746 Federal Register / Vol. 90, No. 3 / Monday, January 6, 2025 / Rules and Regulations 

1 42 U.S.C. 12721 et seq. 2See HUD’s HOME Investment Partnerships 

Program web page at https://www.hud.gov/ 

program_offices/comm_planning/home. 3HUD’s regulations for the HOME Investment 

Trust Fund can be found at 24 CFR 92.500. 

4See 26 U.S.C. 42. 

5HOME Investment Partnerships Program: 

Improving Performance and Accountability; 

Updating Property Standards, (78 FR 44628, July 

24, 2013). 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

24 CFR Parts 91, 92, 570, and 982 

[Docket No. FR–6144–F–03] 

RIN 2506–AC50 

HOME Investment Partnerships 

Program: Program Updates and 

Streamlining 

AGENCY: Office of the Assistant 

Secretary for Community Planning and 

Development, Department of Housing 

and Urban Development, HUD. 

ACTION: Final rule. 

SUMMARY: HUD’s HOME Investment 

Partnerships Program (HOME program 

or HOME) provides formula grants to 

States and units of general local 

government to fund a wide range of 

activities to produce and maintain 

affordable rental and homeownership 

housing and provides tenant-based 

rental assistance for low-income and 

very low-income households. This final 

rule revises the current HOME 

regulations to update, simplify, or 

streamline requirements, better align the 

program with other Federal housing 

programs, and implement recent 

amendments to the HOME statute. This 

final rule also includes minor revisions 

to the regulations for the Community 

Development Block Grant and Section 8 

Housing Choice Voucher Programs 

consistent with the implementation of 

the changes to the HOME program. This 

final rule follows the publication of a 

proposed rule on May 29, 2024, and 

takes into consideration the comments 

received in response to that proposed 

rule. 

DATES: Effective February 5, 2025. 

FOR FURTHER INFORMATION CONTACT: 

Virginia Sardone, Director, Office of 

Affordable Housing Programs, Office of 

Community Planning and Development, 

Department of Housing and Urban 

Development, 451 7th Street SW, Room 

7160, Washington, DC 20410; telephone 

number (202) 708–2684 (this is not a 

toll-free number). HUD welcomes and is 

prepared to receive calls from 

individuals who are deaf or hard of 

hearing, as well as individuals with 

speech or communication disabilities. 

To learn more about how to make an 

accessible telephone call, please visit 

https://www.fcc.gov/consumers/guides/ 

telecommunications-relay-service-trs. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The HOME program is authorized by 

title II of the Cranston-Gonzalez 

National Affordable Housing Act 1

(‘‘NAHA’’ or the ‘‘Act’’) and has been in 

operation since 1992. The HOME 

program provides grants to States, local 

jurisdictions, and consortia of local 

jurisdictions (collectively, participating 

jurisdictions or PJs) and is used, often 

in partnership with local nonprofit 

groups, to fund a wide range of 

activities to build, buy, or rehabilitate 

affordable housing for rent or 

homeownership or to fund direct rental 

assistance to low-income people.2

HOME program funds are awarded 

annually as formula grants to PJs. After 

the Department obligates funds to a PJ, 

the Department establishes a HOME 

Investment Trust Fund 3 for each PJ, 

providing a line of credit that a PJ may 

draw upon as needed. 

The HOME program is the largest 

Federal block grant to States and local 

governments designed exclusively to 

create affordable housing for lowincome households. Each year, the 

HOME program allocates approximately 

$1.5 billion among States and 

approximately 600 localities 

nationwide. In fiscal year 2023, PJs 

completed 6,848 rental housing units 

and 4,051 homebuyer units, assisted 

2,717 low-income homeowners to repair 

their homes, and provided tenant-based 

rental assistance to 13,016 low-income 

households. HOME funds are most often 

used as gap financing for rental projects, 

particularly for projects that have been 

awarded Low-Income Housing Credits 

(LIHTC).4 As of late 2024, there are 

237,767 HOME-assisted rental units 

operating in their periods of 

affordability (i.e., subject to ongoing 

HOME income and rent requirements). 

The HOME program is designed to 

reinforce several important values and 

principles of community development. 

First, the HOME program’s flexibility 

empowers people and communities to 

design and implement strategies tailored 

to their own needs and priorities. 

Second, the HOME program’s emphasis 

on consolidated planning expands and 

strengthens partnerships among all 

levels of government and the 

relationship with the private sector in 

the development of affordable housing. 

Third, the HOME program’s technical 

assistance activities and set-aside for 

qualified Community Housing 

Development Organizations (CHDOs) 

help to build the capacity of, and 

partnerships, with these communitybased nonprofit organizations. Fourth, 

the HOME program’s requirement that 

PJs match 25 cents of every dollar in 

program funds helps mobilize 

community resources in support of 

affordable housing. 

II. The Proposed Rule 

On May 29, 2024, HUD published the 

‘‘HOME Investment Partnerships 

Program: Program Updates and 

Streamlining’’ proposed rule (the 

proposed rule) in the Federal Register, 

available at 89 FR 46618. In the 

proposed rule, HUD proposed numerous 

changes to 24 CFR part 92. The 

proposed changes included significant 

revisions to the CHDO requirements, a 

change in the approach to HOME rents, 

simplified requirements for small-scale 

rental projects, enhanced flexibility in 

HOME tenant-based rental assistance 

(TBRA) programs, and simplified 

provisions and new flexibilities for 

community land trusts (CLTs). The 

proposed rule also proposed to 

significantly strengthen and expand 

tenant protections by requiring that a 

HOME tenancy addendum with a set of 

uniform tenant protections be appended 

to the leases of all tenants of HOMEassisted rental housing units. HUD also 

proposed requiring that a HOME 

tenancy addendum with a streamlined 

set of uniform tenant protections be 

appended to the leases of all tenants 

receiving TBRA. Additionally, HUD 

proposed to create incentives for 

meeting a more advanced property 

standard that incorporates green 

building standards, higher levels of 

energy efficiency, and innovative 

building techniques in new 

construction, reconstruction, and 

rehabilitation of housing. The proposed 

rule also sought to clarify the resale 

requirements for homeownership 

housing and proposed technical 

amendments and simplifications to 

conform provisions to certain changes 

made in the 2013 HOME Final Rule.5

The proposed rule also included 

changes made by the Housing 

Opportunity Through Modernization 

Act of 2016: Implementation of Sections 

102, 103, and 104 final rule, published 

in the Federal Register on February 14, 

2023 (88 FR 9600) (the HOTMA Final 

Rule) and the Economic Growth 

Regulatory Relief and Consumer 

Protection Act: Implementation of 

National Standards for the Physical 

Inspection of Real Estate (NSPIRE) final 

rule, published in the Federal Register 


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on May 11, 2023 (88 FR 30442) (the 

NSPIRE Final Rule). The proposed rule 

also proposed further revisions to the 

changes made to 24 CFR part 92 by the 

HOTMA and NSPIRE Final Rules. In 

addition, the proposed rule proposed 

updates to citations, in paragraphs 

where other changes are being made, to 

conform with recent changes to the 

Office of Management and Budget 

(OMB) regulations at 2 CFR part 200. 

See the proposed rule for a full 

description of all the HOME program 

proposed regulation changes associated 

with this rulemaking. 

III. This Final Rule 

HUD reviewed and considered all 

public comments submitted in response 

to the proposed rule, which are 

summarized and addressed in the next 

section of this final rule. After 

considering the public comments 

received in response to the proposed 

rule, this final rule incorporates a 

majority of the proposed regulatory 

changes described in the proposed rule; 

however, in response to public 

comments received, HUD is making 

certain revisions to the HOME program 

regulations from those described in the 

proposed rule at this final rule stage. 

HUD is also making certain nonsubstantive revisions to the proposed 

regulatory text at this final rule stage. 

In response to comments received 

during the proposed rule stage of this 

rulemaking, HUD is making the 

following revisions to the final rule: 

24 CFR Part 91—Technical Revisions 

HUD is making certain technical 

revisions in 24 CFR part 91 to replace 

the term ‘‘affordability period’’ with 

‘‘period of affordability.’’ These 

revisions are consistent with the 

technical revision proposed in 24 CFR 

part 92 to make the same terminology 

replacement. Further, these revisions 

are consistent with public comments 

HUD received noting that these 

revisions are appropriate. 

24 CFR Part 92—Technical Revisions 

HUD is making certain technical 

revisions in 24 CFR part 92 to improve 

clarity and readability of certain 

language throughout the part. While 

HUD is not summarizing each of these 

technical changes because the changes 

are minor and non-substantive, a 

sampling of these revisions are 

described in the paragraphs that follow. 

The Department received comments 

indicating that it had not fully revised 

all references from ‘‘downpayment 

assistance’’ to ‘‘homeownership 

assistance.’’ The Department is revising 

§§ 92.203(d), 92.209(c)(2)(iv), 

92.250(b)(4), 92.251(c)(3), 

92.254(b)(1)(ii), 92.300(a)(6)(i), 

92.351(a)(1), 92.504(c)(1)(i), and 

92.504(c)(2)(i) accordingly. The 

Department declined to revise certain 

references in the regulation that were 

specific to the downpayment provided 

by a homebuyer (e.g., for purposes of the 

resale or recapture methods used in 

§ 92.254). 

Commenters noted that there were a 

number of areas where the term 

‘‘dwelling’’ had not been replaced by 

‘‘housing.’’ Accordingly, the Department 

is revising §§ 92.219(a)(4), 

92.254(a)(5)(ii)(A), and 92.258(a) to 

standardize the use of ‘‘housing.’’ 

The Department noted several 

instances where it had not corrected the 

term ‘‘single-family’’ to read ‘‘single 

family.’’ Accordingly, the Department is 

revising §§ 92.220(a)(5)(ii), 92.254(a)(6), 

92.504(c)(1)(i), and 92.504(c)(2)(i) to 

include the standardized term ‘‘single 

family.’’ 

Several commenters noted that the 

Department failed to change all the 

references from ‘‘affordability period’’ to 

‘‘period of affordability.’’ The 

Department has further revised the term 

for consistency in §§ 92.251(f), 

92.252(d)(3), 92.254(a)(5)(ii)(B)(2), 

92.258(c) and (d)(3), 92.359(f), and 

92.508(c)(1) and (2). 

The Department is also revising the 

first sentence of § 92.201(b)(3)(i) to 

clarify that States must require that 

State recipients use HOME funds in 

accordance with 24 CFR part 92. This is 

also stated in the written agreement 

section in § 92.504 and is a revision for 

consistency. 

24 CFR 92.2 Definitions 

A. Commitment 

As explained in greater detail in the 

preamble describing the revisions in 

§ 92.209, the rental assistance contract 

requirements in the HOME tenant-based 

rental assistance program are being 

revised to require that the PJ enter into 

a rental assistance contract with the 

owner and the tenant, either as separate 

agreements or a single tri-party 

agreement. The Department is therefore 

revising the definition of Commit to a 

specific local project in paragraph 

(2)(iii) of the definition of Commitment 

to accurately state that the rental 

assistance contract, which is the 

committing document for HOME tenantbased rental assistance, is the contract 

with the ‘‘owner and the tenant’’ instead 

of the contract with the ‘‘owner or the 

tenant.’’ 

A new paragraph (2)(ii)(C) was added 

under Commit to a specific local project 

in the definition of Commitment to 

provide the requirements for 

commitments to a family to acquire 

single family housing for 

homeownership that does not meet the 

PJ’s property standards, as described in 

§ 92.251(c)(3). The requirements include 

the same requirements for standard 

housing, i.e., that the PJ (or State 

recipient or subrecipient) and the family 

must have executed a written agreement 

under which HOME assistance will be 

provided for the purchase of the single 

family housing, which requires the 

property title to be transferred to the 

family within six months of the 

agreement date. In addition, the 

paragraph will also require that the 

written agreement require the property 

to meet the standards in accordance 

with § 92.251(c)(3). This revision is 

being made because the current 

definition of Commit to a specific local 

project only contemplates that the 

homebuyer will be purchasing housing 

in standard condition and not housing 

that requires rehabilitation. This allows 

the written agreement to count as a 

commitment when it complies with the 

requirements in § 92.251(c)(3), thereby 

providing consistent application of the 

new rules permitting homebuyers to 

rehabilitate their units to meet property 

standards post-acquisition. 

B. Community Housing Development 

Organizations 

In response to public comments 

received, HUD is making multiple 

changes to paragraph (8)(i) of the 

definition of community housing 

development organization in § 92.2. 

Paragraph (8)(i) of the CHDO definition 

describes board membership 

requirements to maintain accountability 

to low-income community residents. 

Many commenters were concerned that 

the language of the proposed rule would 

reduce the accountability of CHDO 

boards. As described further in the 

following paragraphs, HUD is 

addressing the concerns expressed in 

the comments by strengthening the 

accountability structures. 

HUD is revising paragraph (8)(i) of the 

CHDO definition to add ‘‘low-income 

beneficiaries of HUD programs’’ as an 

explicitly named group of eligible board 

members to meet the accountability to 

low-income community residents board 

requirement. HUD recognizes that 42 

U.S.C. 12704(6)(B) requires that a CHDO 

‘‘maintain[], through significant 

representation on the organization’s 

governing board and otherwise, 

accountability to low-income 

community residents and, to the extent 

practicable, low-income beneficiaries 

with regard to decisions on the design, 

siting, development, and management of 


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affordable housing . . . .’’ By adding 

‘‘low-income beneficiaries of HUD 

programs’’ to the regulation, HUD 

believes it is more closely matching the 

intent of the statute and emphasizing 

that, whenever possible, board members 

of CHDOs should include low-income 

beneficiaries of HUD programs. 

HUD is also revising paragraph (8)(i) 

of the CHDO definition to use the term 

‘‘designees of nonprofit organizations’’ 

instead of ‘‘authorized representatives of 

nonprofit organizations.’’ This revision 

of the term ‘‘designee’’ is being made 

because of confusion expressed by 

commenters regarding when a person is 

considered an ‘‘authorized 

representative.’’ HUD recognizes that 

the inconsistent terminology is 

confusing and believes that using a 

consistent term to describe individuals 

representing ‘‘low-income neighborhood 

organizations’’ and the ‘‘nonprofit 

organizations’’ described in paragraph 

(8)(i) brings additional clarity to 

paragraph (8)(i) of the CHDO definition. 

