing agency 

cures its failure to comply during the year, it shall be provided with the share attributable to the months remaining 

in the year. 

(C) REDISTRIBUTION.— The total amount of any funds 

not provided public housing agencies by operation of this 

paragraph shall be allocated for agencies determined 

under section 6(j) to be high-performing. 

(4) EXCEPTION TO OBLIGATION REQUIREMENTS.— 

(A) IN GENERAL.— Subject to subparagraph (B), if the 

Secretary has consented, before the effective date under 

section 503(a) of the Quality Housing and Work Responsibility Act of 1998, to an obligation period for any agency 

longer than provided under paragraph (1), a public housing agency that obligates its funds before the expiration of 

that period shall not be considered to be in violation of 

paragraph (1). 

(B) PRIOR FISCAL YEARS.— Notwithstanding subparagraph (A), any funds appropriated to a public housing 

agency for fiscal year 1997 or prior fiscal years shall be 

fully obligated by the public housing agency not later than 

September 30, 1999. 

(5) EXPENDITURE OF AMOUNTS.— 

(A) IN GENERAL.— A public housing agency shall spend 

any assistance received under this section not later than 

4 years (plus the period of any extension approved by the 


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106 

Secretary under paragraph (2)) after the date on which 

funds become available to the agency for obligation. 

(B) ENFORCEMENT.— The Secretary shall enforce the requirement of subparagraph (A) through default remedies 

up to and including withdrawal of the funding. 

(6) RIGHT OF RECAPTURE.— Any obligation entered into by a 

public housing agency shall be subject to the right of the Secretary to recapture the obligated amounts for violation by the 

public housing agency of the requirements of this subsection. 

(7) TREATMENT OF REPLACEMENT RESERVE.— The requirements of this subsection shall not apply to funds held in replacement reserves established pursuant to subsection (n). 

(k) TREATMENT OF NONRENTAL INCOME.—A public housing agency that receives income from nonrental sources (as determined by 

the Secretary) may retain and use such amounts without any decrease in the amounts received under this section from the Capital 

or Operating Fund. Any such nonrental amounts retained shall be 

used only for low-income housing or to benefit the residents assisted by the public housing agency. 

(l) PROVISION OF ONLY CAPITAL OR OPERATING ASSISTANCE.— 

(1) AUTHORITY.— In appropriate circumstances, as determined by the Secretary, a public housing agency may commit 

capital assistance only, or operating assistance only, for public 

housing units, which assistance shall be subject to all of the requirements applicable to public housing except as otherwise 

provided in this subsection. 

(2) EXEMPTIONS.— In the case of any public housing unit assisted pursuant to the authority under paragraph (1), the Secretary may, by regulation, reduce the period under subsection 

(d)(3) or (e)(3), as applicable, during which such units must be 

operated under requirements applicable to public housing. In 

cases in which there is commitment of operating assistance but 

no commitment of capital assistance, the Secretary may make 

section 8 requirements applicable, as appropriate, by regulation. 

(m) TREATMENT OF PUBLIC HOUSING.— (2) REDUCTION OF ASTHMA INCIDENCE.— Notwithstanding 

any other provision of this section, the New York City Housing 

Authority may, in its sole discretion, from amounts provided 

from the Operating and Capital Funds, or from amounts provided for public housing before amounts are made available 

from such Funds, use not more than exceeding $500,000 per 

year for the purpose of initiating, expanding or continuing a 

program for the reduction of the incidence of asthma among 

residents. The Secretary shall consult with the Administrator 

of the Environmental Protection Agency and the Secretary of 

Health and Human Services to identify and consider sources of 

funding for the reduction of the incidence of asthma among recipients of assistance under this title. 

(3) SERVICES FOR ELDERLY RESIDENTS.— Notwithstanding 

any other provision of this section, the New York City Housing 

Authority may, in its sole discretion, from amounts provided 

from the Operating and Capital Funds, or from amounts provided for public housing before the amounts are made available 

from such Funds, use not more than $600,000 per year for the 


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107 

purpose of developing a comprehensive plan to address the 

need for services for elderly residents. Such plan may be developed by a partnership created by such Housing Authority and 

may include the creation of a model project for assisted living 

at one or more developments. The model project may provide 

for contracting with private parties for the delivery of services. 

(4) EFFECTIVE DATE.— This subsection shall apply to fiscal 

year 1999 and each fiscal year thereafter. 

(n) ESTABLISHMENT OF REPLACEMENT RESERVES.— (1) IN GENERAL.— Public housing agencies shall be permitted 

to establish a replacement reserve to fund any of the capital activities listed in subsection (d)(1). 

(2) SOURCE AND AMOUNT OF FUNDS FOR REPLACEMENT RESERVE.— At any time, a public housing agency may deposit 

funds from such agency’s Capital Fund into a replacement reserve, subject to the following: 

(A) At the discretion of the Secretary, public housing 

agencies may transfer and hold in a replacement reserve 

funds originating from additional sources. 

(B) No minimum transfer of funds to a replacement reserve shall be required. 

(C) At any time, a public housing agency may not hold 

in a replacement reserve more than the amount the public 

housing authority has determined necessary to satisfy the 

anticipated capital needs of properties in its portfolio assisted under this section, as outlined in its Capital Fund 5- 

Year Action Plan, or a comparable plan, as determined by 

the Secretary. 

(D) The Secretary may establish, by regulation, a maximum replacement reserve level or levels that are below 

amounts determined under subparagraph (C), which may 

be based upon the size of the portfolio assisted under this 

section or other factors. 

(3) TRANSFER OF OPERATING FUNDS.— In first establishing a 

replacement reserve, the Secretary may allow public housing 

agencies to transfer more than 20 percent of its operating funds 

into its replacement reserve. 

(4) EXPENDITURE.— Funds in a replacement reserve may be 

used for purposes authorized by subsection (d)(1) and contained 

in its Capital Fund 5-Year Action Plan. 

(5) MANAGEMENT AND REPORT.— The Secretary shall establish appropriate accounting and reporting requirements to ensure that public housing agencies are spending funds on eligible 

projects and that funds in the replacement reserve are connected 

to capital needs. 

* * * * * * * 

ELIGIBILITY FOR ASSISTED HOUSING

SEC. 16. (a) INCOME ELIGIBILITY FOR PUBLIC HOUSING.— (1) INCOME MIX WITHIN PROJECTS.— A public housing agency 

may establish and utilize income-mix criteria for the selection 

of residents for dwelling units in public housing projects, subject to the requirements of this section. 

(2) PHA INCOME MIX.— 


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(A) TARGETING.— Except as provided in paragraph (4), of 

the public housing dwelling units of a public housing agency made available for occupancy in any fiscal year by eligible families, not less than 40 percent shall be occupied by 

families whose incomes at the time of commencement of 

occupancy do not exceed 30 percent of the area median income, as determined by the Secretary with adjustments for 

smaller and larger families; except that the Secretary may 

establish income ceilings higher or lower than 30 percent 

of the area median income on the basis of the Secretary’s 

findings that such variations are necessary because of unusually high or low family incomes. 

(3) PROHIBITION OF CONCENTRATION OF LOW-INCOME FAMILIES.— 

(A) PROHIBITION.— A public housing agency may not, in 

complying with the requirements under paragraph (2), 

concentrate very low-income families (or other families 

with relatively low incomes) in public housing dwelling 

units in certain public housing projects or certain buildings 

within projects. The Secretary shall review the income and 

occupancy characteristics of the public housing projects 

and the buildings of such projects of such agencies to ensure compliance with the provisions of this paragraph and 

paragraph (2). 

(B) DECONCENTRATION.— (i) IN GENERAL.— A public housing agency shall submit with its annual public housing agency plan under 

section 5A an admissions policy designed to provide 

for deconcentration of poverty and income-mixing by 

bringing higher income tenants into lower income 

projects and lower income tenants into higher income 

projects. This clause may not be construed to impose 

or require any specific income or racial quotas for any 

project or projects. 

(ii) INCENTIVES.— In implementing the policy under 

clause (i), a public housing agency may offer incentives 

for eligible families having higher incomes to occupy 

dwelling unit in projects predominantly occupied by eligible families having lower incomes, and provide for 

occupancy of eligible families having lower incomes in 

projects predominantly occupied by eligible families 

having higher incomes. 

(iii) FAMILY CHOICE.— Incentives referred to in 

clause (ii) may be made available by a public housing 

agency only in a manner that allows for the eligible 

family to have the sole discretion in determining 

whether to accept the incentive and an agency may 

not take any adverse action toward any eligible family 

for choosing not to accept an incentive and occupancy 

of a project described in clause (i)(II), Provided, That 

the skipping of a family on a waiting list to reach another family to implement the policy under clause (i) 

shall not be considered an adverse action. An agency 

implementing an admissions policy under this subparagraph shall implement the policy in a manner 


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that does not prevent or interfere with the use of sitebased waiting lists authorized under section 6(s). 

(4) FUNGIBILITY WITH TENANT-BASED ASSISTANCE.— 

(A) AUTHORITY.— Except as provided under subparagraph (D), the number of public housing dwelling units 

that a public housing agency shall otherwise make available in accordance with paragraph (2)(A) to comply with 

the percentage requirement under such paragraph for a 

fiscal year shall be reduced by the credit number for the 

agency under subparagraph (B). 

(B) CREDIT FOR EXCEEDING TENANT-BASED ASSISTANCE

TARGETING REQUIREMENT.— Subject to subparagraph (C), 

the credit number under this subparagraph for a public 

housing agency for a fiscal year shall be the number by 

which— 

(i) the aggregate number of qualified families who, 

in such fiscal year, are initially provided tenant-based 

assistance under section 8 by the agency; exceeds 

(ii) the number of qualified families that is required 

for the agency to comply with the percentage requirement under subsection (b)(1) for such fiscal year. 

(C) LIMITATIONS ON CREDIT NUMBER.— The credit number under subparagraph (B) for a public housing agency 

for a fiscal year may not in any case exceed the lesser of— 

(i) the number of dwelling units that is equivalent 

to 10 percent of the aggregate number of families initially provided tenant-based assistance under section 8 

by the agency in such fiscal year; or 

(ii) the number of public housing dwelling units of 

the agency that— 

(I) are in projects that are located in census 

tracts having a poverty rate of 30 percent or more; 

and 

(II) are made available for occupancy during 

such fiscal year and are actually filled only by 

families whose incomes at the time of commencement of such occupancy exceed 30 percent of the 

area median income, as determined by the Secretary with adjustments for smaller and larger 

families. 

(D) FUNGIBILITY FLOOR.— Notwithstanding any authority under subparagraph (A), of the public housing dwelling 

units of a public housing agency made available for occupancy in any fiscal year by eligible families, not less than 

30 percent shall be occupied by families whose incomes at 

the time of commencement of occupancy do not exceed 30 

percent of the area median income, as determined by the 

Secretary with adjustments for smaller and larger families. 

(E) QUALIFIED FAMILY.— For purposes of this paragraph, 

the term ‘‘qualified family’’ means a family having an income described in subsection (b)(1). 

(5) LIMITATIONS ON TENANCY FOR OVER-INCOME FAMILIES.— 


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(A) LIMITATIONS.— Except as provided in subparagraph 

(D), in the case of any family residing in a dwelling unit 

of public housing whose income for the most recent two consecutive years, as determined pursuant to income reviews 

conducted pursuant to section 3(a)(6), has exceeded the applicable income limitation under subparagraph (C), the 

public housing agency shall— 

(i) notwithstanding any other provision of this Act, 

charge such family as monthly rent for the unit occupied by such family an amount equal to the greater 

of— 

(I) the applicable fair market rental established 

under section 8(c) for a dwelling unit in the same 

market area of the same size; or 

(II) the amount of the monthly subsidy provided 

under this Act for the dwelling unit, which shall 

include any amounts from the Operating Fund 

and Capital Fund under section 9 used for the 

unit, as determined by the agency in accordance 

with regulations that the Secretary shall issue to 

carry out this subclause; or 

(ii) terminate the tenancy of such family in public 

housing not later than 6 months after the income determination described in subparagraph (A). 

(B) NOTICE.— In the case of any family residing in a 

dwelling unit of public housing whose income for a year 

has exceeded the applicable income limitation under subparagraph (C), upon the conclusion of such year the public 

housing agency shall provide written notice to such family 

of the requirements under subparagraph (A). 

(C) INCOME LIMITATION.— The income limitation under 

this subparagraph shall be 120 percent of the median income for the area, as determined by the Secretary with adjustments for smaller and larger families, except that the 

Secretary may establish income limitations higher or lower 

than 120 percent of such median income on the basis of the 

Secretary’s findings that such variations are necessary because of prevailing levels of construction costs, or unusually 

high or low family incomes, vacancy rates, or rental costs. 

(D) EXCEPTION.— Subparagraph (A) shall not apply to a 

family occupying a dwelling unit in public housing pursuant to paragraph (5) of section 3(a) (42 U.S.C. 1437a(a)(5)). 

(E) REPORTS ON OVER-INCOME FAMILIES AND WAITING

LISTS.— The Secretary shall require that each public housing agency shall— 

(i) submit a report annually, in a format required by 

the Secretary, that specifies— 

(I) the number of families residing, as of the end 

of the year for which the report is submitted, in 

public housing administered by the agency who 

had incomes exceeding the applicable income limitation under subparagraph (C); and 

(II) the number of families, as of the end of such 

year, on the waiting lists for admission to public 

housing projects of the agency; and 


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(ii) make the information reported pursuant to clause 

(i) publicly available. 

(b) INCOME ELIGIBILITY FOR TENANT-BASED SECTION 8 ASSIST- ANCE.— 

(1) IN GENERAL.— Of the families initially provided tenantbased assistance under section 8 by a public housing agency in 

any fiscal year, not less than 75 percent shall be families 

whose incomes do not exceed 30 percent of the area median income, as determined by the Secretary with adjustments for 

smaller and larger families; except that the Secretary may establish income ceilings higher or lower than 30 percent of the 

area median income on the basis of the Secretary’s findings 

that such variations are necessary because of unusually high 

or low family incomes. 

(2) JURISDICTIONS SERVED BY MULTIPLE PHA’S.— In the case 

of any 2 or more public housing agencies that administer tenant-based assistance under section 8 with respect solely to 

identical geographical areas, such agencies shall be treated as 

a single public housing agency for purposes of paragraph (1). 