HUD is further revising paragraph 

(8)(i) of the CHDO definition to 

specifically reference the designees of 

nonprofit organizations in the 

community that address the housing or 

supportive service needs of ‘‘lowincome residents or residents of lowincome neighborhoods.’’ This revision 

is in response to commenters who stated 

that HUD had not sufficiently connected 

the term ‘‘nonprofit organizations’’ to 

low-income residents of the community 

in paragraph (8)(i) of the CHDO 

definition. The commenters urged HUD 

to use clearer language to show that 

individuals representing organizations 

serving low-income persons, even if 

those persons do not live in low-income 

neighborhoods, should be able to meet 

the requirement that the CHDO board is 

accountable to low-income community 

residents. HUD believes this revision 

will better enable designees that directly 

serve low-income residents to be CHDO 

board members. In response to 

significant comment from the public, 

the Department is revising paragraph 

(8)(i) to prohibit an organization from 

being considered a CHDO if its service 

area is the entire State. Though the 

Department had proposed removing this 

restriction from the current regulation to 

better enable rural PJs and states to use 

their CHDO set-aside funds, the public 

comments were quite clear that allowing 

an organization to have a statewide 

service area was not the solution to 

addressing the shortage of CHDOs with 

capacity in rural areas. 

In response to public comments 

received, HUD is also making multiple 

changes to paragraph (9) of the 

definition of community housing 

development organization in § 92.2. 

These specific changes are described in 

the paragraphs that follow. 

HUD is revising the introductory text 

of paragraph (9) of the CHDO definition 

to add ‘‘Federal Home Loan Bank 

Affordable Housing Program (12 U.S.C. 

1430) funds’’ to the list of housing 

programs that demonstrate a CHDO’s 

capacity to carry out a housing project. 

This change is made in response to 

public comments to provide clarity 

because these grant funds are frequently 

layered with HOME funds in housing 

development projects. 

HUD is revising paragraph (9)(i) of the 

CHDO definition by changing the first 

sentence of the paragraph to require that 

a CHDO have ‘‘paid employees’’ with 

housing development experience who 

will work directly on the HOMEassisted project. HUD is making this 

revision in response to public comments 

that correctly noted that the way the 

proposed rule phrased this portion of 

paragraph (9)(i) of the CHDO definition 

allowed a CHDO to have no paid 

employees at all and still meet the 

capacity requirement. HUD’s intent with 

the proposed rule was to allow 

volunteers to supplement the capacity 

of paid employees, not to allow a CHDO 

to meet the capacity requirements while 

having no paid employees. HUD is 

making a similar revision in the last 

sentence of paragraph (9)(i) of the CHDO 

definition to read as ‘‘key, paid staff of 

the organization’’ for the same reasons. 

HUD is further revising paragraph 

(9)(i) of the CHDO definition to add an 

additional sentence to clarify that where 

the paid employees of a CHDO alone do 

not demonstrate capacity, that 

experience can be supplemented with 

volunteer board members or officers. 

For additional clarity, HUD is also 

making minor revisions to paragraph 

(9)(i) of the CHDO definition to more 

directly state the requirement that a 

volunteer board member or officer may 

not be compensated by or have their 

services donated by another 

organization. 

C. Community Land Trust 

In response to public comments 

received, HUD is making multiple 

changes from the proposed rule to the 

definition of CLT in § 92.2. These 

specific changes are described in the 

paragraphs that follow. 

HUD is revising paragraph (1) of the 

CLT definition to read ‘‘[h]as as its 

primary purposes acquiring, developing, 

or holding land to provide housing that 

is permanently affordable to low-income 

persons.’’ Commenters noted that CLT 

ownership models vary nationwide and, 

while some CLTs do develop and 

maintain their properties, other CLTs 

acquire and hold properties as 

affordable housing in perpetuity but are 

not otherwise involved in maintenance 

or development work. HUD recognizes 

that its proposed definition was too 

narrow to consider many of these 

organizations as CLTs and is revising it 

accordingly. In addition, HUD’s 

proposed rule stated that a CLT must 

have a primary purpose of serving both 

low- and moderate-income persons. 

After reviewing the comments and the 

various CLT models provided by 

commenters, HUD is revising the CLT 

definition to recognize that the primary 

purpose of a CLT participating in the 

HOME program must be to serve lowincome persons. HUD is also making a 

similar change to remove ‘‘moderateincome’’ from paragraph (3) of the CLT 

definition. 

D. Homeownership 

In response to public comments 

received, HUD is making certain 

changes to the definition of 

homeownership in § 92.2. Public 

commenters noted that the Department 

had not changed the term ‘‘dwelling’’ in 

the definition of homeownership in 

§ 92.2. After considering the best way to 

clarify the requirement, the Department 

determined that it would be easier to 

replace to term ‘‘1–4 unit dwelling or in 

a condominium unit’’ with the term 

‘‘single family housing,’’ which is 

defined as ‘‘a one-to four- unit 

residence, condominium unit, 

cooperative unit, combination of 

manufactured housing and lot, or 

manufactured housing lot.’’ The final 

rule text is clearer and uses a common 

term that is also defined in the 

regulation. It also provides additional 

clarity for homeownership projects 

involving manufactured homes, which 

are more explicitly referenced in the 

definition of single family housing. 

HUD believes that this clarifying change 

is therefore also responsive to comments 

requesting that HUD clarify the 

treatment of manufactured homes in 

HOME homeownership projects. 

HUD notes that in its review of the 

public comments, the Department 

identified significant confusion by some 

commenters about the time periods in 

the definition of CLT and 

homeownership in § 92.2 and the 

housing education and organizational 

support requirements in § 92.302. HUD 

is committed to better addressing the 

needs of CLTs and its revisions to the 

homeownership definition in § 92.2 

clarify the intent of the definition and 

how it is meant to apply to HOME 

homeownership projects. The specific 

changes to the definition of 


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homeownership are described in the 

paragraphs that follow. 

HUD is revising paragraph (1) of the 

definition of homeownership to further 

clarify the explanatory text to state that 

the land upon which housing is located 

may be owned in fee simple or through 

a ground lease if the housing was owned 

in fee simple. The paragraph was also 

revised to give a rule of construction so 

that PJs and homeowners understand 

that the minimum term of a ground 

lease is the lowest time period if more 

than one condition applies. For 

example, if a ground lease was part of 

a CLT-developed project, the minimum 

term for the ground lease to be 

considered homeownership is 50 years, 

but if that CLT-developed project was in 

an insular area, the minimum term for 

the ground lease to be considered 

homeownership would be 40 years 

because the minimum term for a ground 

lease to be considered homeownership 

in insular areas is 40 years (See 

§ 92.2(1)(ii)). 

HUD is further revising paragraph (1) 

of the definition of homeownership to 

remove the latter portion of the 

introductory text of paragraph (1) that 

addressed 99-year ground leases. 

Paragraph (1) is instead being revised to 

create a new paragraph (1)(i) to make 

clear that a 99-year ground lease is one 

of multiple options for ground lease 

length. The original paragraphs (1)(i), 

(1)(ii), and (1)(iii) are being redesignated 

as (1)(ii), (1)(iii), (1)(iv), respectively. 

HUD is also making other minor, nonsubstantive revisions to the introductory 

text and paragraph (1) to the definition 

of homeownership to improve the 

readability of the text. 

E. Housing 

HUD is revising the definition of 

housing in § 92.2 to replace the term 

‘‘dwellings’’ with ‘‘housing units.’’ 

Commenters noted that there were 

certain areas in the proposed rule where 

‘‘dwelling’’ had not been replaced with 

the updated term. HUD is updating the 

housing definition to correct this issue. 

F. Single Room Occupancy (SRO) 

Housing 

HUD is revising the definition of 

single room occupancy (SRO) housing 

in § 92.2 to replace the term ‘‘dwelling’’ 

with ‘‘housing.’’ Commenters noted that 

there were certain areas in the proposed 

rule where ‘‘dwelling’’ had not been 

replaced with the updated term. HUD is 

updating the SRO housing definition to 

correct this issue. 

G. American Dream Downpayment 

Initiative References 

The Department intended to remove 

all American Dream Downpayment 

Initiative (ADDI) regulations as part of 

this rulemaking. Unfortunately, the 

Department inadvertently retained 

language in the definition of ‘‘State’’ 

that described deviations between the 

term ‘‘State’’ in the HOME program and 

in the ADDI program. The Department 

is revising the definition of ‘‘State’’ to 

remove all ADDI-related language in 

this final rule. 

24 CFR 92.3—Applicability of 2025 

Regulatory Changes 

In response to the proposed rule, HUD 

received comments requesting that the 

Department specify the effective date of 

the regulatory changes associated with 

this final rule. To address these 

comments, HUD is revising § 92.3 to 

provide the applicable effective dates 

for the regulatory changes associated 

with this final rule instead of the 

applicable effective dates associated 

with the 2013 regulatory revisions. The 

header is being revised to describe the 

applicability of 2025 regulatory changes. 

The introductory language of § 92.3 is 

being replaced by a provision 

explaining that the regulations in 24 

CFR part 92 apply based on when an 

income determination is made or when 

the HOME funds for the project were 

committed. The provision goes on to 

explain that projects where the HOME 

funds were committed before a certain 

date may be subject to previous versions 

of these regulations. The provision also 

explains that the intent of § 92.3 is to 

provide instruction regarding which 

version of these regulations applies to 

which project based on when the funds 

were committed. 

Paragraph § 92.3(a) is being replaced 

with a new paragraph (a). Paragraph (a) 

establishes the effective date for the 

2025 final rule. The paragraph explains 

that the final rule is applicable to 

projects for which HOME funds are 

committed on or after February 5, 2025. 

The paragraph goes on to state that a PJ 

must perform income determinations in 

accordance with § 92.203 after February 

5, 2025. 

Paragraph § 92.3(b) is being revised to 

explain that while the effective date of 

the rule is 30 days after publication, PJs 

are permitted to continue to comply 

with the HOME regulations as they 

existed immediately before the effective 

date for commitments made up to one 

year after the rule’s effective date. This 

allows PJs time to change their policies 

and procedures, forms, and systems, so 

that they can effectively implement the 

provisions of the final rule. 

Paragraph (c) describes how the 

income regulations will be implemented 

for existing tenants and new projects 

that are coming online. This is because 

the income requirements of § 92.203 are 

applied to tenants of existing projects 

pursuant to their written agreements. 

The Department wants to clarify that for 

up to one year after the effective date of 

the rule, PJs may calculate income in 

accordance the income requirements 

that the PJs was implementing 

immediately prior to the publication of 

the final rule. This allows PJs to 

transition to determining income in 

accordance with the new requirements, 

as many income reexaminations may be 

underway when the rule becomes 

effective. 

In some cases, PJs may wish to amend 

existing written agreements to take 

advantage of certain flexibilities or 

impose new requirements. While most 

of the rule may be applied immediately 

on the effective date, the Department is 

clarifying that certain provisions may 

not be implemented when a 

commitment has already been issued for 

a project. These relevant provisions are 

listed in § 92.3(d)(1) through (5). 

Section 92.3(d)(1) explains that the 

written agreement cannot be revised to 

allow for certain predevelopment costs 

as well as certain project related soft 

costs currently contained in 

§ 92.206(d)(2) to be reimbursed in 

accordance with the newly revised 

§ 92.206(d)(1) if the HOME funds were 

committed to the project prior to the 

effective date of the final rule. 

Commitments were made after 

underwriting the project with 

assumptions that these costs were not 

going to be paid with HOME funds and 

the Department determined that the 

written agreements should not be 

amended to include those costs as 

payable from HOME when it was not 

the source that had already been 

identified to pay for the cost. 

Similarly, § 92.3(d)(2) states that the 

new flexibility to obtain a higher 

maximum per-unit subsidy increase 

should only be included for projects 

where funds were committed to the 

project after the effective date of the 

final rule. While the Department fully 

supports green building requirements, 

the Department determined that projects 

with current commitments should not 

undergo additional underwriting and 

cost allocation. When a PJ committed 

HOME funds to projects before the 

effective date of the rule, they 

underwrote and sized the assistance 

based on the assumption that the 

maximum per-unit subsidy was the 


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limit in effect. The Department believes 

that this should continue to be the case 

and that current projects should not be 

amended. If a PJ were to amend its 

written agreement with an owner to add 

the new requirements at a later time, it 

can be disruptive, cause delays in 

production of badly needed affordable 

housing units and is not the behavior 

that the Department is attempting to 

incentivize by providing the increase in 

maximum per-unit subsidy. 

Section 92.3(d)(3) states that the 

revised dollar thresholds for periods of 

affordability in § 92.252 and § 92.254 

will not apply to projects where the PJs 

had already committed HOME funds. 

Similar to paragraphs (d)(1) and (2), a PJ 

already agreed with an owner on the 

applicable periods of affordability, just 

like they had agreed to a maximum perunit subsidy, or which type of funds 

were used to pay which costs. To allow 

the owner and PJ the ability to reduce 

the period of affordability for a project 

that has already been agreed upon 

through amending the written 

agreement would be perverse and 

counter to the purposes of the Act. 

Section 92.3(d)(4) states that the new 

tenant protection provisions cannot be 

imposed upon owners that are already 

under a current written agreement or 

tenants and owners under a current 

rental assistance contract or receiving 

security deposit assistance. Owners 

should have appropriate notice before 

imposing substantial changes in 

landlord-tenant relations. The HOME 

program provides development 

subsidies to owners to build affordable 

housing but does not provide ongoing 

operations assistance. Owners must 

consider the costs of compliance in 

determining whether to participate in 

the HOME program. This includes the 

costs of complying with tenant 

protections. Moreover, the Department 

received numerous comments 

indicating that imposing the tenant 

protections on current owners would 

amount to a regulatory taking. While the 

Department does not believe that this is 

the case and would strenuously object 

to any characterization of improving 

tenant protections as a form of taking or 

violation of an owner’s due process 

rights, the Department does believe it is 

important to establish clear compliance 

requirements within the written 

agreement between the PJ and the 

owner, and to allow those requirements 

to remain consistent for the life of the 

agreement. To prevent potential 

litigation and loss of affordable housing, 

the Department is requiring that the new 

and revised tenant protections provided 

in § 92.253 only be effective for projects 

with commitments of up to one year 

after the effective date of the rule and 

not be applied to projects with 

commitments prior to the effective date 

of the rule. 

Finally, § 92.3(d)(5) was added to 

state that the revisions to the role of 

CHDOs in owning, developing, and 

sponsoring affordable housing in 

§ 92.300 only apply to projects where 

the PJ committed CHDO set-aside funds 

on or after the effective date of the final 

rule. The new flexibilities in § 92.300 

should be used for new projects. If a PJ 

has already entered into an agreement 

with a CHDO to own, develop, or 

sponsor a project, then it is 

inappropriate for the PJ to amend the 

agreement and enter into an agreement 

with a new party because of the new 

flexibilities provided in § 92.300. The 

Department is expanding the way in 

which CHDOs can be involved in a 

HOME project but is not encouraging 

PJs to terminate or significantly 

restructure existing CHDO projects. 

The Department also believes that it 

may be helpful to place the date and the 

triggering action into a chart to better 

assist PJs, owners, and the public in 

understanding when the 2025 final 

rule’s requirements are applicable. 

24 CFR 92.201 Distribution of 

Assistance 

The Department is also revising the 

first sentence of § 92.201(b)(3)(i) to 

clarify that States must require State 

recipients use HOME funds in 

accordance with part 92. This is also 

stated in the written agreement section 

in § 92.504 and is a revision for 

consistency. 

24 CFR 92.203 Income Determinations 

The Department is making a technical 

revision to the first sentence of 

§ 92.203(a) to remove the dash between 

‘‘income’’ and ‘‘eligible’’ to maintain 

consistent usage of the term. The 

Department is revising the ‘‘must’’ to a 

‘‘may’’ in § 92.203(a)(1) in response to 

public comments recommending that 

HUD allow PJs to always retain the right 

to determine annual income in 

accordance with the process described 

in paragraphs (b)–(e). This change will 

allow PJs the choice of accepting the 

income determinations made in Federal 

or State project-based rental subsidy 

programs instead of requiring PJs to 

accept those determinations. 

In response to public comments, the 

Department is revising the language in 

§ 92.203(a) to create a new paragraph 

(a)(3) and redesignate the current 

paragraph (a)(3) as paragraph (a)(4). The 

new paragraph (a)(3) provides 

additional burden relief for PJs and 

owners by expanding a safe harbor that 

is currently located in § 92.203(b)(1)(iii). 

The current safe harbor in 

§ 92.203(b)(1)(iii) is limited to 

government programs and not forms of 

public assistance, which is a broader 

term that encompasses tax credits and 

other forms of assistance that are not 

‘‘programs.’’ The Department uses this 

broader term ‘‘public assistance’’ in the 

safe harbor provisions in 24 CFR 

5.609(c)(3) for 1937 Act programs but 

does not use this term in the current 

HOME regulations. The current safe 

harbor in HOME regulations cannot be 

used for initial annual income and 

eligibility determinations, or in 

calculating annual income for a family 

in years 6, 12, and 18 of a HOME rental 

housing project’s period of affordability. 

The safe harbor also cannot be used for 

individuals applying for or renewing 

tenant-based rental assistance. 

Public commenters recommended 

that PJs be able to accept income 

determinations made under other forms 

of public assistance, including LIHTC 

income determinations for families 

living in tax credit units. The 

Department recognizes the utility in 

expanding the safe harbor to include 

other forms of government assistance 

and allowing its use for initial annual 

income determinations or annual 

income determinations made in years 6, 

12, and 18 of a HOME rental housing 

project’s period of affordability as well 

as for individuals entering into or 

renewing a new rental assistance 

contract for tenant-based rental 

assistance. Therefore, the Department is 

moving the safe harbor into paragraph 

(a) as a new paragraph (a)(3) to enable 

a PJ to use the information for initial 

annual income and subsequent income 

determinations for HOME rental 

housing tenants as well as for tenantbased rental assistance. The Department 

is also expanding the applicability of 

the safe harbor to include an annual 

income determination made under 

another form of Federal, State, or local 

public assistance. Accordingly, the 

Department is also removing 

§ 92.203(b)(1)(iii) and revising the last 

sentence in paragraph (b)(1) to indicate 

that there are only two methods of 

determining income under paragraph 

(b)(1). 

The Department provides several 

examples to enhance the public’s 

understanding of the types of assistance 

that could be accepted under the new 

paragraph (a)(3). These examples 

include TANF, Medicaid, LIHTC, and 

local rental subsidy programs. These 

programs all calculate annual income 

but do not make the adjustments that 

are made in HUD programs that are 

subject to 24 CFR 5.611. 


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To obtain the relief of the safe harbor 

under new § 92.203(a)(3), the PJ must be 

able to obtain a statement that indicates 

the family size and income. This can be 

provided by an administrator of a 

Federal, State, or local form of public 

assistance, even if that administrator is 

not the administrator at the Federal or 

State level. The Department considered 

whether to allow, as the current safe 

harbor provision in § 92.203(b)(1)(iii) 

does, a government administrator to 

provide a PJ with a statement indicating 

that the family’s income does not 

exceed the current dollar limit for very 

low-income or low-income families for 

the family size of the tenant. The 

Department decided against including 

this language. 

The Department drafted this safe 

harbor partly in response to public 

comments requesting that the 

Department accept a statement made by 

an administrator of public assistance 

without further review of income 

documentation for the tenant. The 

Department agrees that it is possible to 

use a statement from a government 

administrator to determine income, 

though verification is left to PJ policies 

and procedures. However, the 

Department decided that if it was 

expanding the safe harbor to enable PJs 

to accept a statement, then the statement 

must contain a statement of family size 

and income and not just a statement that 

the family was below the applicable 

income limit for the family’s size. This 

is especially true because, in many 

cases, the PJ must still calculate 

adjusted income in accordance with 

paragraph (f). To provide the maximum 

amount of burden relief to both the PJs 

and tenant, and best address the 

concerns of the commenter, the 

statement must have the family’s annual 

income on it so that the PJ need only 

adjust the income (if applicable) from a 

known amount of annual income. 

Accordingly, the Department is also 

removing § 92.203(b)(1)(iii) and revising 

the last sentence in paragraph (b)(1) to 

indicate that there are only two methods 

of determining income under paragraph 

(b)(1). 

The Department is requiring in the 

new § 92.203(a)(3) that the statement 

accepted by the PJ must be for an 

income determination made within the 

previous 12-month period. This aligns 

with how similar safe harbor provisions 

are used in other HUD programs, such 

as the safe harbor in 24 CFR 5.609(c)(3) 

that is used for certain programs 

governed under the U.S. Housing Act of 

1937. The Department considered 

whether to provide a shorter period, 

such as the 6-month requirement under 

§ 92.203(e)(2) for income determinations 

made prior to providing 

homeownership or tenant-based rental 

assistance to a family. However, after 

consideration of the comment and how 

to align this safe harbor with other safe 

harbors in HUD regulations, HUD has 

determined that 6 months is 

inappropriate. When a family applies to 

a PJ for assistance and the PJ determines 

the family’s income, there is a 

reasonable expectation that this income 

examination is close in time to when the 

family will receive the HOME assistance 

from the PJ. When a person was 

determined income eligible with these 

other forms of public assistance, it may 

not be at the same time as when the PJ’s 

tenant-based rental assistance program 

waiting list opens up for the public to 

apply or when a person is next up on 

an owner’s waiting list. To establish a 

shorter period in which the income 

determination will remain valid for 

purposes of the new safe harbor would 

therefore disadvantage those families 

and PJs and so the Department chose to 

allow income determinations made 

within a 12-month period to qualify for 

purposes of the safe harbor at 

§ 92.203(a)(3). 

As part of the revisions made to lift 

and expand the safe harbor in 

§ 92.203(a)(3), the Department is making 

conforming changes to paragraph (b)(2) 

and adding paragraph (b)(3) to explain 

that only families applying for 

homeownership activities must 

calculate income using 2 months of 

source documents. Before paragraph 

(a)(3) was added, both families applying 

for homeownership assistance and 

families applying for or receiving 

tenant-based rental assistance were 

required to solely use source 

documents. However, with the 

expansion of the safe harbor to tenants 

applying for, renewing, or for assisted 

families required to enter into a new 

rental assistance contract, the 

Department had to make conforming 

changes to explain how income is 

calculated for tenant-based rental 

assistance. The new paragraph (b)(3) 

does this by explaining that, for families 

applying for or receiving tenant-based 

rental assistance, the PJ may determine 

annual income in accordance with the 

new safe harbor provision or through 

the use of source documents. The 

paragraph also clarifies that income will 

be calculated at the times specified in 

§ 92.209(e)(3), which provides explicit 

instructions on when income must be 

determined for a family applying for or 

receiving tenant-based rental assistance. 

The Department received negative 

comments on § 92.203(e)(2). While the 

Department is declining to revise the 

six-month limit on when income is 

valid, the Department recognizes that 

the provision itself could be clearer. The 

Department is therefore clarifying that a 

PJ is not required to redetermine income 

for a family unless 6 months have 

elapsed since the PJ determined the 

family is income eligible. The term ‘‘reexamine’’ is confusing given that the 

provision is about determining a 

family’s income eligibility in advance of 

being provided assistance. This is 

different than when income is 

reexamined for families living in a 

rental housing project or families 

entering into or renewing a rental 

assistance contract. As the Department 

is revising income reexamination 

provisions for small-scale rental housing 

and in the context of tenant-based rental 

assistance, the Department believes it is 

important to remain consistent and is 

therefore revising this provision as well. 

Paragraph 92.203(e)(2) is also being 

clarified to explain that when the 

regulation refers to ‘‘HOME assistance,’’ 

the regulation means homeownership 

assistance and tenant-based rental 

assistance. In the HOME regulations, the 

term ‘‘HOME assistance’’ is used in a 

variety of contexts. The term means the 

assistance provided to a subrecipient, 

State recipient, or contractor to run all 

or a portion of a PJ’s HOME program; 

the assistance provided to a developer, 

owner, or sponsor to develop a HOME 

rental or homeownership project; 

assistance provided to a family for 

tenant-based rental assistance; 

homeownership assistance provided to 

a family to purchase and/or rehabilitate 

a home; or assistance provided to a 

CHDO. The Department believed it was 

important to clarify which type of 

assistance is meant in the provision 

given the various ways in which the 

term is used. Paragraph (e)(2) was also 

revised with a clarifying edit to say that 

a family ‘‘is income eligible’’ instead of 

‘‘qualifying as income eligible.’’ This is 

a non-substantive revision for 

readability. 

The Department is revising 

§ 92.203(f)(1)(ii) to remove two 

references to § 92.252(a)(2)(iii), which is 

being removed by this rulemaking. The 

Department is also revising 

§ 92.203(f)(2) to make corresponding 

revisions now that PJs are given the 

option of accepting a public housing 

agency, owner, or rental subsidy 

provider’s determination of the family’s 

adjusted income under that program’s 

rules instead of being required to do so 

under § 92.203(a)(1). This change is in 

response to public comments, as 

described earlier in this preamble. 


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24 CFR 92.206 Eligible Project Costs 

In response to public comments, HUD 

is making certain changes to § 92.206(d) 

regarding related soft costs that may be 

considered eligible project costs. The 

Department proposed and received 

comments requesting that HUD allow 

environmental reviews or other 

environmental studies or assessments to 

be reimbursable costs incurred prior to 

the commitment of funds to a project. 

Commenters requested that the 

provision be expanded to also include 

environmental fees, which the 

Department agrees can be included in 

the provision. The comments urged the 

Department to also consider expanding 

the types of costs that would be allowed 

to be incurred to include ‘‘predevelopment’’ and other related soft 

costs. 

In response to the comments, HUD is 

making changes to paragraph (d)(1) to 

expand the project soft costs that may be 

incurred prior to a commitment. The 

final rule moves certain soft costs from 

paragraph (d)(2) into paragraph (d)(1), 

including costs to process and settle 

financing for the project, such as private 

lender origination fees, credit reports, 

fees for title evidence, legal fees, private 

appraisal fees, and fees for independent 

cost estimates. By moving these soft 

costs into paragraph (d)(1), HUD is 

allowing the costs to be paid so long as 

they were incurred no more than 24 

months before the date of commitment 

and included in the written agreement 

committing the funds. Note that ‘‘legal 

fees’’ is a more expansive term than the 

current term ‘‘attorney’s fees’’ and the 

Department is intentionally expanding 

the term to be more inclusive of the 

different legal costs that are associated 

with a project in response to public 

comment. 

The Department determined that soft 

costs contained in the other provisions 

in paragraph (d) could not be moved 

into paragraph (d)(1) as there is no 

reasonable expectation that such costs 

would occur prior to commitment of 

HOME funds. Those provisions include 

building permits, which can only be 

obtained after completion of the HUD 

environmental review; fees for 

recordation and filing of legal 

documents, as recordation of documents 

related to an acquisition, rehabilitation, 

or new construction contract should 

occur after commitment of HOME 

funds; and building or developer fees, as 

those fees should not be earned or 

chargeable to the HOME grant for work 

performed prior to the environmental 

review and commitment of the HOME 

funds to a project. 

In response to public comment, HUD 

is also revising § 92.206 to add 

‘‘accounting fees’’, ‘‘filing fees for 

zoning or planning review and 

approval’’, and ‘‘other lender-required 

third-party reporting fees’’ to paragraph 

(d)(1). The Department added these fees, 

as recommended by the commenter, 

because the Department agrees that 

these fees, which are generally incurred 

prior to applying to a PJ for HOME 

assistance, are directly related to 

meeting underwriting and construction 

feasibility criteria that are required in 

the definition of § 92.2 Commitment. 

They may be payable with HOME funds 

if a PJ agrees to pay these costs in the 

written agreement. 

24 CFR 92.208 Eligible Community 

Housing Development Organization 

(CHDO) Operating Expense and 

Capacity Building Costs 

The public comments indicated 

confusion over the proposed use of 

capacity building funds for CHDOs. The 

new § 92.208(c) describes how PJs may 

provide HOME assistance to CHDOs for 

operating costs under § 92.300(a). The 

paragraph is not intended to describe 

the use of capacity building funds, 

which is described in the previous 

paragraph at § 92.208(b). HUD 

inadvertently included reference to 

‘‘capacity building costs’’ in the 

proposed § 92.208(c) and understands 

that this may have led to confusion for 

commenters. Consequently, HUD is 

removing the reference to ‘‘capacity 

building costs’’ in § 92.208(c) to 

eliminate this confusion. 

24 CFR 92.209 Tenant-Based Rental 

Assistance: Eligible Costs and 

Requirements 

The Department revised § 92.209(c)(3) 

to correct the term ‘‘tenant-based rental 

assistance’’ in the third sentence of the 

paragraph. The regulation had 

previously read ‘‘tenant-based 

assistance.’’ This is a non-substantive 

change. 

The Department made several 

revisions to § 92.209(e) in response to 

public comment. The Department 

redesignated § 92.209(e) as 

§ 92.209(e)(2) and revised the provision 

as described below. The Department 

also revised the header for paragraph (e) 

to describe the rental assistance contract 

more broadly and not just the term 

rental assistance contract. The 

Department then made four new 

subsections. 

The first subsection, § 92.209(e)(1), 

defines the parties to the rental 

assistance contract, which is also the 

header for this provision. Based on 

public comment to specific solicitation 

of comment #10, the Department is 

requiring the PJ to have a rental 

assistance contract with both the owner 

and the tenant. This can take the form 

of a single tri-party agreement or two 

separate agreements. There is precedent 

for this model in HUD programs. In the 

Housing Choice Voucher program, the 

tenant has an agreement with the public 

housing agency where the tenant agrees 

to the rules of the program (See Form 

HUD–52646), and the owner has an 

agreement with the public housing 

where the owner agrees to the terms of 

the housing assistance payments agency 

(See Form HUD–52641). The 

Department also believes that this is the 

best method for the PJ to enforce HOME 

requirements on tenant and owner alike. 