(c) INCOME ELIGIBILITY FOR PROJECT-BASED SECTION 8 ASSIST- ANCE.— 

(1) PRE-1981 ACT PROJECTS.— Not more than 25 percent of 

the dwelling units that were available for occupancy under section 8 housing assistance payments contracts under this Act 

before the effective date of the Housing and Community Development Amendments of 1981, and which will be leased on or 

after such effective date shall be available for leasing by lowincome families other than very low-income families. 

(2) POST-1981 ACT PROJECTS.— Not more than 15 percent of 

the dwelling units which become available for occupancy under 

section 8 housing assistance payments contracts under this Act 

on or after the effective date of the Housing and Community 

Development Amendments of 1981 shall be available for leasing by low-income families other than very low-income families. 

(3) TARGETING.— For each project assisted under a contract 

for project-based assistance, of the dwelling units that become 

available for occupancy in any fiscal year that are assisted 

under the contract, not less than 40 percent shall be available 

for leasing only by extremely low-income families. 

(4) PROHIBITION OF SKIPPING.— In developing admission procedures implementing paragraphs (1), (2), and (3), the Secretary shall prohibit project owners from selecting families for 

residence in an order different from the order on the waiting 

list for the purpose of selecting relatively higher income families for residence. Nothing in this paragraph or this subsection 

may be construed to prevent an owner of housing assisted 

under a contract for project-based assistance from establishing 

a preference for occupancy in such housing for families containing a member who is employed. 

(5) EXCEPTION.— The limitations established in paragraphs 

(1), (2), and (3) shall not apply to dwelling units made available under project-based contracts under section 8 for the purpose of preventing displacement, or ameliorating the effects of 

displacement. 


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(6) DEFINITION.— For purposes of this subsection, the term 

‘‘project-based assistance’’ means assistance under any of the 

following programs: 

(A) The new construction or substantial rehabilitation 

program under section 8(b)(2) (as in effect before October 

1, 1983). 

(B) The property disposition program under section 8(b) 

(as in effect before the effective date under section 503(a) 

of the Quality Housing and Work Responsibility Act of 

1998). 

(C) The loan management set-aside program under subsections (b) and (v) of section 8. 

(D) The project-based certificate program under section 

8(d)(2). 

(E) The moderate rehabilitation program under section 

8(e)(2) (as in effect before October 1, 1991). 

(F) The low-income housing preservation program under 

Low-Income Housing Preservation and Resident Homeownership Act of 1990 or the provisions of the Emergency 

Low Income Housing Preservation Act of 1987 (as in effect 

before November 28, 1990). 

(G) Section 8 (as in effect before the effective date under 

section 503(a) of the Quality Housing and Work Responsibility Act of 1998), following conversion from assistance 

under section 101 of the Housing and Urban Development 

Act of 1965 or section 236(f)(2) of the National Housing 

Act. 

(d) ESTABLISHMENT OF DIFFERENT STANDARDS.—Notwithstanding 

subsection (a)(2) or (b)(1), if approved by the Secretary, a public 

housing agency may for good cause establish and implement, in accordance with the public housing agency plan, an admission standard other than the standard under such subsection. 

(e) ELIGIBILITY FOR ASSISTANCE BASED ON ASSETS.— (1) LIMITATION ON ASSETS.— Subject to paragraph (3) and 

notwithstanding any other provision of this Act, a dwelling unit 

assisted under this Act may not be rented and assistance under 

this Act may not be provided, either initially or at each recertification of family income, to any family— 

(A) whose net family assets exceed $100,000, as such 

amount is adjusted annually by applying an inflationary 

factor as the Secretary considers appropriate; or 

(B) who has a present ownership interest in, a legal right 

to reside in, and the effective legal authority to sell, real 

property that is suitable for occupancy by the family as a 

residence, except that the prohibition under this subparagraph shall not apply to— 

(i) any property for which the family is receiving assistance under subsection (y) or (o)(12) of section 8 of 

this Act; 

(ii) any person that is a victim of domestic violence; 

or 

(iii) any family that is offering such property for sale. 

(2) NET FAMILY ASSETS.— 

(A) IN GENERAL.— For purposes of this subsection, the 

term ‘‘net family assets’’ means, for all members of the 


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113 

household, the net cash value of all assets after deducting 

reasonable costs that would be incurred in disposing of real 

property, savings, stocks, bonds, and other forms of capital 

investment. Such term does not include interests in Indian 

trust land, equity in property for which the family is receiving assistance under subsection (y) or (o)(12) of section 8, 

equity accounts in homeownership programs of the Department of Housing and Urban Development, or Family Self 

Sufficiency accounts. 

(B) EXCLUSIONS.— Such term does not include— 

(i) the value of personal property, except for items of 

personal property of significant value, as the Secretary 

may establish or the public housing agency may determine; 

(ii) the value of any retirement account; 

(iii) real property for which the family does not have 

the effective legal authority necessary to sell such property; 

(iv) any amounts recovered in any civil action or settlement based on a claim of malpractice, negligence, or 

other breach of duty owed to a member of the family 

and arising out of law, that resulted in a member of 

the family being disabled; 

(v) the value of any Coverdell education savings account under section 530 of the Internal Revenue Code 

of 1986 or any qualified tuition program under section 

529 of such Code; and 

(vi) such other exclusions as the Secretary may establish. 

(C) TRUST FUNDS.— In cases in which a trust fund has 

been established and the trust is not revocable by, or under 

the control of, any member of the family or household, the 

value of the trust fund shall not be considered an asset of 

a family if the fund continues to be held in trust. Any income distributed from the trust fund shall be considered income for purposes of section 3(b) and any calculations of 

annual family income, except in the case of medical expenses for a minor. 

(3) SELF-CERTIFICATION.— 

(A) NET FAMILY ASSETS.— A public housing agency or 

owner may determine the net assets of a family, for purposes of this section, based on a certification by the family 

that the net assets of such family do not exceed $50,000, as 

such amount is adjusted annually by applying an inflationary factor as the Secretary considers appropriate. 

(B) NO CURRENT REAL PROPERTY OWNERSHIP.— A public 

housing agency or owner may determine compliance with 

paragraph (1)(B) based on a certification by the family that 

such family does not have any current ownership interest 

in any real property at the time the agency or owner reviews the family’s income. 

(C) STANDARDIZED FORMS.— The Secretary may develop 

standardized forms for the certifications referred to in subparagraphs (A) and (B). 


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114 

(4) COMPLIANCE FOR PUBLIC HOUSING DWELLING UNITS.— When recertifying family income with respect to families residing in public housing dwelling units, a public housing agency 

may, in the discretion of the agency and only pursuant to a policy that is set forth in the public housing agency plan under 

section 5A for the agency, choose not to enforce the limitation 

under paragraph (1). 

(5) ENFORCEMENT.— When recertifying the income of a family 

residing in a dwelling unit assisted under this Act, a public 

housing agency or owner may choose not to enforce the limitation under paragraph (1) or may establish exceptions to such 

limitation based on eligibility criteria, but only pursuant to a 

policy that is set forth in the public housing agency plan under 

section 5A for the agency or under a policy adopted by the 

owner. Eligibility criteria for establishing exceptions may provide for separate treatment based on family type and may be 

based on different factors, such as age, disability, income, the 

ability of the family to find suitable alternative housing, and 

whether supportive services are being provided. 

(6) AUTHORITY TO DELAY EVICTIONS.— In the case of a family 

residing in a dwelling unit assisted under this Act who does not 

comply with the limitation under paragraph (1), the public 

housing agency or project owner may delay eviction or termination of the family based on such noncompliance for a period 

of not more than 6 months. 

(f) INELIGIBILITY OF INDIVIDUALS CONVICTED OF MANUFACTURING

OR PRODUCING METHAMPHETAMINE ON THE PREMISES.—Notwithstanding any other provision of law, a public housing agency shall 

establish standards for occupancy in public housing dwelling units 

and assistance under section 8 that— 

(1) permanently prohibit occupancy in any public housing 

dwelling unit by, and assistance under section 8 for, any person who has been convicted of manufacturing or otherwise producing methamphetamine on the premises in violation of any 

Federal or State law; and 

(2) immediately and permanently terminate the tenancy in 

any public housing unit of, and the assistance under section 8 

for, any person who is convicted of manufacturing or otherwise 

producing methamphetamine on the premises in violation of 

any Federal or State law. 

* * * * * * * 

SEC. 37. DATA EXCHANGE STANDARDS FOR IMPROVED INTEROPERABILITY. 

(a) DESIGNATION.—The Secretary shall, in consultation with an 

interagency work group established by the Office of Management 

and Budget, and considering State government perspectives, designate data exchange standards to govern, under this Act— 

(1) necessary categories of information that State agencies operating related programs are required under applicable law to 

electronically exchange with another State agency; and 

(2) Federal reporting and data exchange required under applicable law. 

(b) REQUIREMENTS.—The data exchange standards required by 

subsection (a) shall, to the maximum extent practicable— 


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115 

(1) incorporate a widely accepted, nonproprietary, searchable, 

computer-readable format, such as the eXtensible Markup Language; 

(2) contain interoperable standards developed and maintained by intergovernmental partnerships, such as the National 

Information Exchange Model; 

(3) incorporate interoperable standards developed and maintained by Federal entities with authority over contracting and 

financial assistance; 

(4) be consistent with and implement applicable accounting 

principles; 

(5) be implemented in a manner that is cost- effective and improves program efficiency and effectiveness; and 

(6) be capable of being continually upgraded as necessary. 

(c) RULES OF CONSTRUCTION.—Nothing in this section requires a 

change to existing data exchange standards for Federal reporting 

found to be effective and efficient. 

* * * * * * * 

HOUSING ACT OF 1949 

* * * * * * * 

TITLE V—FARM HOUSING 

* * * * * * * 

LOANS FOR HOUSING AND BUILDINGS ON ADEQUATE FARMS

SEC. 502. (a)(1) If the Secretary determines that an applicant is 

eligible for assistance as provided in section 501 and that the applicant has the ability to repay in full the sum to be loaned, with interest giving due consideration to the income and earnings capacity 

of the applicant and his family from the farm and other sources, 

and the maintenance of a reasonable standard of living for the 

owner and the occupants of said farm, a loan may be made by the 

Secretary to said applicant for a period of not to exceed thirty-three 

years from the making of the loan with interest. The Secretary may 

accept the personal liability of any person with adequate repayment ability who will cosign the applicant’s note to compensate for 

any deficiency in the applicant’s repayment ability. At the borrower’s option, the borrower may prepay to the Secretary as escrow 

agent, on terms and conditions prescribed by him, such taxes, insurance, and other expenses as the Secretary may require in accordance with section 501(e). 

(2) The Secretary may extend the period of any loan made under 

this section if the Secretary determines that such extension is necessary to permit the making of such loan to any person whose income does not exceed 60 per centum of the median income for the 

area and who would otherwise be denied such loan because the 

payments required under a shorter period would exceed the financial capacity of such person. The aggregate period for which any 

loan may be extended under this paragraph may not exceed 5 

years. 


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(3)(A) Notwithstanding any other provision of this title, a loan 

may be made under this section for the purchase of a dwelling located on land owned by a community land trust, if the borrower 

and the loan otherwise meet the requirements applicable to loans 

under this section. 

(B) For purposes of this paragraph, the term ‘‘community land 

trust’’ means a community housing development organization as 

such term is defined in section 104 of the Cranston-Gonzalez National Affordable Housing Act (except that the requirements under 

section 104(6)(C) and section 104(6)(D) shall not apply for purposes 

of this paragraph)— 

(i) that is not sponsored by a for-profit organization; 

(ii) that is established to carry out the activities under clause 

(iii); 

(iii) that— 

(I) acquires parcels of land, held in perpetuity, primarily 

for conveyance under long-term ground leases; 

(II) transfers ownership of any structural improvements 

located on such leased parcels to the lessees; and 

(III) retains a preemptive option to purchase any such 

structural improvement at a price determined by formula 

that is designed to ensure that the improvement remains 

affordable to low- and moderate-income families in perpetuity; and 

(iv) that has its corporate membership open to any adult 

resident of a particular geographic area specified in the bylaws 

of the organization. 

(b) The instruments under which the loan is made and the security given shall— 

(1) provide for security upon the applicant’s equity in the 

farm or such other security or collateral, if any, as may be 

found necessary by the Secretary reasonably to assure repayment of the indebtedness; 

(2) provide for the repayment of principal and interest in accordance with schedules and repayment plans prescribed by 

the Secretary, except that any prepayment of a loan made or 

insured under section 514 or 515 shall be subject to the provisions of subsection (c); 

(3) except for guaranteed loans, contain the agreement of the 

borrower that he will, at the request of the Secretary, proceed 

with diligence to refinance the balance of the indebtedness 

through cooperative or other responsible private credit sources 

whenever the Secretary determines, in the light of the borrower’s circumstances, including his earning capacity and the 

income from the farm, that he is able to do so upon reasonable 

terms and conditions; 

(4) be in such form and contain such covenants as the Secretary shall prescribe to secure the payment of the loan with 

interest, protect the security, and assure that the farm will be 

maintained in repair and that waste and exhaustion of the 

farm will be prevented. 

(c)(1)(A) The Secretary may not accept an offer to prepay, or request refinancing in accordance with subsection (b)(3) of, any loan 

made or insured under section 514 or 515 of this title pursuant to 

a contract entered into after December 21, 1979, but before the 


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date of the enactment of the Department of Housing and Urban 

Development Reform Act of 1989, unless the Secretary takes appropriate action which will obligate the borrower (and successors in interest thereof) to utilize the assisted housing and related facilities 

for the purposes specified in section 514 or 515, as the case may 

be, for a period of— 

(i) fifteen years from the date on which the loan was made 

in the case of a loan made or insured pursuant to a contract 

entered into after December 21, 1979, but before the date of 

the enactment of the Department of Housing and Urban Development Reform Act of 1989, and utilized for housing and related facilities which have not received assistance under section 521 (a)(1)(B), (a)(2), or (5) of this title or section 8 of the 

United States Housing Act of 1937; or 

(ii) twenty years from the date on which the loan was made 

in the case of any or other such loan; 

or until the Secretary determines (prior to the end of such period) 

that there is no longer a need for such housing and related facilities to be so utilized or that Federal or other financial assistance 

provided to the residents of such housing will no longer be provided. 

(B) The Secretary may not accept an offer to prepay, or request 

refinancing in accordance with subsection (b)(3) of, any initial loan 

made or insured under section 515 pursuant to a contract entered 

into on or after the date of the enactment of the Department of 

Housing and Urban Development Reform Act of 1989. 

(2) If any loan which was made or insured under section 514 or 

515 pursuant to a contract entered into prior to the date of enactment of the Department of Housing and Urban Development Reform Act of 1989, is prepaid or refinanced on or after the date of 

enactment of the Housing and Community Development Act of 

1980, and tenants of the housing and related facilities financed 

with such loan are displaced due to a change in the use of the 

housing, or to an increase in rental or other charges, as a result 

of such prepayment or refinancing, the Secretary shall provide such 

tenants a priority for relocation in alternative housing assisted pursuant to this title. 

(3) NOTICE OF OFFER TO PREPAY.—Not less than 30 days after receiving an offer to prepay any loan made or insured under section 

514 or 515, the Secretary shall provide written notice of the offer 

or request to the tenants of the housing and related facilities involved, to interested nonprofit organizations, and to any appropriate State and local agencies. 

(4)(A) AGREEMENT BY BORROWER TO EXTEND LOW INCOME USE.— 

Before accepting any offer to prepay, or requesting refinancing in 

accordance with subsection (b)(3) of, any loan made or insured 

under section 514 or 515 pursuant to a contract entered into prior 

to the date of enactment of the Department of Housing and Urban 

Development Reform Act of 1989, the Secretary shall make reasonable efforts to enter into an agreement with the borrower under 

which the borrower will make a binding commitment to extend the 

low income use of the assisted housing and related facilities involved for not less than the 20-year period beginning on the date 

on which the agreement is executed. 


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(B) ASSISTANCE AVAILABLE TO BORROWER TO EXTEND LOW INCOME

USE.—To the extent of amounts provided in appropriation Acts, the 

agreement under subparagraph (A) may provide for 1 or more of 

the following forms of assistance that the Secretary, after taking 

into account local market conditions, determines to be necessary to 

extend the low income use of the housing and related facilities involved: 

(i) Increase in the rate of return on investment. 

(ii) Reduction of the interest rate on the loan through the 

provision of interest credits under section 521(a)(1)(B), or additional assistance or an increase in assistance provided under 

section 521(a)(5). 

(iii) Additional rental assistance, or an increase in assistance 

provided under existing contracts, under section 521(a)(2) or 

under section 8 of the United States Housing Act of 1937. 

(iv) An equity loan to the borrower under paragraphs (1) and 

(2) of section 515(c) or under paragraphs (1) and (2) of section 

514(j), except that an equity loan referred to in this clause may 

not be made available after the date of the enactment of the 

Act entitled ‘‘An Act making appropriations for Agriculture, 

Rural Development, Food and Drug Administration, and Related Agencies programs for the fiscal year ending September 

30, 1997, and for other purposes’’, unless the Secretary determines that the other incentives available under this subparagraph are not adequate to provide a fair return on the investment of the borrower, to prevent prepayment of the loan insured under section 514 or 515, or to prevent the displacement 

of tenants of the housing for which the loan was made. 

(v) Incremental rental assistance in connection with loans 

under clauses (ii) and (iv) to the extent necessary to avoid increases in the rental payments of current tenants not receiving 

rental assistance under section 521(a)(2) or under section 8 of 

the United States Housing Act of 1937, or current tenants of 

projects not assisted under section 521(a)(5). 

(vi) In the case of a project that has received rental assistance under section 8 of the United States Housing Act of 1937, 

permitting the owner to receive rent in excess of the amount 

determined necessary by the Secretary to defray the cost of 

long-term repair or maintenance of such a project. 

(C) APPROVAL OF ASSISTANCE.—The Secretary may approve assistance under subparagraph (B) for assisted housing only if the restrictive period has expired for any loan for the housing made or 

insured under section 514 or 515 pursuant to a contract entered 

into after December 21, 1979, but before the date of the enactment 

of the Department of Housing and Urban Development Reform Act 

of 1989, and the Secretary determines that the combination of assistance provided— 

(i) is necessary to provide a fair return on the investment of 

the borrower; and 

(ii) is the least costly alternative for the Federal Government that is consistent with carrying out the purposes of this 

subsection. 

(5)(A) OFFER TO SELL TO NONPROFIT ORGANIZATIONS AND PUBLIC

AGENCIES.— 


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119 

(i) IN GENERAL.— If the Secretary determines after a reasonable period that an agreement will not be entered into with a 

borrower under paragraph (4), the Secretary shall require the 

borrower (except as provided in subparagraph (G)) to offer to 

sell the assisted housing and related facilities involved to any 

qualified nonprofit organization or public agency at a fair market value determined by 2 independent appraisers, one of 

whom shall be selected by the Secretary and one of whom shall 

be selected by the borrower. If the 2 appraisers fail to agree 

on the fair market value, the Secretary and the borrower shall 

jointly select a third appraiser, whose appraisal shall be binding on the Secretary and the borrower. 

(ii) PERIOD FOR WHICH REQUIREMENT APPLICABLE.— If, upon 

the expiration of 180 days after an offer is made to sell housing 

and related facilities under clause (i), no qualified nonprofit organization or public agency has made a bona fide offer to purchase, the Secretary may accept the offer to prepay, or may request refinancing in accordance with subsection (b)(3) of, the 

loan. This clause shall apply only when funds are available for 

purposes of carrying out a transfer under this paragraph. 

(B) QUALIFIED NONPROFIT ORGANIZATIONS AND PUBLIC AGENCIES.— 

(i) LOCAL NONPROFIT ORGANIZATION OR PUBLIC AGENCY.— A 

local nonprofit organization or public agency may purchase 

housing and related facilities under this paragraph only if— 

(I) the organization or agency is determined by the Secretary to be capable of managing the housing and related 

facilities (either directly or through a contract) for the remaining useful life of the housing and related facilities; 

and 

(II) the organization or agency has entered into an 

agreement that obligates it (and successors in interest 

thereof) to maintain the housing and related facilities as 

affordable for very low-income families or persons and low 

income families or persons for the remaining useful life of 

the housing and related facilities. 

(ii) NATIONAL OR REGIONAL NONPROFIT ORGANIZATION.— If 

the Secretary determines that there is no local nonprofit organization or public agency qualified to purchase the housing and 

related facilities involved, the Secretary shall require the borrower to offer to sell the assisted housing and related facilities 

to an existing qualified national or regional nonprofit organization. 

(iii) SELECTION OF QUALIFIED PURCHASER.— The Secretary 

shall promulgate regulations that establish criteria for selecting a qualified nonprofit organization or public agency to purchase housing and related facilities when more than 1 such organization or agency has made a bona fide offer. Such regulations shall give a priority to those organizations or agencies 

with the greatest experience in developing or managing low income housing or community development projects and with the 

longest record of service to the community. 

(C) FINANCING OF SALE.—To facilitate the sale described in subparagraph (A), the Secretary shall— 


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120 

(i) to the extent provided in appropriation Acts, make an advance to the nonprofit organization or public agency whose 

offer to purchase is accepted under this paragraph to cover any 

direct costs (other than the purchase price) incurred by the organization or agency in purchasing and assuming responsibility for the housing and related facilities involved; 

(ii) approve the assumption, by the nonprofit organization or 

public agency involved, of the loan made or insured under section 514 or 515; 

(iii) to the extent provided in appropriation Acts, transfer 

any rental assistance payments that are received under section 

521(a)(2)(A) or under section 8 of the United States Housing 

Act of 1937, or any assistance payments received under section 

521(a)(5), with respect to the housing and related facilities involved; and 

(iv) to the extent provided in appropriation Acts, provide a 

loan under section 515(c)(3) to the nonprofit organization or 

public agency whose offer to purchase is accepted under this 

paragraph to enable the organization or agency to purchase the 

housing and related facilities involved. 

(D) RENT LIMITATION AND ASSISTANCE.—The Secretary shall, to 

the extent provided in appropriation Acts, provide to each nonprofit 

organization or public agency purchasing housing and related facilities under this paragraph financial assistance (in the form of 

monthly payments or forgiveness of debt) in an amount necessary 

to ensure that the monthly rent payment made by each low income 

family or person residing in the housing does not exceed the maximum rent permitted under section 521(a)(2)(A) or, in the case of 

housing assisted under section 521(a)(5), does not exceed the rents 

established for the project under such section. 

(E) RESTRICTION ON SUBSEQUENT TRANSFERS.—Except as provided in subparagraph (B)(ii), the Secretary may not approve the 

transfer of any housing and related facilities purchased under this 

paragraph during the remaining useful life of the housing and related facilities, unless the Secretary determines that— 

(i) the transfer will further the provision of housing and related facilities for low income families or persons; or 

(ii) there is no longer a need for such housing and related facilities by low income families or persons. 

(F) GENERAL RESTRICTION ON PREPAYMENTS AND REFINANCINGS.— 

Following the transfer of the maximum number of dwelling units 

set forth in subparagraph (H)(i) in any fiscal year or the maximum 

number of dwelling units for which budget authority is available in 

any fiscal year, the Secretary may not accept in such fiscal year 

any offer to prepay, or request refinancing in accordance with subsection (b)(3) of, any loan made or insured under section 514 or 515 

pursuant to a contract entered into prior to the date of enactment 

of the Department of Housing and Urban Development Reform Act 

of 1989, except in accordance with subparagraph (G). The limitation established in this subparagraph shall not apply to an offer to 

prepay, or request to refinance, if, following the date on which such 

offer or request is made (or following the date of the enactment of 

the Housing and Community Development Act of 1987, whichever 

occurs later) a 15-month period expires during which no budget authority is available to carry out this paragraph. For purposes of 


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this subparagraph, the Secretary shall allocate budget authority 

under this paragraph in the order in which offers to prepay, or request to refinance, are made. 

(G) EXCEPTION.—This paragraph shall not apply to any offer to 

prepay, or any request to refinance in accordance with subsection 

(b)(3), any loan made or insured under section 514 or 515 pursuant 

to a contract entered into prior to the date of enactment of the Department of Housing and Urban Development Reform Act of 1989, 

if— 

(i) the borrower enters into an agreement with the Secretary 

that obligates the borrower (and successors in interest thereof)— 

(I) to utilize the assisted housing and related facilities 

for the purposes specified in section 514 or 515, as the case 

may be, for a period determined by the Secretary (but not 

less than the period described in paragraph (1)(B) calculated from the date on which the loan is made or insured); and 

(II) upon termination of the period described in paragraph (1)(B), to offer to sell the assisted housing and related facilities to a qualified nonprofit organization or public agency in accordance with this paragraph; or 

(ii) the Secretary determines that housing opportunities of 

minorities will not be materially affected as a result of the prepayment or refinancing, and that— 

(I) the borrower (and any successor in interest thereof) 

are obligated to ensure that tenants of the housing and related facilities financed with the loan will not be displaced 

due to a change in the use of the housing, or to an increase 

in rental or other charges, as a result of the prepayment 

or refinancing; or 

(II) there is an adequate supply of safe, decent, and affordable rental housing within the market area of the 

housing and related facilities and sufficient actions have 

been taken to ensure that the rental housing will be made 

available to each tenant upon displacement. 

(H) FUNDING.— 

(i) BUDGET LIMITATION.— Not more than 5,000 dwelling 

units may be transferred under this paragraph in any fiscal 

year, and the budget authority that may be provided under 

this paragraph for any fiscal year may not exceed the amounts 

required to carry out this paragraph with respect to such number. 

(ii) REIMBURSEMENT OF RURAL HOUSING INSURANCE FUND.— 

There are authorized to be appropriated to the Rural Housing 

Insurance Fund such sums as may be necessary to reimburse 

the Fund for financial assistance provided under this paragraph, paragraph (4), and section 517(j)(7). 

(I) DEFINITIONS.—For purposes of this paragraph: 

(i) LOCAL NONPROFIT ORGANIZATION.— The term ‘‘local nonprofit organization’’ means a nonprofit organization that— 

(I) has a broad based board reflecting various interests 

in the community or trade area; and 


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122 

(II) is a non-for-profit charitable organization whose 

principal purposes include developing or managing low income housing or community development projects. 

(ii) NONPROFIT ORGANIZATION.— The term ‘‘nonprofit organization’’ means any private organization— 

(I) no part of the net earnings of which inures to the 

benefit of any member, founder, contributor, or individual; 

(II) that is approved by the Secretary as to financial responsibility; and 

(III) that does not have among its officers or directorate 

persons or parties with a material interest (or persons or 

parties related to any person or party with such an interest) in loans financed under section 515 that have been 

prepaid. 

(J) REGULATIONS.—Notwithstanding section 534, the Secretary 

shall issue final regulations to carry out this paragraph not later 

than 60 days after the date of the enactment of the Housing and 

Community Development Act of 1987. The Secretary shall provide 

for the regulations to take effect not later than 45 days after the 

date on which the regulations are issued. 

(d) On and after the effective date of the Rural Housing Amendments of 1983— 

(1) not less than 40 percent of the funds approved in appropriation Acts for use under this section shall be set aside and 

made available only for very low-income families or persons; 

and 

(2) not less than 30 percent of the funds allocated to each 

State under this section shall be available only for very lowincome families or persons. 

(e)(1) A loan which may be made or insured under this section 

with respect to housing shall be made or insured with respect to 

a manufactured home or with respect to a manufactured home and 

lot, whether such home or such home and lot is real property, personal property, or mixed real and personal property, if— 

(A) the manufactured home meets the standards prescribed 

pursuant to title VI of the Housing and Community Development Act of 1974; 

(B) the manufactured home, or the manufactured home and 

lot, meets the installation, structural, and site requirements 

which would apply under title II of the National Housing Act; 

and 

(C) the manufactured home meets the energy conserving requirements established under paragraph (2), or until the energy conserving requirements are established under paragraph 

(2), the manufactured home meets the energy conserving requirements applicable to housing other than manufactured 

housing financed under this title. 

(2) Energy conserving requirements established by the Secretary 

for the purpose of paragraph (1)(C) shall— 

(A) reduce the operating costs for a borrower by maximizing 

the energy savings and be cost-effective over the life of the 

manufactured home or the term of the loan, whichever is 

shorter, taking into account variations in climate, types of energy used, the cost to modify the home to meet such requireVerDate Sep 11 2014 05:50 Jan 29, 2016 Jkt 059006 PO 00000 Frm 00122 Fmt 6659 Sfmt 6601 E:\HR\OC\HR397.XXX HR397

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ments, and the estimated value of the energy saved over the 

term of the mortgage; and 

(B) be established so that the increase in the annual loan 

payment resulting from the added energy conserving requirements in excess of those required by the standards prescribed 

under title VI of the Housing and Community Development Act 

of 1974 shall not exceed the projected savings in annual energy 

costs. 

(3) A loan that may be made or insured under this section with 

respect to a manufactured home on a permanent foundation, or a 

manufactured home on a permanent foundation and a lot, shall be 

repayable over the same period as would be applicable under section 203(b) of the National Housing Act. 