The Department revised the 

redesignated § 92.209(e)(2) to provide 

that a rental assistance contract does not 

need to start on the first day of the lease 

so long as the contract commences at 

the beginning of the first month in 

which tenant-based rental assistance is 

provided. The Department revised the 

provision to decouple the execution of 

the rental assistance contract from the 

tenant lease because with the 

imposition of the tenancy addendum, 

which must be executed and attached to 

the tenant lease, the need for the rental 

assistance contract to begin on the first 

day of the lease is significantly lessened. 

This is because the terms of the HOME 

tenant-based rental assistance tenancy 

addendum will control in the event of 

a conflict between the preexisting lease 

and the tenancy addendum, and 

therefore the risk that the lease would 

contain prohibited lease terms or would 

otherwise not comply with the HOME 

program requirements is eliminated. 

The Department is also revising this 

requirement in response to public 

comments that stated that it 

disadvantages families to require that 

the rental assistance contract begin on 

the first day of the lease because current 

very low-income tenants would have to 

break their lease to obtain rental 

assistance, which is not always possible. 

The Department does not wish to 

disadvantage tenants that are housing 

insecure or rent burdened by requiring 

they enter a new lease in order to 

receive tenant-based rental assistance 

under HOME. 

The Department also revised the 

redesignated § 92.209(e)(2) to explain 

that a rental assistance contract can be 

amended subject to the availability of 

funds. This revision is made in response 

to a public commenter that requested 

HUD explain whether an amendment to 

a rental assistance contract would 

require a new income determination. 

The Department is drawing a distinction 


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6See 42 U.S.C. 12745(b)(2)(B). 

between new contracts, amendments, 

and renewals of rental assistance 

contracts first in paragraph (e)(2) and 

then further in the new paragraphs (e)(3) 

and (e)(4). 

The new § 92.209(e)(3) explains under 

what conditions a contract may be 

amended or renewed. The new 

§ 92.209(e)(3)(i) explains that all parties 

must consent to an amendment to the 

rental assistance contract. The new 

§ 92.209(e)(3)(i)(A) explains that a rental 

assistance contract may be amended 

because the lease between the family 

and owner has been amended or 

renewed, as long as the lease term or 

amount charged under the lease are the 

only terms of the contract being 

changed. The new § 92.209(e)(3)(i)(B) 

explains that amendments to the rental 

assistance contract may extend the 

original term of the rental assistance 

contract up to 24 months from the 

original date of execution, which is the 

maximum term allowable under 

§ 92.209(e)(2). The new 

§ 92.209(e)(3)(i)(C) also allows for the 

amendment of the rental assistance 

contract when a family is moving within 

the same building or development, but 

the parties to the lease, family size, and 

the number of bedrooms are all the 

same. With respect to 

§ 92.209(e)(3)(i)(C), the Department 

believes these are reasonable restrictions 

on tenants and owners, as changes to 

the parties to a lease, family size, and 

the number of bedrooms in a unit are all 

significant enough such that allowing a 

PJ to amend an existing rental assistance 

contract is not appropriate, and the PJ 

should instead be required to enter into 

a new rental assistance contract with the 

family and owner. 

The new § 92.209(e)(3)(ii) explains 

that, subject to the availability of HOME 

funds, a rental assistance contract may 

be renewed after the expiration of its 

initial term. The new § 92.209(e)(3)(iii) 

explains that in all other instances, the 

PJ must enter a new rental assistance 

contract with the family and owner in 

accordance with § 92.209(e). This 

includes when family size changes, 

when the family moves to a different 

address with a different owner, or when 

the number of bedrooms in the unit 

changes. 

The Department explains the 

differences between when a new 

contract must be entered, when a 

contract can be amended, or when a 

contract can be renewed primarily to 

provide greater clarity in tenant-based 

rental assistance requirements as well as 

to explain when an income 

determination must be performed. The 

new paragraph (e)(4) whose header is 

‘‘initial and subsequent income 

determinations’’ explains that a PJ must 

perform an income examination each 

time a new rental assistance contract is 

entered into (see § 92.209(e)(4)(i)) or 

renewed (see § 92.209(e)(4)(iii)). The 

Department believes that this change is 

appropriate because it permits PJs to 

amend current rental assistance 

contracts to extend their term to the 

maximum 24-month period without 

requiring additional income 

examination, providing burden relief to 

tenants receiving tenant-based rental 

assistance. The Department declines to 

extend this burden relief to new rental 

assistance contracts or renewals as 

material terms of the lease or the 

number of persons in the housing are 

changing (in the case of new rental 

assistance contracts) or the rental 

assistance contract is being extended for 

more than twenty-four months (in the 

case of renewals). In these situations, 

income should be redetermined because 

it factors so heavily into the sizing of the 

rental assistance. 

The Department is adding a new 

§ 92.209(e)(4)(iv) to explain that if a 

family is participating in a HOME leasepurchase program and receiving tenantbased rental assistance, then the 

family’s income will only be determined 

at the time of execution of the lease 

purchase agreement. This is because the 

statute states that a family must be 

income-eligible at the time the leasepurchase agreement is signed,6 and 

because this will better enable tenants to 

save up for the purchase of the housing 

in accordance with the lease-purchase 

agreement and the HOME leasepurchase program. This type of 

treatment is only when the family is 

participating in a HOME lease-purchase 

program and not for other non-HOME 

lease-purchase programs because those 

programs may have different rules and 

restrictions, and their program design 

may vary significantly from HOME 

requirements. In those instances where 

a family is receiving tenant-based rental 

assistance and participating in a leasepurchase program, the family’s income 

will be examined when the family 

enters into the rental assistance contract 

and again if the family’s assistance is 

renewed. 

The Department is revising § 92.209(g) 

to refer to § 92.253 instead of specific 

paragraphs within § 92.253. This is 

because § 92.253 has been revised to 

directly state its applicability to tenantbased rental assistance and the 

requirements of the HOME tenant-based 

rental assistance tenancy addendum. 

The Department is also revising 

§ 92.209(h)(3)(ii) to better identify the 

Section 8 Housing Choice Voucher 

Program payment standard that may be 

used by a PJ, which is the payment 

standard established in 24 CFR 

982.503(a) through (c) and not the 

exception payment standard established 

in 24 CFR 982.503(d). The exception 

payment standard is, by its nature, an 

exception to the rule and the 

Department has not allowed its use in 

HOME in the past. This change is 

therefore just a clarification of HUD’s 

existing interpretation of the HOME and 

Section 8 regulations. 

The Department also made clarifying 

revisions to § 92.209(j)(6) to use the 

language ‘‘[s]urety bonds, security 

deposit insurance, or instruments 

similar to surety bonds or security 

deposit insurance . . .’’ instead of the 

proposed phrasing of ‘‘[s]urety bonds or 

security deposit insurance and similar 

instruments . . . .’’ HUD believes that 

this revision improves the clarity and 

readability of the paragraph. 

Consistent with changes made 

throughout the section, the Department 

is revising the last two sentences of 

paragraph (k) to reference paragraph (e) 

and making technical revisions. The 

current provision requires that a PJ enter 

into an agreement with either the owner 

or the family. The final rule will require 

that the PJ enter into an agreement with 

the owner and the family. 

24 CFR 92.210 Troubled HOMEAssisted Rental Housing Projects 

In response to public comment that 

suggested the Department was 

establishing an unreasonably high bar to 

evidence that a HOME project is no 

longer financially viable and able to 

obtain the relief in § 92.210, the 

Department has revised and reorganized 

§ 92.210(a). 

The first sentence in the paragraph 

remains unchanged from the proposed 

rule. Revised § 92.210(a)(1) now states 

that a project is not financially viable 

through the period of affordability if one 

of the conditions in § 92.210(a)(1)(i)–(iii) 

exists. 

In response to public comments, the 

Department provides in § 92.210(a)(1)(i) 

that a project is no longer financially 

viable through the period of 

affordability if the project’s operating 

costs exceed its operating revenue 

considering project reserves. The 

Department has revised this sentence to 

remove the term ‘‘significantly’’ and to 

make this and the other conditions 

listed in § 92.210(a)(1)(i)–(iii) be 

independent conditions. In 

§ 92.210(a)(1)(ii), the Department is 

creating a new condition that the project 

is no longer financially viable through 

the period of affordability if an owner is 


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unable to pay for necessary capital 

repair costs or ongoing expenses for the 

project. In the proposed rule, the owner 

being unable to pay for necessary capital 

repair costs was another condition that 

needed to be satisfied instead of an 

independent condition. However, given 

the comments, the Department believed 

it was best to expand the ground to 

include inability to pay operating 

expenses and to make the ground an 

independent ground for demonstrating 

that a project is no longer financially 

viable through the period of 

affordability. 

Lastly, if project reserves are 

insufficient to operate the project, then 

the Department also believes that the 

project is no longer financially viable 

through the period of affordability and 

is therefore making that a separate 

ground for relief under 

§ 92.210(a)(1)(iii). The Department also 

revised § 92.210(a)(3) to clarify that 

HUD may approve the actions in 

§ 92.210(b) and (c) to ‘‘strategically 

preserve the affordability of a rental 

project.’’ The Department had proposed 

to add the modifier ‘‘in preserving 

affordability’’ at the end of the sentence 

in the proposed rule but believes it is 

better for readability to move the 

language to describe the type of 

preservation action that is occurring for 

troubled housing rental housing projects 

under § 92.210. Similarly, the 

Department is revising § 92.210 to 

explain that the PJ may be permitted to 

reduce the ‘‘total’’ number of HOMEassisted units or change the designation 

of the units. This is a non-substantive 

clarifying change. 

24 CFR 92.212 Pre-Award Costs 

The Department revised § 92.212(b)(2) 

to clarify the provision. The provision, 

as proposed, had initially stated that, if 

a given year’s appropriation were not 

timely, then a PJ may incur 

administrative and planning costs as of 

the earlier of the beginning of their 

program year or the date that HUD 

receives the PJ’s consolidated plan. The 

provision then defined when an 

appropriation was not timely as when it 

occurs less than ninety days before a 

PJ’s program year start date. 

After further consideration, the 

Department decided that it is 

inappropriate to characterize 

appropriations as timely or not timely in 

a regulation. The Department also 

believed this language detracted from 

the overall clarity of the provision. 

Instead, the last sentence is being 

deleted and the first sentence is being 

revised to state that in any year in 

which an appropriation is less than 90 

days from a PJ’s program start date, the 

PJ may incur administrative and 

planning costs as of the earlier of the 

beginning of their program year or the 

date that HUD receives the PJ’s 

consolidated plan. This is a clearer 

sentence that doesn’t characterize the 

timeliness of appropriations and it 

aligns with the related final rule text in 

§ 570.200(h)(3). 

24 CFR 92.214 Prohibited Activities 

and Fees 

For certain paragraphs in § 92.214, 

HUD made clarifying revisions to use 

the language ‘‘[s]urety bonds, security 

deposit insurance, or instruments 

similar to surety bonds or security 

deposit insurance . . .’’ instead of the 

proposed phrasing of ‘‘[s]urety bonds or 

security deposit insurance and similar 

instruments . . . .’’ HUD believes that 

this revision improves the clarity and 

readability of the paragraph. In response 

to public comment, HUD also clarified 

that HOME rental housing project 

owners may not charge tenants fees for 

normal wear and tear. 

24 CFR 92.219 Recognition of 

Matching Contribution 

HUD is revising § 92.219(a)(4) to 

replace the term ‘‘dwelling’’ with the 

term ‘‘housing.’’ HUD is making this 

revision to standardize the use of the 

term ‘‘housing’’ in part 92 and in 

response to commenters that noted that 

the Department failed to make this 

terminology replacement in the 

proposed rule. The Department also 

made technical revisions to 

§ 92.221(b)(1) to remove a dash, add 

section symbols, and add the word 

‘‘through’’ when citing §§ 92.218 

through 92.221. 

The Department is making 

conforming regulatory revisions to 

§ 92.219(b)(2)(ii) and (iii) to remove the 

pinpoint citations to § 92.253(a)–(c) and 

(d)(2) and replace them with more 

general citations to the tenant protection 

provisions, as the provisions have 

moved and are now contained in the 

applicable tenancy addendum (HOME 

rental housing tenancy addendum, 

HOME TBRA tenancy addendum, and 

HOME security deposit assistance 

tenancy addendum). The Department 

also made non-substantive revisions to 

§ 92.253(b)(2)(ii) for readability and to 

reduce confusion. The revised provision 

explains that the written agreement 

must impose and enumerate all 

requirements applicable to the project, 

including affordability requirements in 

§§ 92.252 or 92.254 (as applicable based 

on the type of project being carried out), 

any applicable tenant protections due to 

operation of a rental housing project (or 

lease-purchase project), any applicable 

property standards based on the type of 

project (e.g., new construction, 

rehabilitation, acquisition, etc.), and 

income determination requirements that 

apply to the family through § 92.203. 

The revisions of the section should 

make it easier for PJs to know what 

items are necessary for the written 

agreement, but no substantive changes 

were made from the current 

requirements. 

24 CFR 92.250 Maximum Per-Unit 

Subsidy Amount, Underwriting, and 

Subsidy Layering 

The Department received comments 

stating that a five percent increase in the 

maximum per-unit subsidy was 

insufficient to cover the associated costs 

with meeting nationally recognized 

green building standards. In response, 

the Department is increasing the 

percentage in the final rule up to ten 

percent in § 92.250(c). The Department 

understands that many commenters 

requested increases that were 

significantly higher, especially in the 

context of rehabilitation. The estimates 

provided by commenters ranged 

significantly from ten percent to well 

over twenty-five percent depending 

upon the market, the standard the 

project owner is attempting to meet, and 

whether the project was new 

construction or rehabilitation. The 

Department understands that 

rehabilitation of existing housing units 

and meeting significantly higher energy 

efficiency thresholds than what is 

required under section 212(e) of the Act 

can add significantly higher costs. 

However, the Department must balance 

the benefits from more sustainable, 

energy-efficient housing against the 

potential that fewer units will be created 

or fewer families served if the subsidy 

increased beyond ten percent. Given the 

level of annual appropriations that the 

HOME program receives, the 

Department believes it can only move to 

ten percent at this time but will 

reevaluate in the future. 

24 CFR 92.251 Property Standards and 

Inspections 

A. Carbon Monoxide and Smoke 

Detection 

In response to public comments on 

carbon monoxide and smoke detection, 

including comments received in 

response to specific solicitation of 

comment #3, which requested comment 

from the public on new requirements for 

smoke alarms, the Department is making 

revisions to § 92.251(a)(3)(vi), 

§ 92.251(b)(1)(xi), § 92.251(c)(3), and 

§ 92.251(f)(1)(iv). 