(f) REMOTE RURAL AREAS.— 

(1) LOAN SUPPLEMENTS.— The Secretary may supplement 

any loan under this section to finance housing located in a remote rural area or on tribal allotted or Indian trust land with 

a grant in an amount not greater than the amount by which 

the reasonable land acquisition and construction costs of the 

security property exceeds the appraised value of such property. 

(2) PROHIBITION.— The Secretary may not refuse to make, 

insure, or guarantee a loan that otherwise meets the requirements under this section solely on the basis that the housing 

involved is located in an area that is excessively rural in character or excessively remote or on tribal allotted or Indian trust 

land. 

(g) DEFERRED MORTGAGE DEMONSTRATION.— 

(1) AUTHORITY.— With respect to families or persons otherwise eligible for assistance under subsection (d) but having incomes below the amount determined to qualify for a loan under 

this section, the Secretary may defer mortgage payments beyond the amount affordable at 1 percent interest, taking into 

consideration income, taxes and insurance. Deferred mortgage 

payments shall be converted to payment status when the ability of the borrower to repay improves. Deferred amounts shall 

not exceed 25 percent of the amount of the payment due at 1 

percent interest and shall be subject to recapture. 

(2) INTEREST.— Interest on principal deferred shall be set at 

1 percent and any interest payments deferred under this subsection shall not be treated as principal in calculating indebtedness. 

(3) FUNDING.— Subject to approval in appropriations Acts, 

not more than 10 percent of the amount approved for each of 

fiscal years 1993 and 1994 for loans under this section may be 

used to carry out this subsection. 

(h) DOUG BEREUTER SECTION 502 SINGLE FAMILY HOUSING LOAN

GUARANTEE PROGRAM.— 

(1) SHORT TITLE.— This subsection may be cited as the 

‘‘Doug Bereuter Section 502 Single Family Housing Loan Guarantee Act’’. 

(2) AUTHORITY.— The Secretary shall, to the extent provided 

in appropriation Acts, provide guaranteed loans in accordance 

with this section, section 517(d), and the last sentence of section 521(a)(1)(A), except as modified by the provisions of this 


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subsection. Loans shall be guaranteed under this subsection in 

an amount equal to 90 percent of the loan. 

(3) ELIGIBLE BORROWERS.— Loans guaranteed pursuant to 

this subsection shall be made only to borrowers who are low 

or moderate income families or persons, whose incomes do not 

exceed 115 percent of the median income of the area, as determined by the Secretary. 

(4) ELIGIBLE HOUSING.— Loans may be guaranteed pursuant 

to this subsection only if the loan is used to acquire or construct a single-family residence that is— 

(A) to be used as the principal residence of the borrower; 

(B) eligible for assistance under this section, section 

203(b) of the National Housing Act, or chapter 37 of title 

38, United States Code; and 

(C) located in a rural area 

(5) PRIORITY AND COUNSELING FOR FIRST-TIME HOMEBUYERS.— 

(A) In providing guaranteed loans under this subsection, 

the Secretary shall give priority to first-time homebuyers 

(as defined in paragraph (17)). 

(B) The Secretary may require that, as a condition of receiving a guaranteed loan pursuant to this subsection, a 

borrower who is a first-time homebuyer successfully complete a program of homeownership counseling under section 106(a)(1)(iii) of the Housing and Urban Development 

Act of 1968 and obtain certification from the provider of 

the program that the borrower is adequately prepared for 

the obligations of homeownership. 

(6) ELIGIBLE LENDERS.— Guaranteed loans pursuant to this 

subsection may be made only by lenders approved by and 

meeting qualifications established by the Secretary. 

(7) LOAN TERMS.— Loans guaranteed pursuant to this subsection shall— 

(A) be made for a term not to exceed 30 years; 

(B) involve a rate of interest that is fixed over the term 

of the loan and does not exceed the rate for loans guaranteed under chapter 37 of title 38, United States Code, or 

comparable loans in the area that are not guaranteed; and 

(C) involve a principal obligation (including initial service charges, appraisal, inspection, and other fees as the 

Secretary may approve)— 

(i) for a first-time homebuyer, in any amount not in 

excess of 100 percent of the appraised value of the 

property as of the date the loan is accepted or the acquisition cost of the property, whichever is less, plus 

the guarantee fee as authorized by subsection (h)(7); 

and 

(ii) for any borrower other than a first-time homebuyer, in an amount not in excess of the percentage of 

the property or the acquisition cost of the property 

that the Secretary shall determine, such percentage or 

cost in any event not to exceed 100 percent of the appraised value of the property as of the date the loan 

is accepted or the acquisition cost of the property, 


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125 

whichever is less, plus the guarantee fee as authorized 

by subsection (h)(7). 

(8) FEES.— Notwithstanding paragraph (14)(D), with respect 

to a guaranteed loan issued or modified under this subsection, 

the Secretary may collect from the lender— 

(A) at the time of issuance of the guarantee or modification, a fee not to exceed 3.5 percent of the principal obligation of the loan; and 

(B) an annual fee not to exceed 0.5 percent of the outstanding principal balance of the loan for the life of the 

loan. 

(9) REFINANCING.— Any guaranteed loan under this subsection may be refinanced and extended in accordance with 

terms and conditions that the Secretary shall prescribe, but in 

no event for an additional amount or term which exceeds the 

limitations under this subsection. 

(10) NONASSUMPTION.— Notwithstanding the transfer of 

property for which a guaranteed loan under this subsection 

was made, the borrower of a guaranteed loan under this subsection may not be relieved of liability with respect to the loan. 

(11) GEOGRAPHICAL TARGETING.— In providing guaranteed 

loans under this subsection, the Secretary shall establish 

standards to target and give priority to areas that have a demonstrated need for additional sources of mortgage financing for 

low and moderate income families. 

(12) ALLOCATION.— The Secretary shall provide that, in each 

fiscal year, guaranteed loans under this subsection shall be allocated among the States on the basis of the need of eligible 

borrowers in each State for such loans in comparison with the 

need of eligible borrowers for such loans among all States. 

(13) LOSS MITIGATION.— Upon default or imminent default of 

any mortgage guaranteed under this subsection, mortgagees 

shall engage in loss mitigation actions for the purpose of providing an alternative to foreclosure (including actions such as 

special forbearance, loan modification, pre-foreclosure sale, 

deed in lieu of foreclosure, as required, support for borrower 

housing counseling, subordinate lien resolution, and borrower 

relocation), as provided for by the Secretary. 

(14) PAYMENT OF PARTIAL CLAIMS AND MORTGAGE MODIFICA- TIONS.— The Secretary may authorize the modification of mortgages, and establish a program for payment of a partial claim 

to a mortgagee that agrees to apply the claim amount to payment of a mortgage on a 1- to 4-family residence, for mortgages 

that are in default or face imminent default, as defined by the 

Secretary. Any payment under such program directed to the 

mortgagee shall be made at the sole discretion of the Secretary 

and on terms and conditions acceptable to the Secretary, except that— 

(A) the amount of the partial claim payment shall be in 

an amount determined by the Secretary, and shall not exceed an amount equivalent to 30 percent of the unpaid 

principal balance of the mortgage and any costs that are 

approved by the Secretary; 

(B) the amount of the partial claim payment shall be applied first to any outstanding indebtedness on the mortVerDate Sep 11 2014 05:50 Jan 29, 2016 Jkt 059006 PO 00000 Frm 00125 Fmt 6659 Sfmt 6601 E:\HR\OC\HR397.XXX HR397

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gage, including any arrearage, but may also include principal reduction; 

(C) the mortgagor shall agree to repay the amount of the 

partial claim to the Secretary upon terms and conditions 

acceptable to the Secretary; 

(D) expenses related to a partial claim or modification 

are not to be charged to the borrower; 

(E) the Secretary may authorize compensation to the 

mortgagee for lost income on monthly mortgage payments 

due to interest rate reduction; 

(F) the Secretary may reimburse the mortgagee from the 

appropriate guaranty fund in connection with any activities that the mortgagee is required to undertake concerning repayment by the mortgagor of the amount owed 

to the Secretary; 

(G) the Secretary may authorize payments to the mortgagee on behalf of the borrower, under such terms and 

conditions as are defined by the Secretary, based on successful performance under the terms of the mortgage modification, which shall be used to reduce the principal obligation under the modified mortgage; and 

(H) the Secretary may authorize the modification of 

mortgages with terms extended up to 40 years from the 

date of modification. 

(15) ASSIGNMENT.— (A) PROGRAM AUTHORITY.— The Secretary may establish 

a program for assignment to the Secretary, upon request 

of the mortgagee, of a mortgage on a 1- to 4-family residence guaranteed under this chapter. 

(B) PROGRAM REQUIREMENTS.— 

(i) IN GENERAL.— The Secretary may encourage loan 

modifications for eligible delinquent mortgages or 

mortgages facing imminent default, as defined by the 

Secretary, through the payment of the guaranty and 

assignment of the mortgage to the Secretary and the 

subsequent modification of the terms of the mortgage 

according to a loan modification approved under this 

section. 

(ii) ACCEPTANCE OF ASSIGNMENT.— The Secretary 

may accept assignment of a mortgage under a program under this subsection only if— 

(I) the mortgage is in default or facing imminent default; 

(II) the mortgagee has modified the mortgage or 

qualified the mortgage for modification sufficient 

to cure the default and provide for mortgage payments the mortgagor is reasonably able to pay, at 

interest rates not exceeding current market interest rates; and 

(III) the Secretary arranges for servicing of the 

assigned mortgage by a mortgagee (which may include the assigning mortgagee) through procedures that the Secretary has determined to be in 

the best interests of the appropriate guaranty 

fund. 


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(C) PAYMENT OF GUARANTY.— Under the program under 

this paragraph, the Secretary may pay the guaranty for a 

mortgage, in the amount determined in accordance with 

paragraph (2), without reduction for any amounts modified, but only upon the assignment, transfer, and delivery 

to the Secretary of all rights, interest, claims, evidence, 

and records with respect to the mortgage, as defined by 

the Secretary. 

(D) DISPOSITION.— After modification of a mortgage pursuant to this paragraph, and assignment of the mortgage, 

the Secretary may provide guarantees under this subsection for the mortgage. The Secretary may subsequently— 

(i) re-assign the mortgage to the mortgagee under 

terms and conditions as are agreed to by the mortgagee and the Secretary; 

(ii) act as a Government National Mortgage Association issuer, or contract with an entity for such purpose, in order to pool the mortgage into a Government 

National Mortgage Association security; or 

(iii) re-sell the mortgage in accordance with any program that has been established for purchase by the 

Federal Government of mortgages insured under this 

title, and the Secretary may coordinate standards for 

interest rate reductions available for loan modification 

with interest rates established for such purchase. 

(E) LOAN SERVICING.— In carrying out the program 

under this subsection, the Secretary may require the existing servicer of a mortgage assigned to the Secretary under 

the program to continue servicing the mortgage as an 

agent of the Secretary during the period that the Secretary 

acquires and holds the mortgage for the purpose of modifying the terms of the mortgage. If the mortgage is resold 

pursuant to subparagraph (D)(iii), the Secretary may provide for the existing servicer to continue to service the 

mortgage or may engage another entity to service the 

mortgage. 

(16) DEFINITIONS.— For purposes of this subsection: 

(A) The term ‘‘displaced homemaker’’ means an individual who— 

(i) is an adult; 

(ii) has not worked full-time full-year in the labor 

force for a number of years but has, during such years, 

worked primarily without remuneration to care for the 

home and family; and 

(iii) is unemployed or underemployed and is experiencing difficulty in obtaining or upgrading employment. 

(B) The term ‘‘first-time homebuyer’’ means any individual who (and whose spouse) has had no present ownership in a principal residence during the 3-year period ending on the date of purchase of the property acquired with 

a guaranteed loan under this subsection except that— 

(i) any individual who is a displaced homemaker 

may not be excluded from consideration as a first-time 


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homebuyer under this subparagraph on the basis that 

the individual, while a homemaker, owned a home 

with his or her spouse or resided in a home owned by 

the spouse; and 

(ii) any individual who is a single parent may not be 

excluded from consideration as a first-time homebuyer 

under this subparagraph on the basis that the individual, while married, owned a home with his or her 

spouse or resided in a home owned by the spouse. 

(C) The term ‘‘single parent’’ means an individual who— 

(i) is unmarried or legally separated from a spouse; 

and 

(ii)(I) has 1 or more minor children for whom the individual has custody or joint custody; or 

(II) is pregnant. 

(D) The term ‘‘State’’ means the States of the United 

States, the Commonwealth of Puerto Rico, the District of 

Columbia, the Commonwealth of the Northern Mariana Islands, Guam, the Virgin Islands, American Samoa, the 

Trust Territories of the Pacific, and any other possession 

of the United States. 

(17) GUARANTEES FOR REFINANCING LOANS.— (A) IN GENERAL.— Upon the request of the borrower, the 

Secretary shall, to the extent provided in appropriation 

Acts and subject to subparagraph (F), guarantee a loan 

that is made to refinance an existing loan that is made 

under this section or guaranteed under this subsection, 

and that the Secretary determines complies with the requirements of this paragraph. 

(B) INTEREST RATE.— To be eligible for a guarantee 

under this paragraph, the refinancing loan shall have a 

rate of interest that is fixed over the term of the loan and 

does not exceed the interest rate of the loan being refinanced. 

(C) SECURITY.— To be eligible for a guarantee under this 

paragraph, the refinancing loan shall be secured by the 

same single-family residence as was the loan being refinanced, which shall be owned by the borrower and occupied by the borrower as the principal residence of the borrower. 

(D) AMOUNT.— To be eligible for a guarantee under this 

paragraph, the principal obligation under the refinancing 

loan shall not exceed an amount equal to the sum of the 

balance of the loan being refinanced and such closing costs 

as may be authorized by the Secretary, which shall include 

a discount not exceeding 200 basis points and an origination fee not exceeding such amount as the Secretary shall 

prescribe. 

(E) OTHER REQUIREMENTS.— The provisions of the last 

sentence of paragraph (2) and paragraphs (3), (6), (7)(A), 

(8), and (10) shall apply to loans guaranteed under this 

paragraph, and no other provisions of paragraphs (2) 

through (13) shall apply to such loans. 

(F) AUTHORITY TO ESTABLISH LIMITATION.— The Secretary may establish limitations on the number of loans 


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129 

guaranteed under this paragraph, which shall be based on 

market conditions and other factors as the Secretary considers appropriate. 