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First, the Department is adding the 

carbon monoxide requirement 

applicable to the Section 8 voucher 

program as a new requirement for the 

HOME program at § 92.251(a)(3)(vi)(A), 

§ 92.251(b)(1)(xi)(A), and 

§ 92.251(f)(1)(iv)(A), which HUD will 

more fully describe through a 

publication in the Federal Register. The 

Department is also revising 

§ 92.251(c)(3) to reference the 

requirement at § 92.251(b)(1)(xi)(A) and 

revising § 92.251(f)(1)(i) to clarify that 

the carbon monoxide requirements in 24 

CFR 5.703 do not apply because the 

ones in § 92.251(f)(1)(iv)(A) apply 

instead. 

Second, the Department is adding 

smoke detection requirements to 

§ 92.251(a)(3)(vi)(B), 

§ 92.251(b)(1)(xi)(B), and 

§ 92.251(f)(1)(iv)(B). The Department is 

also revising § 92.251(c)(3) to reference 

the requirement in § 92.251(b)(1)(xi)(B). 

The revised smoke detection 

requirements are tailored to the type of 

HOME activity and work being 

performed, based on public comments 

and informed by implementation 

considerations. 

For new construction projects under 

§ 92.251(a)(3)(vi)(B)(1), a hardwired 

smoke detector must be installed on 

each level of each housing unit, in or 

near each sleeping area in each housing 

unit, in the basement of each housing 

unit, and in each common area of a 

project. However, a hardwired smoke 

alarm is not required in crawl spaces or 

unfinished attics of housing units. In 

addition, a hardwired smoke detector 

must also be installed within 21 feet of 

any door to a sleeping area measured 

along a path of travel and, where a 

smoke alarm installed outside a sleeping 

area is separated from an adjacent living 

area by a door, a smoke alarm must also 

be installed on the living area side of the 

door. The Department believes that it is 

appropriate to require that the smoke 

alarm be hardwired, as HOME funds are 

being used in the new construction of 

the projects and therefore the building 

designs and electrical systems can be 

tailored to meet the HOME 

requirements. 

In response to HUD’s consideration of 

public comments, the Department 

added § 92.251(a)(3)(vi)(B)(4) to 

establish that following the relevant 

specifications of either the International 

Code Council (ICC) or the National Fire 

Protection Association (NFPA) Standard 

72 satisfies the requirements of 

§ 92.251(a)(3)(vi)(B). Originally, the 

Department considered only codifying 

installation in accordance with the 

NFPA Standard 72 but received 

comments urging the Department to 

make its revisions consistent with the 

U.S. Housing Act of 1937, as amended 

by the Consolidated Appropriations Act, 

2023 (Pub. L. 117–328, div. AA, title VI, 

§ 601)). The Consolidated 

Appropriations Act, 2023 requires that 

units occupied by tenants living in 

public housing, living in units and 

receiving Section 8 Housing Choice 

Vouchers, or living in unit that receives 

project-based assistance comply with 

the applicable codes and standards 

published by the International Code 

Council or the National Fire Protection 

Association and the requirements of the 

National Fire Protection Association 

Standard 72 or any successor standard. 

Therefore, the Department is codifying 

§ 92.251(a)(3)(vi)(B)(4) to allow property 

compliance with either standard for 

new construction in the HOME program 

which is consistent with other HUD 

programs. 

The Department also added paragraph 

(a)(3)(vi)(B)(2) to require that smoke 

alarms have an alarm system designed 

for hearing-impaired persons. The 

Department is adding this language to 

ensure that individuals with hearing 

impairments are adequately warned in 

the event of smoke or a fire. The 

addition of this paragraph also makes 

the requirements of this section more 

consistent with the requirements 

contained in the Consolidated 

Appropriations Act, 2023. 

The Department also added paragraph 

(a)(3)(vi)(B)(3) to describe that the 

Secretary may establish additional 

standards related to § 92.251(a)(3)(vi)(B) 

through a publication in the Federal 

Register. 

Additionally, the Department 

considered requiring hardwired smoke 

detectors for rehabilitation projects but 

understood that rehabilitation projects 

may require different considerations. As 

a result, while the Department is 

adopting the same requirements from 

§ 92.251(a)(3)(vi)(B) for 

§ 92.251(b)(1)(xi)(B). In addition, the 

Department is also adding 

§ 92.251(b)(1)(xi)(B)(4), which will 

allow a PJ to provide a written 

exception to an owner to allow the 

owner to install a smoke detector that 

uses 10-year non rechargeable, 

nonreplaceable primary batteries as long 

as the smoke detector is sealed, tamperresistant, contains a means to silence 

the alarm, and otherwise complies with 

the requirements of this section. This 

relief may only be provided where the 

use of hardwired smoke detectors places 

an undue financial burden on the owner 

or is infeasible. It is the PJ’s 

responsibility for making and 

documenting this determination for 

their records. The Department is 

declining to define the terms ‘‘undue 

financial burden’’ or ‘‘infeasible’’ 

because it believes that PJs should have 

the flexibility to develop their own 

standards and to make their own 

determinations based on the factspecific circumstances. 

For homeownership activities, the 

Department is revising § 92.251(c)(3) to 

require that housing acquired for 

homeownership meet the same carbon 

monoxide and smoke detection 

requirements required under 

§ 92.251(b)(1)(xi). And, similar to the 

exception that the Department is 

allowing at § 92.251(b)(1)(xi)(B), the 

Department is allowing a PJ to provide 

a written exception to an owner to allow 

the owner to install a smoke detector 

that uses 10-year non rechargeable, 

nonreplaceable primary batteries as long 

as the smoke detector is sealed, tamperresistant, contains a means to silence 

the alarm, and otherwise complies with 

the requirements of this section. The 

Department is also requiring that the 

same grounds which justify an 

exemption from being required to use 

hardwired smoke detectors, i.e., undue 

financial burden, be the applicable 

grounds in § 92.251(c)(3). 

Finally, as for the ongoing property 

standards for existing rental housing 

projects and the property standards for 

tenant-based rental assistance, the 

Department is creating new 

requirements in § 92.251(f)(1)(iv)(B), 

which will mandate that smoke 

detectors meet the standards in 24 CFR 

5.703(b) and (d). These are the NSPIRE 

smoke detection standards that apply to 

the Section 8 program and elsewhere. 

The Department believes it is 

appropriate to treat existing rental 

housing and units with tenants 

receiving tenant-based rental assistance 

the same as those receiving Section 8 

HCV assistance or project-based Section 

8 assistance, as these programs are 

sufficiently similar. 

For these existing rental housing units 

and units with tenants receiving tenantbased rental assistance, the inside area 

must include at least one batteryoperated or hard-wired smoke detector, 

in proper working condition, on each 

level of the property. For the unit, there 

must be at least one battery-operated or 

hard-wired smoke detector, in proper 

working condition on each level of the 

unit, inside each bedroom, within 21 

feet of any door to a bedroom measured 

along a path of travel, and where a 

smoke detector installed outside a 

bedroom is separated from an adjacent 

living area by a door, a smoke detector 

must also be installed on the living area 

side of the door. Additionally, if the 

unit is occupied by any hearingVerDate Sep<11>2014 17:56 Jan 03, 2025 Jkt 265001 PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 E:\FR\FM\06JAR2.SGM 06JAR2

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7See 42 U.S.C. 12756(c). 

impaired person, the smoke detectors 

must have an alarm system designed for 

hearing-impaired persons. For both the 

inside area of the building and the unit, 

the Secretary is able to establish 

additional standards through Federal 

Register publication. 

B. Accepting NSPIRE Inspections 

The Department is revising 

§ 92.251(b)(1)(viii)(A), 

§ 92.251(f)(3)(i)(B), and § 92.251(f)(4)(ii) 

in response to commenters that stated 

HUD should not restrict the acceptance 

of NSPIRE inspections to only those 

made under another HUD program. The 

Department understands that there are 

other projects using non-HUD funding, 

such as LIHTC projects, that may use 

inspections to the NSPIRE standards to 

demonstrate compliance with the 

requirements for those funding sources. 

The Department will allow a PJ to 

accept inspections to the NSPIRE 

standards or another alternative 

inspection standard HUD may establish 

through Federal Register publication. 

The inspections must be in satisfaction 

of another funding source’s 

requirements and conducted within the 

timeframes established for the 

applicable regulations. 

C. Meeting Property Standards After 

Acquisition of Homeownership Housing 

In response to comment, the 

Department is revising 

§ 92.251(c)(3)(ii)(C) and adding 

§ 92.251(c)(3)(ii)(D) to give PJs the 

ability to provide homebuyers an 

extension of the six-month deadline for 

bringing a substandard homeownership 

unit into compliance with the PJ’s 

property standards. 

While the Department strongly 

encourages PJs to provide 

homeownership assistance to 

homebuyers purchasing housing that 

already meets their property standards, 

this is not always possible. Because 

there will be times where homebuyers 

wish to purchase properties that do not 

meet the PJ’s property standards, the 

Department is revising its regulations to 

be flexible enough to allow PJs and 

homebuyers to bring a unit up to the 

PJ’s property standards after purchase. 

The Department continues to believe 

that six months is the appropriate 

amount of time to provide a homebuyer 

to comply with a PJ’s property 

standards. However, every construction 

project is different, and each 

jurisdiction has local requirements for 

permitting. In the past, due to national 

emergencies or disasters, homebuyers 

have also been affected by materials 

shortages. Therefore, in light of the 

variety of factors that can affect even 

minor repairs needed to bring a unit up 

to a PJ’s property standards, the 

Department’s revisions to 

§ 92.251(c)(3)(ii)(C) and addition of 

§ 92.251(c)(3)(ii)(D) will allow PJs to 

provide homebuyers an extension 

lasting up to 12 months from the date 

of acquisition with HOME funds to 

bring their unit up to the PJ’s property 

standards. If an extension is granted, the 

PJ must inspect the unit within 12 

months of acquisition and determine 

that it meets the PJ’s property standards. 

D. Clarifying the Application of 

Property Standards 

In response to public comments 

requesting clear requirements for when 

a unit must be inspected under the new 

construction property standards and 

when a unit must be inspected under 

the PJ’s rehabilitation standards, the 

Department is adding a new § 92.251(d) 

that explains that if a project includes 

both rehabilitation of housing units and 

either new construction or 

reconstruction of housing units, then 

the PJ must apply the rehabilitation 

standards to the housing units that are 

rehabilitated and the new construction 

requirements to housing that is either 

newly constructed or reconstructed. 

E. Sample Size for Property Inspections 

The Department solicited comment on 

the correct sample size for HOME 

project inspections in specific 

solicitation #4 of the proposed rule. 

After considering the comments 

received in response to this solicitation, 

the Department developed a chart that 

will provide greater clarity on how 

many units must be inspected in a 

project based on the number of HOMEassisted units within the project. 

Accordingly, the Department is revising 

§ 92.251(f)(3)(iii) to require that 

inspections be performed in accordance 

with the chart. The Department is also 

adding clarifying text to indicate that 

the PJ must inspect the inspectable areas 

for each building containing HOMEassisted units and not just the units 

themselves. 

To determine the appropriate sample 

size for each project, the Department 

started with its minimum requirement 

that four units be inspected for all 

projects that have up to twenty units. 

This is because all units in small-scale 

housing (1–4 unit projects) must be 

inspected once every three years, and 

projects of a larger size should not be 

required to inspect fewer units than a 

small-scale housing project. This is 

counter to the statutory intent of the 

monitoring flexibilities provided for 

small-scale housing projects.7

Additionally, the Department examined 

other sampling techniques in response 

to public comment, including the 

LIHTC and NSPIRE sampling methods 

(see 26 CFR 1.42–5 for LIHTC and 88 FR 

43379 and 43380 for NSPIRE). The 

Department found that even with the 

four-unit minimum sample size 

requirement for projects with up to 

twenty units, HOME was still less 

burdensome than other programs and 

required fewer units to be inspected 

than did other programs. 

The Department has therefore adopted 

its proposal for a 20 percent sample for 

projects containing between twenty and 

one hundred and thirty HOME units. 

Then, in response to comments 

requesting that the Department provide 

burden relief similar to that provided in 

LIHTC or HUD programs subject to 

NSPIRE, the Department adopted the 

sampling method that it uses under 

NSPIRE for projects containing greater 

than one hundred and thirty units. The 

Department believes that this approach 

strikes the correct balance by providing 

burden relief for smaller and larger 

projects while still requiring an 

appropriate amount of unit inspections 

occur. It also provides a clearer standard 

for PJs because the unit sampling for the 

inspection is not required to be based on 

a statistically valid sample. 

F. Miscellaneous Revisions to § 92.251 

The Department is adding State and 

local requirements back into 

§ 92.251(a)(3)(iii), which lists the 

various standards that housing must, 

where relevant, meet with respect to 

disaster mitigation. The Department 

believed it had provided clarifying 

technical revisions to this section, but 

did not mean to remove any additional 

requirements not contained in State and 

local codes or ordinances from the list 

of applicable standards. The Department 

also did not intend to change the 

meaning of that provision in any other 

way. 

The Department is revising paragraph 

(a)(3)(iv) to make the requirement 

described in that paragraph more 

consistent with the requirements in 

§ 92.504(c). Instead of requiring that a PJ 

ensure construction contracts and 

documents describe the work to be 

undertaken, the PJ must require this to 

be the case. This non-substantive 

change will increase clarity and will 

make the language in paragraph 

(a)(3)(iv) consistent with that of the 

monitoring requirements provided in 

the written agreement provisions in 


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8The HOME thresholds came into effect in 1991 

(see 56 FR 65312–01). 

§ 92.504 and of the cost principles 

contained in 2 CFR part 200, subpart E. 

The Department is revising 

§ 92.251(a)(3)(vii) to state that the green 

building standards will be published 

through a Federal Register publication. 

Similar to how the Department is 

revising § 92.251(a)(3)(iv) to make the 

requirements in this section more 

consistent with the requirements in 

§ 92.504(c), the Department is also 

revising § 92.251(b)(2). Instead of 

requiring a PJ to ‘‘ensure’’ that 

construction meet the PJ’s rehabilitation 

standards, the PJ must ‘‘require’’ this to 

be the case. This is already required in 

other regulations including the 

monitoring requirements provided in 

the written agreement provisions in 

§ 92.504 and the cost principles 

contained in 2 CFR part 200, subpart E, 

and so is a non-substantive change 

made to increase clarity. 

§ 92.251(b)(1)(vi) is being revised to 

align the language with the same 

language contained in § 92.251(a)(2)(iii). 