(18) DELEGATION OF APPROVAL.— The Secretary may delegate, in part or in full, the Secretary’s authority to approve and 

execute binding Rural Housing Service loan guarantees pursuant to this subsection to certain preferred lenders, in accordance 

with standards established by the Secretary. 

* * * * * * * 

NATIONAL HOUSING ACT 

* * * * * * * 

TITLE II—MORTGAGE INSURANCE 

* * * * * * * 

INSURANCE OF MORTGAGES

SEC. 203. (a) The Secretary is authorized, upon application by 

the mortgagee, to insure as hereinafter provided any mortgage offered to him which is eligible for insurance as hereinafter provided, 

and, upon such terms as the Secretary may prescribe, to make 

commitments for the insuring of such mortgages prior to the date 

of their execution or disbursement thereon. 

(b) To be eligible for insurance under this section a mortgage 

shall comply with the following: 

(1) Have been made to, and be held by, a mortgagee approved by the Secretary as responsible and able to service the 

mortgage properly. 

(2) Involve a principal obligation (including such initial service charges, appraisal, inspection, and other fees as the Secretary shall approve) in an amount— 

(A) not to exceed the lesser of— 

(i) in the case of a 1-family residence, 115 percent of 

the median 1-family house price in the area, as determined by the Secretary; and in the case of a 2-, 3-, or 

4-family residence, the percentage of such median 

price that bears the same ratio to such median price 

as the dollar amount limitation determined under the 

sixth sentence of section 305(a)(2) of the Federal Home 

Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) 

for a 2-, 3-, or 4-family residence, respectively, bears 

to the dollar amount limitation determined under such 

section for a 1-family residence; or 

(ii) 150 percent of the dollar amount limitation determined under the sixth sentence of such section 

305(a)(2) for a residence of applicable size; 

except that the dollar amount limitation in effect under 

this subparagraph for any size residence for any area may 

not be less than the greater of: (I) the dollar amount limitation in effect under this section for the area on October 

21, 1998; or (II) 65 percent of the dollar amount limitation 


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determined under the sixth sentence of such section 

305(a)(2) for a residence of the applicable size; and 

(B) not to exceed 100 percent of the appraised value of 

the property. 

For purposes of the preceding sentence, the term ‘‘area’’ means 

a metropolitan statistical area as established by the Office of 

Management and Budget; and the median 1-family house price 

for an area shall be equal to the median 1-family house price 

of the county within the area that has the highest such median 

price. 

Notwithstanding any other provision of this paragraph, the 

amount which may be insured under this section may be increased by up to 20 percent if such increase is necessary to account for the increased cost of the residence due to the installation of a solar energy system (as defined in subparagraph (3) 

of the last paragraph of section 2(a) of this Act) therein. 

Notwithstanding any other provision of this paragraph, the 

Secretary may not insure, or enter into a commitment to insure, a mortgage under this section that is executed by a firsttime homebuyer and that involves a principal obligation (including such initial service charges, appraisal, inspection, and 

other fees as the Secretary shall approve) in excess of 97 percent of the appraised value of the property unless the mortgagor has completed a program of counseling with respect to 

the responsibilities and financial management involved in 

homeownership that is approved by the Secretary; except that 

the Secretary may, in the discretion of the Secretary, waive the 

applicability of this requirement. 

(3) Have a maturity satisfactory to the Secretary, but not to 

exceed, in any event, thirty-five years (or thirty years if such 

mortgage is not approved for insurance prior to construction) 

from the date of the beginning of amortization of the mortgage. 

(4) Contain complete amortization provisions satisfactory to 

the Secretary requiring periodic payments by the mortgagor 

not in excess of his reasonable ability to pay as determined by 

the Secretary. 

(5) Bear interest at such rate as may be agreed upon by the 

mortgagor and the mortgagee. 

(6) Provide, in a manner satisfactory to the Secretary, for the 

application of the mortgagor’s periodic payments (exclusive of 

the amount allocated to interest and to the premium charge 

which is required for mortgage insurance as hereinafter provided) to amortization of the principal of the mortgage. 

(7) Contain such terms and provisions with respect to insurance, repairs, alterations, payment of taxes, default reserves, 

delinquency charges, foreclosure proceedings, anticipation of 

maturity, additional and secondary liens, and other matters as 

the Secretary may in his discretion prescribe. 

(9) CASH INVESTMENT REQUIREMENT.— (A) IN GENERAL.— A mortgage insured under this section shall be executed by a mortgagor who shall have paid, 

in cash or its equivalent, on account of the property an 

amount equal to not less than 3.5 percent of the appraised 

value of the property or such larger amount as the Secretary may determine. 


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(B) FAMILY MEMBERS.— For purposes of this paragraph, 

the Secretary shall consider as cash or its equivalent any 

amounts borrowed from a family member (as such term is 

defined in section 201), subject only to the requirements 

that, in any case in which the repayment of such borrowed 

amounts is secured by a lien against the property, that— 

(i) such lien shall be subordinate to the mortgage; 

and 

(ii) the sum of the principal obligation of the mortgage and the obligation secured by such lien may not 

exceed 100 percent of the appraised value of the property plus any initial service charges, appraisal, inspection, and other fees in connection with the mortgage. 

(C) PROHIBITED SOURCES.— In no case shall the funds 

required by subparagraph (A) consist, in whole or in part, 

of funds provided by any of the following parties before, 

during, or after closing of the property sale: 

(i) The seller or any other person or entity that financially benefits from the transaction. 

(ii) Any third party or entity that is reimbursed, directly or indirectly, by any of the parties described in 

clause (i). 

This subparagraph shall apply only to mortgages for which 

the mortgagee has issued credit approval for the borrower 

on or after October 1, 2008. 

(c)(1) The Secretary is authorized to fix premium charge for the 

insurance of mortgages under the separate sections of this title but 

in the case of any mortgage such charge shall be not less than an 

amount equivalent to one-fourth of 1 per centum per annum nor 

more than an amount equivalent to 1 per centum per annum of the 

amount of the principal obligation of the mortgage outstanding at 

any time, without taking into account delinquent payments or prepayments: Provided, That premium charges fixed for insurance (1) 

under section 245, 247, 251, 252, or 253, or any other financing 

mechanism providing alternative methods for repayment of a mortgage that is determined by the Secretary to involve additional risk, 

or (2) under subsection (n) are not required to be the same as the 

premium charges for mortgages insured under the other provisions 

of this section, but in no case shall premium charges under subsection (n) exceed 1 per centum per annum: Provided, That any reduced premium charge so fixed and computed may, in the discretion of the Secretary, also be made applicable in such manner as 

the Secretary shall prescribe to each insured mortgage outstanding 

under the section or sections involved at the time the reduced premium charge is fixed. Such premium charges shall be payable by 

the mortgagee, either in cash, or in debentures issued by the Secretary under this title at par plus accrued interest, in such manner 

as may be prescribed by the Secretary: Provided, That debentures 

presented in payment of premium charges shall represent obligations of the particular insurance fund or account to which such premium charges are to be credited: Provided further, That the Secretary may require the payment of one or more such premium 

charges at the time the mortgage is insured, at such discount rate 

as he may prescribe not in excess of the interest rate specified in 

the mortgage. If the Secretary finds upon the presentation of a 


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mortgage for insurance and the tender of the initial premium 

charge or charges so required that the mortgage complies with the 

provisions of this section, such mortgage may be accepted for insurance by endorsement or otherwise as the Secretary may prescribe; 

but no mortgage shall be accepted for insurance under this section 

unless the Secretary finds that the project with respect to which 

the mortgage is executed is economically sound. In the event that 

the principal obligation of any mortgage accepted for insurance 

under this title is paid in full prior to the maturity date, the Secretary is further authorized in his discretion to require the payment by the mortgagee of an adjusted premium charge in such 

amount as the Secretary determines to be equitable, but not in excess of the aggregate amount of the premium charges that the 

mortgagee would otherwise have been required to pay if the mortgage had continued to be insured until such maturity date; and in 

the event that the principal obligation is paid in full as herein set 

forth, the Secretary is authorized to refund to the mortgagee for 

the account of the mortgagor all, or such portion as he shall determine to be equitable, of the current unearned premium charges 

theretofore paid: Provided, That with respect to mortgages (1) for 

which the Secretary requires, at the time the mortgage is insured, 

the payment of a single premium charge to cover the total premium obligation for the insurance of the mortgage, and (2) on 

which the principal obligation is paid before the number of years 

on which the premium with respect to a particular mortgage was 

based, or the property is sold subject to the mortgage or is sold and 

the mortgage is assumed prior to such time, the Secretary shall 

provide for refunds, where appropriate, of a portion of the premium 

paid and shall provide for appropriate allocation of the premium 

cost among the mortgagors over the term of the mortgage, in accordance with procedures established by the Secretary which take 

into account sound financial and actuarial considerations. 

(2) Notwithstanding any other provision of this section, each 

mortgage secured by a 1- to 4-family dwelling that is an obligation 

of the Mutual Mortgage Insurance Fund shall be subject to the following requirements: 

(A) The Secretary shall establish and collect, at the time of 

insurance, a single premium payment in an amount not exceeding 3 percent of the amount of the original insured principal obligation of the mortgage. In the case of a mortgage for 

which the mortgagor is a first-time homebuyer who completes 

a program of counseling with respect to the responsibilities and 

financial management involved in homeownership that is approved by the Secretary, the premium payment under this subparagraph shall not exceed 2.75 percent of the amount of the 

original insured principal obligation of the mortgage. Upon 

payment in full of the principal obligation of a mortgage prior 

to the maturity date of the mortgage, the Secretary shall refund all of the unearned premium charges paid on the mortgage pursuant to this subparagraph, provided that the mortgagor refinances the unpaid principal obligation under title II 

of this Act. 

(B) In addition to the premium under subparagraph (A), the 

Secretary may establish and collect annual premium payments 

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sured principal balance (excluding the portion of the remaining 

balance attributable to the premium collected under subparagraph (A) and without taking into account delinquent payments or prepayments) for the following periods: 

(i) For any mortgage involving an original principal obligation (excluding any premium collected under subparagraph (A)) that is less than 90 percent of the appraised 

value of the property (as of the date the mortgage is accepted for insurance), for the first 11 years of the mortgage 

term. 

(ii) For any mortage involving an original principal obligation (excluding any premium collected under subparagraph (A)) that is greater than or equal to 90 percent of 

such value, for the first 30 years of the mortgage term; except that notwithstanding the matter preceding clause (i), 

for any mortgage involving an original principal obligation 

(excluding any premium collected under subparagraph (A)) 

that is greater than 95 percent of such value, the annual 

premium collected during the 30-year period under this 

clause may be in an amount not exceeding 1.55 percent of 

the remaining insured principal balance (excluding the 

portion of the remaining balance attributable to the premium collected under subparagraph (A) and without taking into account delinquent payments or prepayments). 

(C)(i) In addition to the premiums under subparagraphs (A) 

and (B), the Secretary shall establish and collect annual premium payments for any mortgage for which the Secretary collects an annual premium payment under subparagraph (B), in 

an amount described in clause (ii). 

(ii)(I) Subject to subclause (II), with respect to a mortgage, 

the amount described in this clause is 10 basis points of the 

remaining insured principal balance (excluding the portion of 

the remaining balance attributable to the premium collected 

under subparagraph (A) and without taking into account delinquent payments or prepayments). 

(II) During the 2-year period beginning on the date of enactment of this subparagraph, the Secretary shall increase the 

number of basis points of the annual premium payment collected under this subparagraph incrementally, as determined 

appropriate by the Secretary, until the number of basis points 

of the annual premium payment collected under this subparagraph is equal to the number described in subclause (I). 

(d)(1) Except as provided in paragraph (2) of this subsection, notwithstanding provision of this title governing maximum mortgage 

amounts for insuring a mortgage secured by a one- to four-family 

dwelling, the maximum amount of the mortgage determined under 

any such provision may be increased by the amount of the mortgage insurance premium paid at the time the mortgage is insured. 

(2) The maximum amount of a mortgage determined under subsection (b)(2)(B) of this section may not be increased as provided 

in paragraph (1). 

(e) Any contract of insurance heretofore or hereafter executed by 

the Secretary under this title shall be conclusive evidence of the 

eligibility of the loan or mortgage for insurance, and the validility 

of any contract of insurance so executed shall be incontestable in 


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the hands of an approved financial institution or approved mortgagee from the date of the execution of such contract, except for 

fraud or misrepresentation on the part of such approved financial 

institution or approved mortgagee. 

(f) DISCLOSURE OF OTHER MORTGAGE PRODUCTS.— (1) IN GENERAL.— In conjunction with any loan insured 

under this section, an original lender shall provide to each prospective borrower a disclosure notice that provides a 1-page 

analysis of mortgage products offered by that lender and for 

which the borrower would qualify. 

(2) NOTICE.— The notice required under paragraph (1) shall 

include— 

(A) a generic analysis comparing the note rate (and associated interest payments), insurance premiums, and other 

costs and fees that would be due over the life of the loan 

for a loan insured by the Secretary under subsection (b) 

with the note rates, insurance premiums (if applicable), 

and other costs and fees that would be expected to be due 

if the mortgagor obtained instead other mortgage products 

offered by the lender and for which the borrower would 

qualify with a similar loan-to-value ratio in connection 

with a conventional mortgage (as that term is used in section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) or section 302(b)(2) of 

the Federal National Mortgage Association Charter Act (12 

U.S.C. 1717(b)(2)), as applicable), assuming prevailing interest rates; and 

(B) a statement regarding when the requirement of the 

mortgagor to pay the mortgage insurance premiums for a 

mortgage insured under this section would terminate, or a 

statement that the requirement shall terminate only if the 

mortgage is refinanced, paid off, or otherwise terminated. 

(g)(1) The Secretary may insure a mortgage under this title that 

is secured by a 1- to 4-family dwelling, or approve a substitute 

mortgagor with respect to any such mortgage, only if the mortgagor 

is to occupy the dwelling as his or her principal residence or as a 

secondary residence, as determined by the Secretary. In making 

this determination with respect to the occupancy of secondary residences, the Secretary may not insure mortgages with respect to 

such residences unless the Secretary determines that it is necessary to avoid undue hardship to the mortgagor. In no event may 

a secondary residence under this subsection include a vacation 

home, as determined by the Secretary. 