24 CFR 92.252 Qualification as 

Affordable Housing: Rental Housing 

In response to public comment, the 

Department has determined that the rent 

limits do not apply to Federal, State, or 

local rental assistance or subsidy 

payments and is revising the third 

sentence of § 92.252(a) accordingly. The 

Department also revised the first 

sentence of § 92.252(a)(1) to state that if 

a family is participating in a program 

where the person pays thirty percent of 

their monthly adjusted income or ten 

percent of their monthly income as a 

contribution to rent, then the maximum 

rent due from the family is the family’s 

contribution under that program. 

Commenters requested clarity on 

whether an owner could accept the full 

contract rent for a tenant in a HOMEassisted rental housing unit that was 

also receiving Section 8 or other forms 

of rental assistance even if the tenant 

was low-income and governed by the 

High HOME Rent provisions of 

§ 92.252(a)(1). 

After careful consideration, the 

Department determined that the changes 

in the Housing and Economic Recovery 

Act of 2008 (HERA) (Pub. L. 110–289, 

122 Stat. 2654, approved July 30, 2008) 

not only revised the Section 8 statute, 

but fundamentally changed the 

relationship between the two programs. 

It is clear from HERA that the HOME 

Rent Limits were not meant to apply to 

recipients of Section 8 assistance or 

similar recipients of rental assistance or 

living in subsidized units. Prior to the 

passage of HERA, the only way that the 

Secretary was permitted to increase the 

rent limits was provided by 42 U.S.C. 

12745(a)(1)(A). After passage of HERA, 

HUD determined the Secretary could 

also make such determination based 

upon misalignment between HOME rent 

requirements and the rent requirements 

of Section 8 and other similar rental 

assistance or subsidy programs. The 

Secretary determined that this change is 

appropriate and promotes greater 

alignment between the HOME program 

and HUD’s other rental assistance 

programs and is revising § 92.252(a)(1) 

and § 92.252(a)(2) accordingly. Where a 

family is participating in a program 

where the family pays as a contribution 

toward rent no more than thirty percent 

of the family’s monthly adjusted income 

or ten percent of the family’s monthly 

income, then the maximum rent due 

from the family is the family’s 

contribution, regardless of whether the 

family is occupying a High or Low 

HOME Rent unit. Thus, under the 

HOME program as changed by HERA, 

the HOME-assisted rental housing 

project owner may now accept the rent 

due from the tenant and the assistance 

or subsidy payment made under the 

applicable assistance or subsidy 

program. 

The Department is revising 

§ 92.252(a)(2)(i) to clearly reference the 

fair market rent being described in 

§ 92.252(a)(1)(i) and to revise the term 

‘‘fair market value’’ to ‘‘fair market rent’’ 

to more accurately describe the rent. 

§ 92.252(a)(2)(ii) is also being revised to 

more accurately state that the rent 

contribution of the family in a Low 

HOME rent unit is 30 percent of the 

family’s adjusted income. This is not a 

substantive change from the proposed 

rule or the current regulatory text, but 

it is a more accurate description of the 

Low HOME rent applicable to a family. 

In response to comments about 

aligning with LIHTC on income and 

rents, the Department is adding the 

statutory language contained in 42 

U.S.C. 12745(a)(1)(B)(ii) into the new 

§ 92.252(a)(2)(iii). The provision will 

state that if a HOME-assisted unit ‘‘is a 

LIHTC unit and has rents not greater 

than the gross rent for rent-restricted 

residential units as determined under 

section 42(g)(2) of title 26’’ then it shall 

be a Low HOME Rent unit. 

The Department is revising 

§ 92.252(a)(3)(i) and (ii) to add explicit 

reference to how the zero-bedroom fair 

market rent is determined. This rent is 

established under 24 CFR part 888. In 

revising the rent limits, the Department 

also realized the requirement in 

§ 92.252(a)(3)(ii), which currently 

requires that SRO units without sanitary 

or food preparation facilities meet the 

occupancy requirements of Low HOME 

rent units, could be identified in plain 

language. Instead of referring to the 

occupancy requirements, the provision 

is being revised to explain that the units 

are to be occupied by very low-income 

tenants. This is a non-substantive 

change to provide a clearer regulation. 

In response to public comments 

received, HUD is clarifying in 

§ 92.252(b) that ‘‘cable and broadband’’ 

are not included in utility allowances. 

Commentors asked for clarity regarding 

whether broadband is a utility and 

whether tenants can be required to pay 

for cable and broadband as a condition 

of occupying a HOME-assisted rental 

housing unit. The Department agrees the 

regulation could be clearer and included 

language in § 92.252(b) to clarify that in 

addition to telephone, ‘‘cable and 

broadband’’ are not included in utility 

allowances. 

Paragraph § 92.252(b) was also revised 

to add the term ‘‘applicable’’ when 

describing local public housing 

authority utility allowances. The 

Department understands multiple 

public housing authorities may serve a 

particular geographic location (e.g., 

State, county, city, etc.) and the 

Department believes that the public 

housing authority providing Section 8 

project-based voucher assistance (if the 

project is assisted) or the one serving the 

jurisdiction that the PJ believes is most 

reflective of the utility consumption in 

the community in which the project is 

located should be the one used for the 

HOME project. 

The Department is making a nonsubstantive change to replace the word 

‘‘ensure’’ with ‘‘require’’ in § 92.252(c). 

This change better explains the 

requirement that PJs must not allow 

owners to charge tenants in excess of 

the rents in § 92.252. 

The Department is revising the dollar 

thresholds that define the periods of 

affordability in § 92.252(d) in response 

to public comments. Commenters stated 

that the thresholds had not been 

adjusted for inflation and the increase in 

the cost of construction. The 

Department agrees that the thresholds 

have not been revised since 1991 and 

must be revised to account for the 

increase in costs.8 See 42 U.S.C. 

12745(a)(1)(E) of the Act. requires that 

HOME projects ‘‘will remain affordable, 

according to binding commitments 

satisfactory to the Secretary, for the 

remaining useful life of the property, as 

determined by the Secretary, without 

regard to the term of the mortgage or to 

transfer of ownership, or for such other 

period that the Secretary determines is 

the longest feasible period of time 


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9By one measure, the Consumer Price Index, the 

dollar has increased by over 200% since the 

establishment of the dollar thresholds used to 

determine the period of affordability for the HOME 

program. See the CPI Inflation Calculator at https:// 

data.bls.gov/cgi-bin/cpicalc.pl?cost1=

1%2C000%2C000.00&year1=199201&

year2=202310. 

10See 42 U.S.C. 12722(1) and (7). 

11 In 1992, the Department was appropriated 

$1,500,000,000 for HOME, the first year of annual 

appropriations for the program. (See 105 STAT. 744 

for Pub. L. 102–139). For Fiscal Year 2024, the 

Department received $1,250,000,000 for HOME. In 

current dollars, this is a decrease in investment in 

affordable housing of only $250,000,000 but when 

using the Consumer Price Index to calculate the 

inflation-adjusted decrease, it is a decrease of over 

50% of the initial investment made in affordable 

housing. 

consistent with sound economics and 

the purposes of this Act . . .’’ The 

Department cannot adjust the thresholds 

to fully account for the differences in 

inflation 9 because the Department must 

balance the need for adjusting the 

periods of affordability to account for 

the increase in costs (i.e., sound 

economics) with the purposes of the 

Act, which are to produce and maintain 

affordable housing units.10 Given the 

significant decrease in appropriations 

that the HOME program has had in both 

real and inflation-adjusted dollars since 

the inception of the current dollar 

thresholds, the Department can only 

revise the thresholds to partially 

account for the increase of costs.11

Accordingly, the Department will 

revise the initial threshold for 

rehabilitation or acquisition of existing 

housing per-unit amount of HOME 

funds from $15,000 to $25,000. If the 

per-unit cost of rehabilitation and/or 

acquisition of existing housing is below 

$25,000, then the minimum period of 

affordability for each HOME-assisted 

housing unit is five years. The 

Department is revising the second 

threshold from $40,000 to $50,000. If 

the per-unit cost of rehabilitation and/ 

or acquisition of existing housing is 

from $25,000 to $50,000, then the 

minimum period of affordability shall 

be ten years for each HOME-assisted 

rental housing unit. For rehabilitation 

and/or acquisition of existing housing, if 

the per-unit cost is over $50,000 for 

each HOME-assisted rental housing 

unit, then the minimum period of 

affordability is fifteen years. 

While the Department is revising the 

dollar thresholds for the periods of 

affordability involving rehabilitation 

and/or acquisition, the Department has 

chosen to maintain the period of 

affordability for new construction and 

for rehabilitation involving refinancing. 

The Department believes that the useful 

life of the property or the longest 

feasible period of time is consistent with 

sound economics and the purposes of 

this Act is still twenty years for HOME 

rental housing projects involving new 

construction. Similarly, the Department 

believes that properties where 

rehabilitation involves refinancing 

should also continue to be subject to a 

period of affordability of fifteen years, as 

the refinancing and rehabilitation of the 

property to the PJ’s rehabilitation 

standards should adequately extend its 

useful life to a period of fifteen years. 

If the rehabilitation and refinancing 

action cannot ensure that the property 

remains capable of operating as 

affordable housing for a period of fifteen 

years, then the project is not feasible or 

furthering the purposes of the Act. 

The Department is revising the first 

sentence of § 92.252(g) and 

§ 92.252(g)(3) to include reference to the 

new safe harbor in § 92.203(a)(3). This 

revision allows a PJ to use the safe 

harbor in § 92.203(a)(3) in the 

calculation of both initial and annual 

income determinations instead of using 

source documents, as required in 

§ 92.203(b)(1)(i). The Department is also 

revising the first sentence of § 92.252(g) 

to reference income provisions for 

HOME tenant-based rental assistance 

tenants, which have been moved to 

§ 92.203(b)(3) from § 92.203(b)(2). 

The Department is revising 

§ 92.252(g)(1) to provide a chart 

clarifying the alternative income 

reexamination cycle for small-scale 

rental projects that a PJ may permit. The 

Department is also revising 

§ 92.252(g)(2) to specify that rental 

projects, including small-scale projects, 

must reexamine tenant income using 

source documentation every sixth year 

of the period of affordability. 

The Department is revising 

§ 92.252(h)(2)(i) for readability by 

striking ‘‘section 42’’ and instead stating 

that over-income tenants subject to the 

rent restrictions under section 42 of the 

Internal Revenue Code of 1986 must pay 

a rent that complies ‘‘with that section.’’ 

This is clearer and less wordy. The 

Department is adding a new paragraph 

§ 92.252(h)(2)(iii) that will explain that 

rent limits do not apply to rental 

assistance or subsidy payments under 

any Federal, State, or local rental 

assistance or subsidy program. This is 

because when tenants become overincome in certain rental assistance 

programs, such as the Housing Choice 

Voucher program, the tenant still pays 

a percentage of their rent, such as thirty 

percent of their rent, up to the contract 

rent for the housing unit. This means 

that there may still be subsidy or 

assistance from the rental assistance 

provider until the tenant is paying the 

full contract rent. If owners were unable 

to accept this rent, then it would 

undermine the purposes of HERA, as 

explained earlier for High and Low 

HOME Rents. As such, the Department 

providing the same clarification it did in 

paragraph § 92.252(a), which is that the 

rent does not include the rental 

assistance provided by the rental 

assistance or subsidy provider. 

Paragraph § 92.252(i) was revised 

similar to other provisions to state that 

surety bonds, security deposit 

insurance, or instruments similar to 

surety bonds and security deposit 

insurance may not be used in lieu of or 

in addition to a security deposit in 

HOME-assisted units. This is a 

clarifying change for readability and not 

a substantive change from the proposed 

rule. 

24 CFR 92.253 Tenant Protections and 

Selection 

The Department is making significant 

changes to its tenant protection 

provisions in response to public 

comment. Based on comments received 

as part of the specific solicitation of 

comment #10, the Department has 

chosen to create three tenancy addenda 

for the HOME program, one for each 

type of HOME rental activity (rental 

housing, tenant-based rental assistance, 

security deposit assistance only). The 

requirements for each addendum shall 

be provided in paragraphs (b)–(d) 

accordingly. The Department is also 

reorganizing the tenant protections 

regulations by removing the current 

security deposit and termination of 

tenancy provisions found in paragraphs 

(c) and (d) and instead placing them 

directly into the applicable tenancy 

addendum. The Department believes 

these changes allow HUD to tailor the 

protections to the form of assistance 

being received under the HOME 

program and should decrease any 

potential chilling effects that an 

addendum may have on private owners 

accepting tenants with HOME tenantbased rental or security deposit 

assistance. 

The Department also believes 

reorganizing the tenant protections to 

include the security deposit 

requirements and termination of 

tenancy provisions into the applicable 

tenancy addenda for rental housing and 

tenant-based rental assistance is more 

legally supportable and consistent with 

other HUD programs. Section 42 U.S.C. 

12755(a)(1) provides an explicit 

congressional delegation of authority to 

the Secretary to determine the terms and 

conditions of leases in the HOME 

program. Security deposit requirements 

and termination of tenancy provisions 

are material terms to a lease and other 


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12See HUD Form 52641A for the Housing Choice 

Voucher Program Tenancy Addendum and Form 

HUD 52530.c for the Section 8 Project-based 

Voucher Program Tenancy Addendum. 

HUD programs include specific 

provisions addressing each in their 

tenancy addenda, including in the 

Section 8 voucher programs.12 The 

Department believes this is the most 

legally sound way of requiring PJs and 

owners to comply with the tenant 

protections and that it will better enable 

beneficiaries of HUD programs to assert 

their legal rights and defenses. 

Commenters had also specifically 

requested that the Department add the 

security deposit provisions within the 

tenancy addendum, as those are 

traditionally contained in a lease, and 

the Department agrees. 

Accordingly, the Department is 

revising paragraph § 92.253(a) by adding 

a ‘‘(1)’’ after lease contents and 

redesignating § 92.253(a)(1)–(4) as 

§ 92.253(a)(1)(i)–(iv). Paragraph 

§ 92.253(a)(1)(iv)(A) shall also be 

revised to require that a lease of a tenant 

in HOME rental housing include the 

HOME rental housing tenancy 

addendum described in § 92.253(b). 

Paragraph § 92.253(a)(1)(iv)(B) is being 

added and shall require that a lease of 

a tenant in HOME tenant-based rental 

assistance include the HOME tenantbased rental assistance tenancy 

addendum described in paragraph 

§ 92.253(c). 

A separate paragraph § 92.253(a)(2) is 

being added and shall provide the lease 

requirements for security deposit 

assistance only recipients. After 

reviewing the comments received as 

part of the solicitation of public 

comment, the Department determined 

that it was not appropriate to require 

that tenants and owners use the HOME 

tenant-based rental assistance tenancy 

addendum. Security deposit assistance 

is fundamentally different than other 

forms of assistance under the HOME 

program. It is a one-time form of 

assistance that is inherently short-term 

in nature. The assistance is primarily 

intended as a form of emergency 

assistance for families whose primary 

barrier to obtaining housing is the 

security deposit. Many times, this 

assistance is also paired with long-term 

assistance in other programs that comes 

with their own protections. The HOME 

tenant-based rental assistance tenancy 

addendum contemplates a contractual 

relationship between the PJ and the 

owner because of the updated rental 

assistance contract requirements 

contained in § 92.209(e). Security 

deposit assistance, in contrast, is of 

limited duration, lasting only the 

issuance of the initial assistance. 

Instead of requiring the HOME tenantbased rental assistance tenancy 

addendum, the Department is requiring 

a security deposit assistance tenancy 

addendum. Paragraph § 92.253(a)(2) 

shall require a written lease between the 

tenant and the owner that is for a period 

of not less than 1 year, unless by mutual 

agreement between the tenant and the 

owner, a shorter period is specified. 

This mirrors the requirements for both 

rental housing and tenant-based rental 

assistance. Likewise, to determine that 

the HOME security deposit assistance 

tenancy addendum is included in the 

lease, the owner must also provide the 

PJ with a written lease before security 

deposit assistance is provided. This 

mirrors the new requirements for both 

rental housing and tenant-based rental 

assistance. Then, the paragraph requires 

that the lease contain the HOME 

security deposit assistance tenancy 

addendum in paragraph (d) of this 

section. 

The Department received a significant 

amount of comment on its proposed 

tenant protections that represented a 

spectrum of participants in the HOME 

program including PJs, owners, CHDOs, 

tenant rights and advocacy 

organizations, fair housing and civil 

rights organizations, and associations. 

These comments ranged from 

unqualified support to complete 

opposition. The Department considered 

the comments and determined that the 

vast majority of its proposed text was 

appropriate for a rental housing tenancy 

addendum. However, based on public 

comment and the reorganization of the 

regulation, the Department did make a 

number of revisions since the proposed 

rule stage. 

The introductory text in § 92.253(b) 

has been clarified to indicate that the 

tenancy addendum being described is 

the HOME ‘‘rental housing’’ tenancy 

addendum. The second sentence was 

also revised to include addenda from 

local affordable housing programs in 

addition to other Federal or State 

affordable housing programs. The 

Department did not intend to 

inadvertently exclude HOME-assisted 

tenants from receiving other forms of 

local affordable housing assistance and 

believes this revision is responsive to 

public comments that warned HUD not 

to create conflicts with local programs. 

Paragraph (b)(1)(ii)(A) is being revised 

to clarify that with respect to 

maintenance and repairs to a housing 

unit, the owner shall provide tenants 

with written expected timeframes for 

maintaining or repairing units as soon 

as practicable. A written record is more 

protective of a participating jurisdiction, 

owner, and tenant alike, as it provides 

each clear evidence of when work is 

expected to occur. 

The Department is revising paragraph 

(b)(2)(i) because while it is true that a 

family may reside in the unit with a 

foster child, foster adult, or live-in aide, 

the family must still comply with all 

applicable occupancy requirements 

when living in HOME-assisted rental 

housing. The Department did not intend 

to preempt or override State or local 

occupancy laws or HUD’s own 

occupancy restrictions in other 

programs whose assistance may be 

combined with HOME assistance, such 

as Section 8 project-based rental 

assistance. The Department notes that 

any reasonable accommodations must 

still be made in accordance with all 

applicable laws regarding 

nondiscrimination and accessibility. In 

§ 92.253(b)(5), the owner is separately 

agreeing not to interfere with or retaliate 

against the tenant for asserting their 

rights, which include the right to 

request a reasonable accommodation for 

a live-in aide. In § 92.253(b)(8), the 

owner is also agreeing to operate HOME 

rental housing in accordance with all 

applicable nondiscrimination and equal 

opportunity requirements pursuant to 

§ 92.350. As a result, the Department 

does not believe that this revision will 

negatively impact tenant protections. 

This revision was made in response to 

public comments that requested HUD 

reexamine the tenant protections to 

determine that they did not conflict 

with State or local law or with other 

Federal programs. 

The Department is revising the term 

‘‘dwelling’’ to ‘‘housing’’ in 

§ 92.253(b)(2)(iii), (b)(2)(iii)(A), and 

(b)(2)(iii)(C). The Department is also 

revising § 92.253(b)(2)(iii)(C) in 

response to public comment urging 

HUD to require that owners provide 

tenants with written notice of the date, 

time, and purpose of the owner’s entry 

if the owner must enter the housing 

without advance notification when 

there is reasonable cause to believe that 

an emergency requiring entry to the unit 

exists. The commenter was supportive 

of this approach and believed it would 

be protective for the tenant. The 

Department agrees and believes this 

provision will improve communication 

between owners and tenants of HOMErental housing. 

In response to public comment, the 

Department is revising § 92.253(b)(3)(i) 

to require that owners provide tenants 

with written accessible notice of the 

specific grounds for proposed adverse 

actions by the owner against the tenant 

before taking such actions. The 


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Department had proposed to provide 

this as simply a notification 

requirement. One commenter 

recommended that instead, the 

Department revise the provision to make 

the adverse action itself contingent 

upon providing the tenant notice. The 

Department believes this is a sensible 

approach and that it may enable tenants 

to assert any rights or protections prior 

to the imposition of any charges or other 

adverse actions. In revising 

§ 92.253(b)(3)(i), the Department is also 

clarifying that the notification of the 

adverse action must be translated if 

required for the tenant to understand 

the notice. Tenants and owners have an 

existing landlord-tenant relationship 

and so it should not be overly 

burdensome to ensure that tenants are 

able to read the written notice in a 

language they can understand. Similar 

changes were made to § 92.253(c)(3)(i). 

The Department is also revising 

§ 92.253(b)(3)(ii) to more clearly state 

when tenants must be notified of 

changes in the ownership and 

management of the rental housing 

project. Paragraph § 92.253(b)(3)(ii)(A) 

will specify that an owner must notify 

tenants within 30 calendar days of the 

impending sale or foreclosure of a rental 

housing project. Paragraph 

§ 92.253(b)(3)(ii)(B) specifies that 

owners must notify tenants within five 

business days of a change in ownership. 

These requirements were both in the 

proposed rule. The Department added 

as a new requirement that owners not 

only notify tenants within five business 

days of any changes in ownership but 

also any changes in property 

management companies managing the 

property as § 92.253(b)(3)(ii)(C). This 

change, being made to was in response 

to public comments that believed that 

such notification should include 

property managers and not just owners. 

Property managers have significant 

involvement in the operation of the 

property and are agents or employees 

acting on behalf of HOME rental 

housing owners. When an owner 

obtains a different property management 

company, it can have significant 

impacts on the daily life of tenants. The 

Department believes it is important to 

keep tenants informed in advance of 

such impacts and that this improved 

communication may help both owners 

and tenants. Similar additions are made 

to § 92.253(c)(3)(ii). 

The Department is revising 

§ 92.253(b)(4)(v) to narrow the instances 

in which a tenant must pay an owner’s 

attorney fees or other legal costs as part 

of a court proceeding. In the proposed 

rule, the Department proposed language 

to allow payment of such costs if the 

tenant loses the court proceeding. In 

response to public comment stating that 

the Department should examine local 

and State laws to determine that the 

tenant protections in § 92.253 are not in 

conflict with such requirements, the 

Department determined that this 

provision may conflict with State or 

local laws that would not permit 

payment of attorney’s fees or other legal 

costs, even if the tenant were to lose the 

matter. Moreover, as courts hearing 

landlord-tenant disputes are making 

findings of fact and law based on the 

individual circumstances of each case, it 

should be up to those courts to 

determine whether tenants should pay 

these costs. Therefore, the revised 

requirement will state that a tenant is 

only required to pay the owner’s 

attorney fees or other legal costs if the 

tenant loses the court proceeding and 

the court orders the tenant to pay those 

costs. 

The Department is significantly 

revising § 92.253(b)(5) to address a 

number of comments received about the 

effectiveness of the provisions in 

protecting tenants. First, the heading for 

the section is being revised to explicitly 

include ‘‘unreasonable interference’’ to 

be clear that unreasonable interference 

with the tenant’s safety or peaceful 

enjoyment of their property is a subject 

of the provision and that the provision 

is not only prohibiting retaliation. 

Commenters reasonably believed that 

the section was only describing 

retaliation because the heading did not 

specify otherwise. Similarly, 

unreasonable interference is now being 

separately prohibited in 

§ 92.253(b)(5)(i). The terminology is also 

being revised from the proposed rule to 

remove the term ‘‘comfort’’ and instead 

state ‘‘tenant’s safety or peaceful 

enjoyment of a rental unit or the 

common areas of the rental housing 

project.’’ The Department recognizes 

that there is significant landlord-tenant 

case law on the term ‘‘peaceful 

enjoyment’’ and that it is a far more 

recognized term than ‘‘enjoyment.’’ The 

Department believes this change will 

improve the ability for courts to 

determine the meaning of the provision 

in relation to their jurisdictions and 

governing law. The revision to address 

common areas also reflects consistency 

with protections in § 92.253 that allow 

tenants reasonable access to and use of 

the common areas of the project (see 

§ 92.253(b)(2)(iv)). 

The Department then revised 

§ 92.253(b)(5)(ii) to prohibit an owner 

from retaliating against a tenant for 

taking any action allowable under the 

lease and applicable law. The rule 

provides a variety of actions that a 

tenant may take under a lease and the 

Department believes that retaliating 

against a tenant for using any of these 

protections is a breach of the lease and 

of the owner’s written agreement with 

the participating jurisdiction. Section 

92.253(b)(5)(iii) provides a list of actions 

that evidence unreasonable interference 

or retaliation against a tenant. The 

Department stresses that this language is 

providing examples and that it is not a 

limited list. The actions taken are the 

same actions that were prohibited in the 

proposed rule, but the list has been 

redesignated § 92.253(b)(5)(iii)(A)–(E), 

and § 92.253(b)(5)(iii)(B) has been 

revised to add a parenthetical to give an 

example of what it means to be 

increasing obligations of a tenant in a 

manner that is not in accordance with 

24 CFR part 92. The example given is 

of new or increased monetary 

obligations, such as the addition of new 

or increased fees. This is just an 

example of monetary obligations but 

nonmonetary obligations like new 

property rules could also be considered 

retaliatory acts under this regulation 

under the right circumstances. 

In response to public comments 

requesting that the Department specify 

the consequences of unreasonably 

interfering with a tenant’s safety or 

peaceful enjoyment or retaliating against 

a tenant for exercising a right under 

their lease or the law, the Department 

has added a new § 92.253(b)(5)(iv). This 

new provision explains that if an owner 

unreasonably interferes or retaliates 

against a tenant, then the owner is 

violating the lease, the HOME program 

requirements, and their written 

agreement with the participating 

jurisdiction. While the Department has 

no authority to require that a 

participating jurisdiction establish a 

grievance process, the participating 

jurisdiction is required to address any 

regulatory violations in accordance with 

the applicable provisions contained in 

§ 92.504(a) and (c). This applicability is 

made clearer by adding explicit cross 

references. 

The Department is also revising 

§ 92.253(b)(5)(ii) of the proposed rule, 

which is being revised and redesignated 

as § 92.253(b)(6). The new § 92.253(b)(6) 

has a revised header that explains that 

the section is describing the exercise of 

rights under tenancy. The revised first 

sentence explains that the tenant can 

exercise any right of tenancy or 

protection under their lease and other 

applicable Federal, State, or local tenant 

protections. Then the Department 

redesignated § 92.253(b)(5)(ii)(A)(C) as 

§ 92.253(b)(6)(i) through (iii) and revised 

§ 92.253(b)(6)(ii) to also allow for a 

tenant to report lease violations in 


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13 42 U.S.C. 12755(b) states: ‘‘An owner shall not 

terminate the tenancy or refuse to renew the lease 

of a tenant of rental housing assisted under this 

subchapter 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. Any termination or refusal 

to renew must be preceded by not less than 30 days 

by the owner’s service upon the tenant of a written 

notice specifying the grounds for the action. Such 

30-day waiting period is not required if the grounds 

for the termination or refusal to renew involve a 

direct threat to the safety of the tenants or 

employees of the housing, or an imminent and 

serious threat to the property (and the termination 

or refusal to renew is in accordance with the 

requirements of State or local law).’’ 

addition to requesting enforcement of 

the lease or any tenant protections. The 

Department believes that reporting such 

lease violations are inherent in 

requesting enforcement but believes that 

it is best to be explicit, given that the 

provision is also contained in the lease 

addendum. 

The Department redesignated the 

proposed § 92.253(b)(6) and (7) as 

§ 92.253(b)(7) and (8). In response to 

public comments, the Department also 

redesignated § 92.253(c) as 

§ 92.253(b)(9). The same provision will 

also be included in § 92.253(c)(9). This 

provision, which provides the 

requirements for security deposits, 

should be contained in the tenancy 

addenda and not contained in a 

standalone regulation. As explained 

earlier in this preamble, the Department 

has clear authority to specify the terms 

and conditions of the lease under 42 

U.S.C. 12755 and security deposits are 

a material term of the lease. Therefore, 

the Department is moving the security 

deposit provisions from a standalone 

section of the regulation and instead 

making the language a part of each 

HOME tenancy addendum. The 

Department is also revising 

§ 92.253(b)(9) to state that ‘‘Surety 

bonds, security deposit insurance, and 

instruments similar to surety bonds or 

security deposit insurance may not be 

used in lieu of or in addition to a 

security deposit.’’ This is a nonsubstantive clarification of the text. 

Similarly, one of the most important 

provisions of a lease concerns 

termination of tenancy. The Department 

understands how central these terms are 

to a lease and is also including 

termination of tenancy provisions in the 

lease addendum. Section 92.253(d)(1) of 

the proposed rule and all its contents 

are being redesignated as 

§ 92.523(b)(10)(i)–(v) and being revised. 

Section 92.253(b)(10)(i) is being 

revised from the proposed rule to clarify 

that good cause includes serious or 

repeated violation of the ‘‘material’’ 

terms and conditions of the lease. The 

Department adds the word ‘‘material’’ 

because good cause is a higher standard 

and minor lease violations, especially 

when easily curable or already cured, 

should not provide the basis for a 

termination of tenancy or refusal to 

renew tenancy in a HOME rental 

housing project. The Department still 

believes that serious or repeated 

violations of the material terms of the 

lease, such as nonpayment of rent or 

intentionally damaging the project, can 

form the basis of a termination of 

tenancy or refusal to renew. 