(2) The occupancy requirement established in paragraph (1) shall 

not apply to any mortgagor (or co-mortgagor, as appropriate) that 

is— 

(A) a public entity, as provided in section 214 or 247, or any 

other State or local government or an agency thereof; 

(B) a private nonprofit or public entity, as provided in section 

221(h) or 235(j), or other private nonprofit organization that is 

exempt from taxation under section 501(c)(3) of the Internal 

Revenue Code of 1986 and intends to sell or lease the mortgage 

property to low or moderate-income persons, as determined by 

the Secretary; 

(C) an Indian tribe, as provided in section 248; 


SSpencer on DSK4SPTVN1PROD with REPORTS
135 

(D) a serviceperson who is unable to meet such requirement 

because of his or her duty assignment, as provided in section 

216 or subsection (b)(4) or (f) of section 222; 

(E) a mortgagor or co-mortgagor under subsection (k); or 

(F) a mortgagor that, pursuant to section 223(a)(7), is refinancing an existing mortgage insured under this Act for not 

more than the outstanding balance of the existing mortgage, if 

the amount of the monthly payment due under the refinancing 

mortgage is less than the amount due under the existing mortgage for the month in which the refinancing mortgage is executed. 

(3) For purposes of this subsection, the term ‘‘substitute mortgagor’’ means a person who, upon the release by a mortgagee of a 

previous mortgagor from personal liability on the mortgage note, 

assumes such liability and agrees to pay the mortgage debt. 

(h) Notwithstanding any other provision of this section, the Secretary is authorized to insure any mortgage which involves a principal obligation not in excess of the applicable maximum dollar 

limit under subsection (b) and not in excess of 100 per centum of 

the appraised value of a property upon which there is located a 

dwelling designed principally for a single-family residence, where 

the mortgagor establishes (to the satisfaction of the Secretary) that 

his home which he occupied as an owner or as a tenant was destroyed or damaged to such an extent that reconstruction is required as a result of a flood, fire, hurricane, earthquake, storm, or 

other catastrophe, which the President, pursuant to Robert T. Stafford Disaster Relief and Emergency Assistance Act, has determined 

to be a major disaster. In any case in which the single family residence to be insured under this subsection is within a jurisdiction 

in which the President has declared a major disaster to have occurred, the Secretary is authorized, for a temporary period not to 

exceed 18 months from the date of such Presidential declaration, 

to enter into agreements to insure a mortgage which involves a 

principal obligation of up to 100 percent of the dollar limitation determined under section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act for single family residence, and not in excess 

of 100 percent of the appraised value. 

(j) Loans secured by mortgages insured under this section shall 

not be taken into account in determining the amount of real estate 

loans which a national bank may make in relation to its capital 

and surplus or its time and savings deposits. 

(k)(1) The Secretary may, in order to assist in the rehabilitation 

of one- to four-family structures used primarily for residential purposes, insure and make commitments to insure rehabilitation loans 

(including advances made during rehabilitation) made by financial 

institutions. Such commitments to insure and such insurance shall 

be made upon such terms and conditions which the Secretary may 

prescribe and which are consistent with the provisions of subsections (b), (c), (e), (i) and (j) of this section, except as modified by 

the provisions of this subsection. 

(2) For the purpose of this subsection— 

(A) the term ‘‘rehabilitation loan’’ means a loan, advance of 

credit, or purchase of an obligation representing a loan or advance of credit, made for the purpose of financing— 


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136 

(i) the rehabilitation of an existing one- to four-unit 

structure which will be used primarily for residential purposes; 

(ii) the rehabilitation of such a structure and the refinancing of the outstanding indebtedness on such structure 

and the real property on which the structure is located; or 

(iii) the rehabilitation of such a structure and the purchase of the structure and the real property on which it is 

located; and 

(B) the term ‘‘rehabilitation’’ means the improvement (including improvements designed to meet cost-effective energy 

conservation standards prescribed by the Secretary) or repair 

of a structure, or facilities in connection with a structure, and 

may include the provision of such sanitary or other facilities as 

are required by applicable codes, a community development 

plan, or a statewide property insurance plan to be provided by 

the owner or tenant of the project. The term ‘‘rehabilitation’’ 

may also include measures to evaluate and reduce lead-based 

paint hazards, as such terms are defined in section 1004 of the 

Residential Lead-Based Paint Hazard Reduction Act of 1992. 

(3) To be eligible for insurance under this subsection, a rehabilitation loan shall— 

(A) involve a principal obligation (including such initial service charges, appraisal, inspection, and other fees as the Secretary shall approve) in an amount which does not exceed, 

when added to any outstanding indebtedness of the borrower 

which is secured by the structure and the property on which 

it is located, the amount specified in subsection (b)(2); except 

that, in determining the amount of the principal obligation for 

purposes of this subsection, the Secretary shall establish as the 

appraised value of the property an amount not to exceed the 

sum of the estimated cost of rehabilitation and the Secretary’s 

estimate of the value of the property before rehabilitation; 

(B) bear interest at such rate as may be agreed upon by the 

borrower and the financial institution; 

(C) be an acceptable risk, as determined by the Secretary; 

and 

(D) comply with such other terms, conditions, and restrictions as the Secretary may prescribe. 

(4) Any rehabilitation loan insured under this subsection may be 

refinanced and extended in accordance with such terms and conditions as the Secretary may prescribe, but in no event for an additional amount or term which exceeds the maximum provided for in 

this subsection. 

(5) All funds received and all disbursements made pursuant to 

the authority established by this subsection shall be credited or 

charged as appropriate, to the Mutual Mortgage Insurance Fund, 

and insurance benefits shall be paid in cash out of such Fund or 

in debentures executed in the name of such Fund. Insurance benefits paid with respect to loans secured by a first mortgage and insured under this subsection shall be paid in accordance with section 204. Insurance benefits paid with respect to loans secured by 

a mortgage other than a first mortgage and insured under this subsection shall be paid in accordance with paragraphs (6) and (7) of 


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137 

section 220(h), except that reference to ‘‘this subsection’’ in such 

paragraphs shall be construed as referring to this subsection. 

(6) The Secretary is authorized, for a temporary period not 

to exceed 18 months from the date on which the President has 

declared a major disaster to have occurred, to enter into agreements to insure a rehabilitation loan under this subsection 

which involves a principal obligation of up to 100 percent of 

the dollar limitation determined under section 305(a)(2) of the 

Federal Home Loan Mortgage Corporation Act for a residence 

of the applicable size, if such loan is secured by a structure and 

property that are within a jurisdiction in which the President 

has declared such disaster, pursuant to the Robert T. Stafford 

Disaster Relief and Emergency Assistance Act, and if such loan 

otherwise conforms to the loan-to-value ratio and other requirements of this subsection. 

(n)(1) The Secretary is authorized to insure under this section 

any mortgage meeting the requirements of subsection (b) of this 

section, except as modified by this subsection. To be eligible, the 

mortgage shall involve a dwelling unit in a cooperative housing 

project which is covered by a blanket mortgage insured under this 

Act or the construction of which was completed more than a year 

prior to the application for the mortgage insurance. The mortgage 

amount as determined under the other provisions of subsection (b) 

of this section shall be reduced by an amount equal to the portion 

of the unpaid balance of the blanket mortgage covering the project 

which is attributable (as of the date the mortgage is accepted for 

insurance) to such unit. 

(2) For the purpose of this subsection— 

(A) The terms ‘‘home mortgage’’ and ‘‘mortgage’’ include a 

first or subordinate mortgage or lien given (in accordance with 

the laws of the State where the property is located and accompanied by such security and other undertakings as may be required under regulations of the Secretary) to secure a loan 

made to finance the purchase of stock or membership in a cooperative ownership housing corporation the permanent occupancy of the dwelling units of which is restricted to members 

of such corporation, where the purchase of such stock or membership will entitle the purchaser to the permanent occupancy 

of one of such units. 

(B) The terms ‘‘appraised value of the property’’, ‘‘value of 

the property’’, and ‘‘value’’ include the appraised value of a 

dwelling unit in a cooperative housing project of the type described in subparagraph (A) where the purchase of the stock or 

membership involved will entitle the purchaser to the permanent occupancy of that unit; and the term ‘‘property’’ includes 

a dwelling unit in such a cooperative project. 

(C) The terms ‘‘mortgagor’’ includes a person or persons giving a first or subordinate mortgage or lien (of the type described in subparagraph (A)) to secure a loan to finance the 

purchase of stock or membership in a cooperative housing corporation. 

(r) The Secretary shall take appropriate actions to reduce losses 

under the single-family mortgage insurance programs carried out 

under this title. Such actions shall include— 


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138 

(1) an annual review by the Secretary of the rate of early serious defaults and claims, in accordance with section 533; 

(2) requiring that at least one person acquiring ownership of 

a one- to four-family residential property encumbered by a 

mortgage insured under this title be determined to be creditworthy under standards prescribed by the Secretary, whether 

or not such person assumes personal liability under the mortgage (except that acquisitions by devise or descent shall not be 

subject to this requirement); 

(3) in any case where personal liability under a mortgage is 

assumed, requiring that the original mortgagor be advised of 

the procedures by which he or she may be released from liability; and 

(4) providing counseling, either directly or through third parties, to delinquent mortgagors whose mortgages are insured 

under this section 203 (12 U.S.C. 1709), using the Fund to pay 

for such counseling. 

In any case where the homeowner does not request a release from 

liability, the purchaser and the homeowner shall have joint and 

several liability for any default for a period of 5 years following the 

date of the assumption. After the close of such 5-year period, only 

the purchaser shall be liable for any default on the mortgage unless the mortgage is in default at the time of the expiration of the 

5-year period. 

(t)(1) Each mortgagee (or servicer) with respect to a mortgage 

under this section shall provide each mortgagor of such mortgagee 

(or servicer) written notice, not less than annually, containing a 

statement of the amount outstanding for prepayment of the principal amount of the mortgage and describing any requirements the 

mortgagor must fulfill to prevent the accrual of any interest on 

such principal amount after the date of any prepayment. This paragraph shall apply to any insured mortgage outstanding on or after 

the expiration of the 90-day period beginning on the date of effectiveness of final regulations implementing this paragraph. 

(2) Each mortgagee (or servicer) with respect to a mortgage 

under this section shall, at or before closing with respect to any 

such mortgage, provide the mortgagor with written notice (in such 

form as the Secretary shall prescribe, by regulation, before the expiration of the 90-day period beginning upon the date of the enactment of the Cranston-Gonzalez National Affordable Housing Act) 

describing any requirements the mortgagor must fulfill upon prepayment of the principal amount of the mortgage to prevent the accrual of any interest on the principal amount after the date of such 

prepayment. This paragraph shall apply to any mortgage executed 

after the expiration of the period under paragraph (1). 

(u)(1) No mortgagee may make or hold mortgages insured under 

this section if the customary lending practices of the mortgagee, as 

determined by the Secretary pursuant to section 539, provide for 

a variation in mortgage charge rates that exceeds 2 percent for insured mortgages made by the mortgagee on dwellings located within an area. The Secretary shall ensure that any permissible variations in the mortgage charge rates of any mortgagee are based 

only on actual variations in fees or costs to the mortgagee to make 

the loan. 

(2) For purposes of this subsection— 


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139 

(A) the term ‘‘area’’ means a metropolitan statistical area as 

established by the Office of Management and Budget; 

(B) the term ‘‘mortgage charges’’ includes the interest rate, 

discount points, loan origination fee, and any other amount 

charged to a mortgagor with respect to an insured mortgage; 

and 

(C) the term ‘‘mortgage charge rate’’ means the amount of 

mortgage charges for an insured mortgage expressed as a percentage of the initial principal amount of the mortgage. 

(v) The insurance of a mortgage under this section in connection 

with the assistance provided under section 8(y) of the United 

States Housing Act of 1937 shall be the obligation of the Mutual 

Mortgage Insurance Fund. 

(w) ANNUAL REPORT.—The Secretary of Housing and Urban Development shall submit to the Congress an annual report on the 

single family mortgage insurance program under this section. Each 

report shall set forth— 

(1) an analysis of the income groups served by the single 

family insurance program, including— 

(A) the percentage of borrowers whose incomes do not 

exceed 100 percent of the median income for the area; 

(B) the percentage of borrowers whose incomes do not 

exceed 80 percent of the median income for the area; and 

(C) the percentage of borrowers whose incomes do not 

exceed 60 percent of the median income for the area; 

(2) an analysis of the percentage of minority borrowers annually assisted by the program; the percentage of central city borrowers assisted and the percentage of rural borrowers assisted 

by the program; 

(3) the extent to which the Secretary in carrying out the program has employed methods to ensure that needs of low and 

moderate income families, underserved areas, and historically 

disadvantaged groups are served by the program; and 

(4) the current impediments to having the program serve low 

and moderate income borrowers; borrowers from central city 

areas; borrowers from rural areas; and minority borrowers. 

(x) MANAGEMENT DEFICIENCIES REPORT.— 

(1) IN GENERAL.— Not later than 60 days after the date of 

the enactment of this subsection, and annually thereafter, the 

Secretary shall submit to Congress a report on the plan of the 

Secretary to address each material weakness, reportable condition, and noncompliance with an applicable law or regulation 

(as defined by the Director of the Office of Management and 

Budget) identified in the most recent audited financial statement of the Federal Housing Administration submitted under 

section 3515 of title 31, United States Code. 

(2) CONTENTS OF ANNUAL REPORT.— Each report submitted 

under paragraph (1) shall include— 

(A) an estimate of the resources, including staff, information systems, and contract assistance, required to address each material weakness, reportable condition, and 

noncompliance with an applicable law or regulation described in paragraph (1), and the costs associated with 

those resources; 


SSpencer on DSK4SPTVN1PROD with REPORTS
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(B) an estimated timetable for addressing each material 

weakness, reportable condition, and noncompliance with 

an applicable law or regulation described in paragraph (1); 

and 

(C) the progress of the Secretary in implementing the 

plan of the Secretary included in the report submitted 

under paragraph (1) for the preceding year, except that 

this subparagraph does not apply to the initial report submitted under paragraph (1). 

(y) REQUIREMENTS FOR MORTGAGES FOR CONDOMINIUMS.— (1) PROJECT RECERTIFICATION REQUIREMENTS.— Notwithstanding any other law, regulation, or guideline of the Secretary, including chapter 2.4 of the Condominium Project Approval and Processing Guide of the FHA, the Secretary shall 

streamline the project certification requirements that are applicable to the insurance under this section for mortgages for condominium projects so that recertifications are substantially less 

burdensome than certifications. The Secretary shall consider 

lengthening the time between certifications for approved properties, and allowing updating of information rather than resubmission. 

(2) COMMERCIAL SPACE REQUIREMENTS.— Notwithstanding 

any other law, regulation, or guideline of the Secretary, including chapter 2.1.3 of the Condominium Project Approval and 

Processing Guide of the FHA, in providing for exceptions to the 

requirement for the insurance of a mortgage on a condominium 

property under this section regarding the percentage of the floor 

space of a condominium property that may be used for nonresidential or commercial purposes, the Secretary shall provide 

that— 

(A) any request for such an exception and the determination of the disposition of such request may be made, at the 

option of the requester, under the direct endorsement lender 

review and approval process or under the HUD review and 

approval process through the applicable field office of the 

Department; and 

(B) in determining whether to allow such an exception for 

a condominium property, factors relating to the economy for 

the locality in which such project is located or specific to 

project, including the total number of family units in the 

project, shall be considered. 

Not later than the expiration of the 90-day period beginning on 

the date of the enactment of this paragraph, the Secretary shall 

issue regulations to implement this paragraph, which shall include any standards, training requirements, and remedies and 

penalties that the Secretary considers appropriate. 

(3) TRANSFER FEES.— Notwithstanding any other law, regulation, or guideline of the Secretary, including chapter 1.8.8 of 

the Condominium Project Approval and Processing Guide of the 

FHA and section 203.41 of the Secretary’s regulations (24 

C.F.R. 203.41), existing standards of the Federal Housing Finance Agency relating to encumbrances under private transfer 

fee covenants shall apply to the insurance of mortgages by the 

Secretary under this section to the same extent and in the same 

manner that such standards apply to the purchasing, investing 


SSpencer on DSK4SPTVN1PROD with REPORTS
141 

in, and otherwise dealing in mortgages by the Federal National 

Mortgage Association and the Federal Home Loan Mortgage 

Corporation. If the provisions of part 1228 of the Director of the 

Federal Housing Finance Agency’s regulations (12 C.F.R. part 

1228) are amended or otherwise changed after the date of the 

enactment of this paragraph, the Secretary of Housing and 

Urban Development shall adopt any such amendments or 

changes for purposes of this paragraph, unless the Secretary 

causes to be published in the Federal Register a notice explaining why the Secretary will disregard such amendments or 

changes within 90 days after the effective date of such amendments or changes. 

(4) OWNER-OCCUPANCY REQUIREMENT.— 

(A) ESTABLISHMENT OF PERCENTAGE REQUIREMENT.— 

Not later than the expiration of the 90-day period beginning on the date of the enactment of this paragraph, the 

Secretary shall, by rule, notice, or mortgagee letter, issue 

guidance regarding the percentage of units that must be occupied by the owners as a principal residence or a secondary residence (as such terms are defined by the Secretary), or must have been sold to owners who intend to 

meet such occupancy requirements, including justifications 

for the percentage requirements, in order for a condominium project to be acceptable to the Secretary for insurance under this section of a mortgage within such condominium property. 

(B) FAILURE TO ACT.— If the Secretary fails to issue the 

guidance required under subparagraph (A) before the expiration of the 90-day period specified in such clause, the following provisions shall apply: 

(i) 35 PERCENT REQUIREMENT.— In order for a condominium project to be acceptable to the Secretary for 

insurance under this section, at least 35 percent of all 

family units (including units not covered by FHA-insured mortgages) must be occupied by the owners as a 

principal residence or a secondary residence (as such 

terms are defined by the Secretary), or must have been 

sold to owners who intend to meet such occupancy requirement. 

(ii) OTHER CONSIDERATIONS.— The Secretary may increase the percentage applicable pursuant to clause (i) 

to a condominium project on a project-by-project or regional basis, and in determining such percentage for a 

project shall consider factors relating to the economy 

for the locality in which such project is located or specific to project, including the total number of family 

units in the project. 

* * * * * * * 

MCKINNEY-VENTO HOMELESS ASSISTANCE ACT 

* * * * * * * 


SSpencer on DSK4SPTVN1PROD with REPORTS
142 

SECTION 101. SHORT TITLE AND TABLE OF CONTENTS. 

(a) SHORT TITLE.—This Act may be cited as the ‘‘McKinney-Vento 

Homeless Assistance Act’’. 

(b) TABLE OF CONTENTS.— 

* * * * * * * 

TITLE IV—HOUSING ASSISTANCE 

* * * * * * * 

Subtitle C—Continuum of Care Program 

Sec. 421. Purposes. 

* * * * * * * 

øSec. 432. Regulations. 

øSec. 433. Reports to Congress.¿ 

Sec. 432. Geographic areas. 

Sec. 433. Regulations. 

Sec. 434. Reports to Congress. 

* * * * * * * 

TITLE IV—HOUSING ASSISTANCE 

* * * * * * * 

Subtitle B—Emergency Solutions Grants 

Program 

* * * * * * * 

SEC. 414. ALLOCATION AND DISTRIBUTION OF ASSISTANCE. 

(a) IN GENERAL.—The Secretary shall allocate assistance under 

this subtitle to metropolitan cities, urban counties, and States (for 

distribution to local governments and private nonprofit organizations in the States) in a manner that ensures that the percentage 

of the total amount available under this subtitle for any fiscal year 

that is allocated to any State, metropolitan city, or urban county 

is equal to the percentage of the total amount available for section 

106 of the Housing and Community Development Act of 1974 for 

such prior fiscal year that is allocated to such State, metropolitan 

city, or urban county. 

(b) MINIMUM ALLOCATION REQUIREMENT.—If, under the allocation provisions applicable under this subtitle, any metropolitan city 

or urban county would receive a grant of less than 0.05 percent of 

the amounts appropriated under section 408 and made available to 

carry out this subtitle for any fiscal year, such amount shall instead be reallocated to the State, except that any city that is located in a State that does not have counties as local governments, 

that has a population greater than 40,000 but less than 50,000 as 

used in determining the fiscal year 1987 community development 

block grant program allocation, and that was allocated in excess of 

$1,000,000 in community development block grant funds in fiscal 

year 1987, shall receive directly the amount allocated to such city 

under subsection (a). 

(c) DISTRIBUTIONS TO NONPROFIT ORGANIZATIONS, PUBLIC HOUSING AGENCIES, AND LOCAL REDEVELOPMENT AUTHORITIES.—Any 

local government receiving assistance under this subtitle may disVerDate Sep 11 2014 05:50 Jan 29, 2016 Jkt 059006 PO 00000 Frm 00142 Fmt 6659 Sfmt 6601 E:\HR\OC\HR397.XXX HR397

SSpencer on DSK4SPTVN1PROD with REPORTS
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tribute all or a portion of such assistance to private nonprofit organizations providing assistance to homeless individuals, to public 

housing agencies (as defined under section 3(b)(6) of the United 

States Housing Act of 1937), or to local redevelopment authorities 

(as defined under State law) . Any State receiving assistance under 

this subtitle may distribute all or a portion of such assistance to 

private nonprofit organizations providing assistance to homeless individuals, if the local government for the locality in which the 

project is located certifies that it approves of the project. 

(d) REALLOCATION OF FUNDS.— (1) The Secretary shall, not less than twice during each fiscal 

year, reallocate any assistance provided under this subtitle 

that is unused or returned or that becomes available under 

subsection (b). 

(2) If a city or county eligible for a grant under subsection 

(a) fails to obtain approval of its comprehensive plan during 

the 90-day period following the date funds authorized by this 

subtitle first become available for allocation during any fiscal 

year, the amount that the city or county would have received 

shall be available to the State in which the city or county is 

located if the State has obtained approval of its comprehensive 

plan. Any amounts that cannot be allocated to a State under 

the preceding sentence shall be reallocated to other States, 

counties, and cities that demonstrate extraordinary need or 

large numbers of homeless individuals, as determined by the 

Secretary. 

(3) If a State or Indian tribe fails to obtain approval of its 

comprehensive plan during the 90-day period following the 

date funds authorized by this subtitle first become available for 

allocation during any fiscal year, the amount that the State or 

Indian tribe would have received shall be reallocated to other 

States and to cities and counties as applicable, that demonstrate extraordinary need or large numbers of homeless individuals, as determined by the Secretary. 

(e) ALLOCATIONS TO TERRITORIES.—In addition to the other allocations required in this section, the Secretary shall (for amounts 

appropriated after the date of enactment of this Act) allocate assistance under this subtitle to 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, in accordance with an allocation formula established by the 

Secretary. 

* * * * * * * 

Subtitle C—Continuum of Care Program 

* * * * * * * 

SEC. 432. GEOGRAPHIC AREAS. 

(a) REQUIREMENT TO DEFINE.—For purposes of this subtitle, the 

term ‘‘geographic area’’ shall have such meaning as the Secretary 

shall by notice provide. 

(b) ISSUANCE OF NOTICE.—Not later than the expiration of the 90- 

day period beginning on the date of the enactment of the Housing 

Opportunity Through Modernization Act of 2015, the Secretary 


SSpencer on DSK4SPTVN1PROD with REPORTS
144 

shall issue a notice setting forth the definition required by subsection (a). 

SEC. ø432.¿ 433. REGULATIONS. 

Not later than the expiration of the 90-day period beginning on 

the date of the enactment of the Housing and Community Development Act of 1992, the Secretary shall issue interim regulations to 

carry out this subtitle, which shall take effect upon issuance. The 

Secretary shall issue final regulations to carry out this subtitle 

after notice and opportunity for public comment regarding the interim regulations, pursuant to the provisions of section 553 of title 

5, United States Code (notwithstanding subsections (a)(2), (b)(B), 

and (d)(3) of such section). The duration of the period for public 

comment shall not be less than 60 days, and the final regulations 

shall be issued not later than the expiration of the 60-day period 

beginning upon the conclusion of the comment period and shall 

take effect upon issuance. 

SEC. ø433.¿ 434. REPORTS TO CONGRESS. 

The Secretary shall submit a report to the Congress annually, 

summarizing the activities carried out under this subtitle and setting forth the findings, conclusions, and recommendations of the 

Secretary as a result of the activities. The report shall be submitted not later than 4 months after the end of each fiscal year (except that, in the case of fiscal year 1993, the report shall be submitted not later than 6 months after the end of the fiscal year). 

* * * * * * * 

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 

ACT 

* * * * * * * 

UNDER SECRETARY AND OTHER OFFICERS AND OFFICES

SEC. 4. (a)(1) There shall be in the Department a Deputy Secretary, 7 Assistant Secretaries, and a general counsel, who shall be 

appointed by the President by and with the advice and consent of 

the Senate, and who shall perform such functions, powers, and duties as the Secretary shall prescribe from time to time. 

(2) There shall be in the Department an Assistant Secretary for 

Public Affairs, who shall be appointed by the President and shall 

perform such functions, powers, and duties as the Secretary shall 

prescribe from time to time. 

(b) There shall be in the Department a Federal Housing Commissioner, who shall be one of the Assistant Secretaries, who shall 

head a Federal Housing Administration within the Department, 

who shall have such duties and powers as may be prescribed by the 

Secretary, and who shall administer, under the supervision and direction of the Secretary, departmental programs relating to the private mortgage market. The Secretary shall ensure, to the extent 

practicable, that managers of Federal Housing Administration programs, at each level of the Department, shall be accountable for 

program operation, risk management, management of cash and 

other Federal assets, and program financing related to activities 

over which such managers have responsibility. 


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145 

(c) There shall be in the Department a Director of Urban Program Coordination, who shall be designated by the Secretary. He 

shall assist the Secretary in carrying out his responsibilities to the 

President with respect to achieving maximum coordination of the 

programs of the various departments and agencies of the Government which have a major impact on community development. In 

providing such assistance, the Director shall make such studies of 

urban and community problems as the Secretary shall request, and 

shall develop recommendations relating to the administration of 

Federal programs affecting such problems, particularly with respect to achieving effective cooperation among the Federal, State, 

and local agencies concerned. Subject to the direction of the Secretary, the Director shall, in carrying out his responsibilities, (1) 

establish and maintain close liaison with the Federal departments 

and agencies concerned, and (2) consult with State, local, and regional officials, and consider their recommendations with respect to 

such programs. 

(d) There shall be in the Department an Assistant to the Secretary, designated by the Secretary, who shall be responsible for 

providing information and advice to nonprofit organizations desiring to sponsor housing projects assisted under programs administered by the Department. 

(e)(1)(A) There shall be in the Department a Special Assistant for 

Indian and Alaska Native Programs, who shall be located in the 

Office of the Assistant Secretary for Public and Indian Housing. 

The Special Assistant for Indian and Alaska Native Programs shall 

be designated by the Secretary not later than 60 days after the 

date of enactment of this subsection. 

(B) The Special Assistant for Indian and Alaska Native Programs 

shall be appointed based solely on merit and shall be covered under 

the provisions of title 5, United States Code, governing appointments in the competitive service. 

(C) The Special Assistant for Indian and Alaska Native Programs 

shall be responsible for— 

(i) administering, in coordination with the relevant office in 

the Department, the provision of housing assistance to Indian 

tribes or Indian housing authorities under each program of the 

Department that provides for such assistance; 

(ii) administering the community development block grant 

program for Indian tribes under title I of the Housing and 

Community Development Act of 1974 and the provision of assistance to Indian tribes under such Act; 

(iii) directing, coordinating, and assisting in managing any 

regional offices of the Department that administer Indian programs to the extent of such programs; and 

(iv) coordinating all programs of the Department relating to 

Indian and Alaska Native housing and community development. 

(D) The Secretary shall include in the annual report under section 8 a description of the extent of the housing needs for Indian 

families and community development needs of Indian tribes in the 

United States and the activities of the Department, and extent of 

such activities, in meeting such needs. 

(2) The Secretary shall, not later than December 1 of each year, 

submit to Congress an annual report which shall include— 


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(A) a description of his actions during the current year and 

a projection of his activities during the succeeding years; 

(B) estimate of the cost of the projected activities for succeeding fiscal years; 

(C) a statistical report on the conditions of Indian and Alaska Native housing; and 

(D) recommendations for such legislative, administrative, 

and other actions, as he deems appropriate. 

(f) There shall be in the Department a Federal Housing Administration Comptroller, designated by the Secretary, who shall be responsible for overseeing the financial operations of the Federal 

Housing Administration. 

(g) OFFICE OF HOUSING COUNSELING.— 

(1) ESTABLISHMENT.— There is established, in the Department, the Office of Housing Counseling. 

(2) DIRECTOR.— There is established the position of Director 

of Housing Counseling. The Director shall be the head of the 

Office of Housing Counseling and shall be appointed by, and 

shall report to, the Secretary. Such position shall be a careerreserved position in the Senior Executive Service. 

(3) FUNCTIONS.— (A) IN GENERAL.— The Director shall have primary responsibility within the Department for all activities and 

matters relating to homeownership counseling and rental 

housing counseling, including— 

(i) research, grant administration, public outreach, 

and policy development relating to such counseling; 

and 

(ii) establishment, coordination, and administration 

of all regulations, requirements, standards, and performance measures under programs and laws administered by the Department that relate to housing counseling, homeownership counseling (including maintenance of homes), mortgage-related counseling (including home equity conversion mortgages and credit protection options to avoid foreclosure), and rental housing counseling, including the requirements, standards, 

and performance measures relating to housing counseling. 

(B) SPECIFIC FUNCTIONS.— The Director shall carry out 

the functions assigned to the Director and the Office under 

this section and any other provisions of law. Such functions shall include establishing rules necessary for— 

(i) the counseling procedures under section 106(g)(1) 

of the Housing and Urban Development Act of 1968 

(12 U.S.C. 1701x(h)(1)); 

(ii) carrying out all other functions of the Secretary 

under section 106(g) of the Housing and Urban Development Act of 1968, including the establishment, operation, and publication of the availability of the toll-free 

telephone number under paragraph (2) of such section; 

(iii) contributing to the distribution of home buying 

information booklets pursuant to section 5 of the Real 

Estate Settlement Procedures Act of 1974 (12 U.S.C. 

2604); 


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(iv) carrying out the certification program under section 106(e) of the Housing and Urban Development 

Act of 1968 (12 U.S.C. 1701x(e)); 

(v) carrying out the assistance program under section 106(a)(4) of the Housing and Urban Development 

Act of 1968, including criteria for selection of applications to receive assistance; 

(vi) carrying out any functions regarding abusive, 

deceptive, or unscrupulous lending practices relating 

to residential mortgage loans that the Secretary considers appropriate, which shall include conducting the 

study under section 6 of the Expand and Preserve 

Home Ownership Through Counseling Act; 

(vii) providing for operation of the advisory committee established under paragraph (4) of this subsection; 

(viii) collaborating with community-based organizations with expertise in the field of housing counseling; 

and 

(ix) providing for the building of capacity to provide 

housing counseling services in areas that lack sufficient services, including underdeveloped areas that 

lack basic water and sewer systems, electricity services, and safe, sanitary housing. 

(4) ADVISORY COMMITTEE.— (A) IN GENERAL.— The Secretary shall appoint an advisory committee to provide advice regarding the carrying 

out of the functions of the Director. 

(B) MEMBERS.— Such advisory committee shall consist 

of not more than 12 individuals, and the membership of 

the committee shall equally represent the mortgage and 

real estate industry, including consumers and housing 

counseling agencies certified by the Secretary. 

(C) TERMS.— Except as provided in subparagraph (D), 

each member of the advisory committee shall be appointed 

for a term of 3 years. Members may be reappointed at the 

discretion of the Secretary. 

(D) TERMS OF INITIAL APPOINTEES.— As designated by 

the Secretary at the time of appointment, of the members 

first appointed to the advisory committee, 4 shall be appointed for a term of 1 year and 4 shall be appointed for 

a term of 2 years. 

(E) PROHIBITION OF PAY; TRAVEL EXPENSES.— Members 

of the advisory committee shall serve without pay, but 

shall receive travel expenses, including per diem in lieu of 

subsistence, in accordance with applicable provisions 

under subchapter I of chapter 57 of title 5, United States 

Code. 

(F) ADVISORY ROLE ONLY.— The advisory committee 

shall have no role in reviewing or awarding housing counseling grants. 

(5) SCOPE OF HOMEOWNERSHIP COUNSELING.— In carrying 

out the responsibilities of the Director, the Director shall ensure that homeownership counseling provided by, in connection 

with, or pursuant to any function, activity, or program of the 


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Department addresses the entire process of homeownership, including the decision to purchase a home, the selection and purchase of a home, issues arising during or affecting the period 

of ownership of a home (including refinancing, default and 

foreclosure, and other financial decisions), and the sale or other 

disposition of a home. 

(h) SPECIAL ASSISTANT FOR VETERANS AFFAIRS.— 

(1) POSITION.— There shall be in the Office of the Secretary 

a Special Assistant for Veterans Affairs, who shall report directly to the Secretary. 

(2) APPOINTMENT.— The Special Assistant for Veterans Affairs shall be appointed based solely on merit and shall be covered under the provisions of title 5, United States Code, governing appointments in the competitive service. 

(3) RESPONSIBILITIES.— The Special Assistant for Veterans 

Affairs shall be responsible for— 

(A) ensuring veterans have fair access to housing and 

homeless assistance under each program of the Department 

providing either such assistance; 

(B) coordinating all programs and activities of the Department relating to veterans; 

(C) serving as a liaison for the Department with the Department of Veterans Affairs, including establishing and 

maintaining relationships with the Secretary of Veterans 

Affairs; 

(D) serving as a liaison for the Department, and establishing and maintaining relationships with the United 

States Interagency Council on Homelessness and officials of 

State, local, regional, and nongovernmental organizations 

concerned with veterans; 

(E) providing information and advice regarding— 

(i) sponsoring housing projects for veterans assisted 

under programs administered by the Department; or 

(ii) assisting veterans in obtaining housing or homeless assistance under programs administered by the 

Department; 

(F) coordinating with the Secretary of Housing and 

Urban Development and the Secretary of Veterans Affairs 

in carrying out section 404 of the Housing Opportunity 

Through Modernization Act of 2015; and 

(G) carrying out such other duties as may be assigned to 

the Special Assistant by the Secretary or by law. 

* * * * * * * 

SECTION 11 OF THE HOUSING OPPORTUNITY PROGRAM 

EXTENSION ACT OF 1996 

SEC. 11. ASSISTANCE FOR SELF-HELP HOUSING PROVIDERS. 

(a) GRANT AUTHORITY.—The Secretary of Housing and Urban Development may, to the extent amounts are available to carry out 

this section and the requirements of this section are met, make 

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viding or facilitating self-help housing homeownership opportunities. 

(b) GOALS AND ACCOUNTABILITY.—In making grants under this 

section, the Secretary shall take such actions as may be necessary 

to ensure that— 

(1) assistance provided under this section is used to facilitate 

and encourage innovative homeownership opportunities 

through the provision of self-help housing, under which the 

homeowner contributes a significant amount of sweat equity 

toward the construction of the new dwellings; 

(2) assistance provided under this section for land acquisition 

and infrastructure development results in the development of 

not less than 4,000 new dwellings; 

(3) the dwellings constructed in connection with assistance 

provided under this section are quality dwellings that comply 

with local building and safety codes and standards and are 

available at prices below the prevailing market prices; 

(4) the provision of assistance under this section establishes 

and fosters a partnership between the Federal Government 

and organizations and consortia, resulting in efficient development of affordable housing with minimal governmental intervention, limited governmental regulation, and significant involvement by private entities; 

(5) activities to develop housing assisted pursuant to this 

section involve community participation in which volunteers 

assist in the construction of dwellings; and 

(6) dwellings are developed in connection with assistance 

under this section on a geographically diverse basis, which includes areas having high housing costs, rural areas, and areas 

underserved by other homeownership opportunities that are 

populated by low-income families unable to otherwise afford 

housing. 

If, at any time, the Secretary determines that the goals under this 

subsection cannot be met by providing assistance in accordance 

with the terms of this section, the Secretary shall immediately notify the applicable Committees in writing of such determination 

and any proposed changes for such goals or this section. 

(c) NATIONAL COMPETITION.—The Secretary shall select organizations and consortia referred to in subsection (a) to receive grants 

through a national competitive process, which the Secretary shall 

establish. 

(d) USE.— 

(1) PURPOSE.— Amounts from grants made under this section, including any recaptured amounts, shall be used only for 

eligible expenses in connection with developing new decent, 

safe, and sanitary nonluxury dwellings in the United States for 

families and persons who otherwise would be unable to afford 

to purchase a dwelling. 

(2) ELIGIBLE EXPENSES.— For purposes of paragraph (1), the 

term ‘‘eligible expenses’’ means costs only for the following activities: 

(A) LAND ACQUISITION.— Acquiring land (including financing and closing costs), which may include reimbursing 

an organization, consortium, or affiliate, upon approval of 

any required environmental review, for nongrant amounts 


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of the organization, consortium, or affiliate advanced before such review to acquire land. 

(B) INFRASTRUCTURE IMPROVEMENT.— Installing, extending, constructing, rehabilitating, or otherwise improving 

utilities and other infrastructure. 

Such term does not include any costs for the rehabilitation, improvement, or construction of dwellings. 

(e) ESTABLISHMENT OF GRANT FUND.— (1) IN GENERAL.— Any amounts from any grant made under 

this section shall be deposited by the grantee organization or 

consortium in a fund that is established by such organization 

or consortium for such amounts, administered by such organization or consortium, and available for use only for the purposes under subsection (d). Any interest, fees, or other earnings of the fund shall be deposited in the fund and shall be 

considered grant amounts for purposes of this section. 

(2) ASSISTANCE TO AFFILIATES.— Any organization or consortia that receives a grant under this section may use 

amounts in the fund established for such organization or consortia pursuant to paragraph (1) for the purposes under subsection (d) by providing assistance from the fund to local affiliates of such organization or consortia. 

(f) REQUIREMENTS FOR ASSISTANCE.—The Secretary may make a 

grant to an organization or consortium under subsection (a) only 

pursuant to— 

(1) an expression of interest by such organization or consortia to the Secretary for a grant for such purposes; 

(2) a determination by the Secretary that the organization or 

consortia has the capability and has obtained financial commitments (or has the capacity to obtain financial commitments) 

necessary to— 

(A) develop not less than 30 dwellings in connection with 

the grant amounts; and 

(B) otherwise comply with a grant agreement under subsection (i); and 

(3) a grant agreement entered into under subsection (i). 

(g) ENERGY EFFICIENCY REQUIREMENTS.—The Secretary may not 

require any dwelling developed using amounts from a grant made 

under this section to meet any energy efficiency standards other 

than the standards applicable at such time pursuant to section 109 

of the Cranston-Gonzalez National Affordable Housing Act (42 

U.S.C. 12709) to housing specified in subsection (a) of such section. 

(h) GEOGRAPHICAL DIVERSITY.—In making grants under subsection (a), the Secretary shall ensure that grants are provided and 

grant amounts are used in a manner that results in national geographic diversity among housing developed using grant amounts 

under this section. 

(i) GRANT AGREEMENT.—A grant under this section shall be made 

only pursuant to a grant agreement entered into by the Secretary 

and the organization or consortia receiving the grant, which shall— 

(1) require such organization or consortia to use grant 

amounts only as provided in this section; 

(2) provide for the organization or consortia to develop a specific and reasonable number of dwellings using the grant 

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sideration costs and economic conditions in the areas in which 

the dwellings will be developed, but in no case shall be less 

than 30; 

(3) require the organization or consortia to use the grant 

amounts in a manner that leverages other sources of funding 

(other than grants under this section), including private or 

public funds, in developing the dwellings; 

(4) require the organization or consortia to comply with the 

other provisions of this section; 

(5) provide that the Secretary shall recapture any grant 

amounts provided to the organization or consortia that are not 

used within 24 months after such amounts are first disbursed 

to the organization or consortia, except that such period shall 

be 36 months in the case of grant amounts from amounts made 

available for fiscal year 1996 to carry out this section, and in 

the case of a grant amounts provided to a local affiliate of the 

organization or consortia that is developing five or more dwellings in connection with such grant amounts; and 

(6) contain such other terms as the Secretary may require to 

provide for compliance with subsection (b) and the requirements of this section. 

(j) FULFILLMENT OF GRANT AGREEMENT.—If the Secretary determines that an organization or consortia awarded a grant under this 

section has not, within 24 months after grant amounts are first 

made available to the organization or consortia (or, in the case of 

grant amounts from amounts made available for fiscal year 1996 

to carry out this section and grant amounts provided to a local affiliate of the organization or consortia that is developing five or 

more dwellings in connection with such grant amounts, within 36 

months), substantially fulfilled the obligations under the grant 

agreement, including development of the appropriate number of 

dwellings under the agreement, the Secretary shall use any such 

undisbursed amounts remaining from such grant for other grants 

in accordance with this section. 

(k) RECORDS AND AUDITS.—During the period beginning upon the 

making of a grant under this section and ending upon close-out of 

the grant under subsection (l)— 

(1) the organization awarded the grant shall keep such 

records and adopt such administrative practices as the Secretary may require to ensure compliance with the provisions of 

this section and the grant agreement; and 

(2) the Secretary and the Comptroller General of the United 

States, and any of their duly authorized representatives, shall 

have access for the purpose of audit and examination to any 

books, documents, papers, and records of the grantee organization or consortia and its affiliates that are pertinent to the 

grant made under this section. 

(l) CLOSE-OUT.—The Secretary shall close out a grant made 

under this section upon determining that the aggregate amount of 

any assistance provided from the fund established under subsection 

(e)(1) by the grantee organization or consortium exceeds the 

amount of the grant. For purposes of this paragraph, any interest, 

fees, and other earnings of the fund shall be excluded from the 

amount of the grant. 


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(m) ENVIRONMENTAL REVIEW.—A grant under this section shall 

be considered to be funds for a special project for purposes of section 305(c) of the Multifamily Housing Property Disposition Reform 

Act of 1994. 

(n) REPORT TO CONGRESS.—Not later than 90 days after close-out 

of all grants under this section is completed, the Secretary shall 

submit a report to the applicable Committees describing the grants 

made under this section, the grantees, the housing developed in 

connection with the grant amounts, and the purposes for which the 

grant amounts were used. 

(o) DEFINITIONS.—For purposes of this section, the following definitions shall apply: 

(1) APPLICABLE COMMITTEES.— The term ‘‘applicable Committees’’ means the Committee on Banking and Financial Services of the House of Representatives and the Committee on 

Banking, Housing, and Urban Affairs of the Senate. 

(2) SECRETARY.— The term ‘‘Secretary’’ means the Secretary 

of Housing and Urban Development. 

(3) UNITED STATES.— The term ‘‘United States’’ includes the 

States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern 

Mariana Islands, Guam, the Virgin Islands, American Samoa, 

and any other territory or possession of the United States. 

(p) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 

be appropriated to carry out this section such sums as may be necessary for fiscal year 2001. 

(q) REGULATIONS.—The Secretary shall issue any final regulations necessary to carry out this section not later than 30 days 

after the date of the enactment of this Act. The regulations shall 

take effect upon issuance and may not exceed, in length, 5 full 

pages in the Federal Register. 

Æ 


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