Section 92.253(b)(10)(i) is also being 

revised to add a provision that states 

that an owner is permitted to terminate 

the tenancy of any tenant or household 

member or refuse to renew the lease of 

a tenant of rental housing assisted with 

HOME funds if the owner is permitted 

to do so pursuant to the provisions 

contained in 24 CFR part 5, subpart I; 

24 CFR 882.511; or 24 CFR 982.310. 

This change is in response to public 

comments and to maintain consistency 

across HUD programs. Owners with 

tenants assisted under programs that are 

subject to these lease provisions must be 

allowed to terminate tenancy in 

accordance with the U.S. Housing Act of 

1937 (42 U.S.C. 1437f) and the 

Department is allowing for a consistent 

approach for termination of tenancy 

under the HOME program for those 

assisted tenants. 

Section 92.253(b)(10)(i)(A) is being 

revised from the proposed rule. The 

provision will state that refusal to 

purchase a HOME rental housing unit is 

not good cause to terminate a tenancy. 

The provision will provide an exception 

for when a family fails to purchase 

housing pursuant to a lease-purchase 

agreement. This was in response to 

public comment, which pointed out that 

owners must be able to sell units when 

the tenant fails to purchase the home in 

accordance with their lease-purchase 

agreement. The Department agrees and 

allows for this to be good cause to 

terminate a tenancy. 

Section 92.253(b)(10)(i)(B) is being 

restructured to specify other good cause 

and then list each ground individually. 

This was done to improve readability of 

this section. Two grounds for good 

cause were added and one was 

significantly revised. 

The first form of good cause being 

added to § 92.253(b)(10)(i)(B)(1) is when 

a tenant or household member is a 

direct threat to the safety of the tenants 

or employees of the housing or an 

imminent and serious threat to the 

property, which is a statutory ground 

that commenters requested be 

considered in the termination of 

tenancy or refusal to renew.13 The 

Department agrees that owners should 

be able to terminate tenancy for this 

reason and is adding this as a specific 

ground. The Department requires 

owners to maintain records to 

demonstrate that they complied with 

the tenant protections provisions, 

including records demonstrating there is 

a reasonable basis to determine that a 

person constituted a direct threat to 

safety of the tenants or employees of the 

housing or an imminent and serious 

threat to the property. This could 

include specific threats or acts that took 

place on the project site, against other 

families living in the project, or against 

any employees or staff of the owner. The 

Department believes that posing a direct 

threat to the safety of tenants or 

employees is a high bar and not satisfied 

easily. Similarly, forming the basis for 

an imminent and serious threat to the 

property is a higher bar than just 

describing past negligent acts alone, and 

brings with it an expectation that there 

is a specific or credible threat or act 

made by the tenant or household 

member against the property. 

The second form of good cause added 

to § 92.253(b)(10)(i)(B)(5) allows an 

owner to terminate a tenant’s tenancy 

terminated if the tenant fails to purchase 

the housing within the timeframes listed 

in the tenant’s lease-purchase 

agreement. The intent of a leasepurchase program is for the tenant to 

purchase the unit. If the unit cannot be 

purchased pursuant to the leasepurchase agreement within 36 months, 

then the owner must be able to sell the 

unit to an eligible homebuyer to 

effectuate the intent of the 

homeownership development project. 

The Department has revised 

§ 92.254(a)(7) to further enable owners 

to sell homeownership units that fail to 

be purchased pursuant to their leasepurchase agreement and though those 

changes are not interdependent with the 

tenant protections provisions contained 

in § 92.253, the Department is 

maintaining consistency between the 

requirements. 

One form of good cause was 

substantively revised since the proposed 

rule is contained in the newly 

redesignated § 92.253(b)(10)(i)(B)(2). 

This form of good cause was revised to 

state that other good cause includes 

when a tenant unreasonably refuses to 

provide the owner access to the unit to 

allow the owner to repair the unit. The 

provision originally contained language 

permitting termination of tenancy or 

refusal to renew tenancy if the tenant 

creates a documented nuisance under 

applicable State or local law. The 

comments received for that provision 

were decidedly negative and there were 

significant concerns that this provision 


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was not only inconsistent with the rest 

of the tenant protections but 

counterproductive to the overall tenant 

protection scheme by providing an 

often-used avenue for discrimination. 

The Department agrees with 

commenters and is removing the 

provision, thereby clarifying that 

owners may not justify termination of 

tenancy on outdated or discriminatory 

concepts of nuisance but instead must 

rely upon good cause. 

Section 92.253(d)(1)(i)(D) is being 

redesignated and revised as 

§ 92.253(b)(10)(i)(C). The provision is 

also being revised directly in response 

to public comment. The public was 

concerned that the meaning of a record 

of conviction of a crime that bears 

directly on the tenant’s continued 

tenancy was too vague to be an 

appropriate legal standard to apply to 

landlord-tenant relationships. The 

commenters believed that the 

Department should be more specific to 

ensure the regulation and protections 

are applied correctly. The Department 

agrees. Based on the public comment, 

the Department is revising the language 

to specify that the violations of 

applicable Federal, State, or local law 

must be for convictions of a crime that 

directly threatens the health, safety, or 

right to peaceful enjoyment of the 

premises by other tenants in the project. 

The Department continues to believe 

that termination of tenancy is a factspecific matter and that it is impossible 

to provide an exhaustive list of all the 

grounds or considerations that one must 

consider prior to termination. Criminal 

convictions may impact continued 

tenancy but only to the extent that such 

convictions interfere with the rights of 

others who live in the project. Minor 

violations of law that do not impact 

people living in the housing should not 

form the basis for terminating tenancy 

or refusing to renew a lease in the 

HOME program. 

Paragraph § 92.253(d)(1)(ii) is being 

redesignated as § 92.253(b)(10)(ii) and 

revised. The first and second sentence 

are revised to only provide 30 days’ 

notice prior to termination of tenancy or 

refusal to renew, and to specify that the 

30-day requirement does not apply to 

the statutory grounds for termination 

relating to tenants that are a direct threat 

to the safety of the tenants or employees 

of the housing or an imminent and 

serious threat to the property. The 

Department received overwhelmingly 

negative comments from the public on 

the negative effects of requiring a longer 

notice period before termination or 

refusal to renew. Some commenters 

explained the variation of eviction 

timeframes across the country. Others 

explained how adding an additional 30 

days to the notice period impacted the 

average eviction process and the average 

owner in their jurisdiction. 

Organizations that represented owners 

and affordable housing managers 

described how these changes negatively 

impact the financial feasibility of 

current and future HOME projects. 

There were commenters who supported 

the change, and most indicated that it 

would better assist tenants in curing or 

preventing termination of tenancy. The 

Department also considered what it had 

done in other programs and the effort to 

make a consistent 30 day notice 

standard. On the whole, when the 

Department considered the potential 

negative ramifications and how the 

extension to 60 days was inconsistent 

with other Departmental efforts, the 

Department decided to withdraw the 

proposal to extend the notice period to 

60 days and is revising the paragraph 

accordingly. Paragraphs 

§ 92.253(d)(1)(iii) through (v) are 

redesignated as § 92.253(b)(10)(iii) 

through (v). Paragraph § 92.253(d)(1)(v) 

is also being revised to specify that an 

owner may not create a hostile living 

environment or refuse to provide a 

reasonable accommodation to cause a 

tenant to terminate their tenancy. The 

proposed rule had initially just stated 

that the owner cannot refuse to make a 

reasonable accommodation, but changes 

are now being made to cover situations 

where an owner refuses to permit a 

lawful reasonable accommodation with 

the intent of constructively evicting a 

person. 

A new paragraph (c) is being added to 

§ 92.253. This section will provide the 

tenancy addendum requirements for the 

HOME tenant-based rental assistance 

program. The opening paragraph 

mirrors the opening paragraph for 

§ 92.253(b) and specifies that the terms 

of the HOME tenant-based rental 

assistance tenancy addendum shall 

prevail over any conflicting provisions 

of the lease. The terms and conditions 

of the written lease, the HOME tenantbased rental assistance tenancy 

addendum, the VAWA addendum listed 

in § 92.253(a), and any addendum 

required by another Federal, State, or 

local affordable housing program are the 

sole and entire agreement between the 

owner and the tenant and no prior or 

contemporaneous oral or written 

representation or agreement between the 

owner or tenant shall have legal effect. 

This is the same as the new rental 

housing requirements and provides 

sufficient protections to ensure that the 

owner does not later claim that the 

tenant agreed to something that would 

be prohibited under the tenant 

protections or applicable law. Paragraph 

§ 92.253(c) also states that the HOME 

tenant-based rental assistance tenancy 

addendum shall terminate upon 

termination of the rental assistance 

contract. Initially, the Department had 

proposed that the lease terminate upon 

termination of the rental assistance 

contract but determined that it was best 

left to the owner and tenant as to when 

the lease shall terminate. Instead, the 

tenancy addendum shall terminate, as 

the tenant is no longer being assisted 

with HOME tenant-based rental 

assistance. Then the paragraph provides 

the same list of tenant protections 

contained in the HOME rental housing 

tenancy addendum paragraph (b) except 

for: 

1. The provision in § 92.253(b)(1)(iii) 

which requires an owner to repair a lifethreatening deficiency impacting the 

tenant, and requires, if the repairs 

cannot be completed on the day the lifethreatening deficiency is identified, the 

owner to promptly relocate the tenant 

into housing that is decent, safe, 

sanitary, and in good repair and that 

provides the same or a greater level of 

accessibility, or other physically 

suitable lodging, at no additional cost to 

the tenant, until the repairs are 

completed. The Department recognizes 

that this type of provision may have a 

chilling effect on owner participation in 

the tenant-based rental assistance 

program and is removing the 

requirement. If participating 

jurisdictions wish to provide this 

requirement as part of the rental 

assistance contract, then they still retain 

discretion to do so. 

2. Section 92.253(b)(2)(v) allowing 

tenants to organize, create tenant 

associations, convene meetings, 

distribute literature, and post 

information. This provision may have a 

chilling effect on owners and may deter 

participation in the tenant-based rental 

assistance program. Though the 

Department believes that tenants should 

have the right to organize tenant 

associations, rental assistance provided 

through HOME tenant-based rental 

assistance is not of the same durable 

nature as development subsidies 

provided to owners and developers 

producing HOME rental housing. 

Requiring that owners allow organizing 

activities when the participating 

jurisdiction has far fewer incentives to 

encourage owners to comply 

disadvantages tenants and participating 

jurisdictions who are already 

contending with source of income 

discrimination in many jurisdictions. 

3. Paragraph § 92.253(c)(9)(iii) will 

permit tenants that are already in a lease 


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before they enter into a rental assistance 

contract to have fulfilled the security 

deposit requirements of paragraph 

§ 92.253(c)(9) even if the family used an 

instrument prohibited under paragraph 

(c)(9)(i). This was due to comment that 

rightly explained that tenants under a 

lease may have already used surety 

bonds, security deposit insurance, or 

instruments similar to surety bonds and 

security deposit insurance before they 

ever received HOME tenant-based rental 

assistance. While the Department does 

not encourage the use of these 

instruments and has determined that 

they are neither legally security deposits 

nor is their use advantageous to either 

owners or tenants, the Department does 

not want to penalize tenants or place 

obstacles in the way of tenants 

attempting to use tenant-based rental 

assistance. 

Other than the above-described 

protections, § 92.253(c)(1)–(9) is 

substantively the same as 

§ 92.253(b)(1)–(9). The Department 

believes that this is appropriate. 

Recipients of tenant-based rental 

assistance should have substantively the 

same protections as tenants in HOMEassisted rental housing. 

The Department did want to highlight 

that for the retaliation provision 

contained in § 92.253(c)(5)(iv), the 

Department understands that 

participating jurisdictions may have 

limited leverage to require that owners 

unreasonably interfering with or 

retaliating against individuals with 

HOME tenant-based rental assistance 

stop their actions. The participating 

jurisdiction must use their best 

judgment about how to address such 

circumstances, including balancing the 

needs of the tenant to the continued 

tenant-based rental assistance and the 

participating jurisdiction’s obligation to 

enforce compliance with the owner’s 

rental assistance contract with the 

participating jurisdiction. However, the 

Department is declining to remove this 

protection, as it is a meaningful and 

necessary tenant protection for all the 

reasons given in the proposed rule. 

The termination of tenancy provisions 

that were contained in paragraph 

§ 92.253(d)(2) are being revised and 

redesignated from the proposed rule to 

be included in § 92.253(c)(10). First, just 

as in the HOME rental housing 

termination provisions in 

§ 92.253(b)(10)(i), the tenant-based 

rental assistance provisions are being 

included in a new paragraph 

§ 92.253(c)(10)(i) that states that an 

owner may not terminate the tenancy of 

any tenant or household member or 

refuse to renew the lease of a tenant 

with tenant-based rental assistance, 

except for serious or repeated violation 

of the material terms and conditions of 

the lease; for violation of applicable 

Federal, State, or local law; for 

completion of the tenancy period for 

transitional housing or failure to follow 

any required transitional housing 

supportive services plan; or for other 

good cause. This mirrors the HOME 

rental housing section but does not 

include the additional specific grounds 

that allows owners to terminate the 

tenancy of any tenant or household 

member or refuse to renew the lease of 

a tenant of rental housing assisted with 

HOME funds if the owner is permitted 

to do so pursuant to the provisions 

contained in 24 CFR part 5, subpart I; 

24 CFR 882.511; or 24 CFR 982.310. 

This is because the Department has 

determined that this is not applicable to 

the recipients of HOME tenant-based 

rental assistance, who would not be 

living in units receiving subsidy or 

assistance under the Section 8 program. 

Similar to § 92.253(b)(10)(i)(A), 

§ 92.253(c)(10)(i)(A) also states that an 

increase in the tenant’s income or 

assets, the amount or type of income or 

assets the tenant possesses does not 

constitute good cause. The section also 

states that except in the case of a leasepurchase agreement, other good cause 

also does not include refusal of the 

tenant to purchase the housing. These 

protections are substantively the same 

as the HOME rental housing protections. 

The provisions on good cause in 

§ 92.253(c)(10)(i)(B) differ from the 

proposed rule in several respects. 

Section 92.253(d)(2)(i)(A) and (B) of the 

proposed rule are being redesignated as 

§ 92.253(c)(10)(i)(B)(2) and (3). Section 

92.253(c)(10)(i)(B)(1) is added and is 

substantively the same as the statutory 

grounds for termination of tenancy and 

refusal to renew that were added to 

§ 92.253(b)(10)(i)(B)(1). If a tenant or 

household member constitutes a direct 

threat to the safety of tenants or 

employees of the housing or an 

imminent and serious threat to the 

property, an owner must have the 

ability to terminate the tenancy or refuse 

to renew the lease. For the reasons given 

earlier in this preamble, this is a high 

standard to meet, and the owner must 

be able to document how they arrived 

at this determination. Section 

92.253(d)(2)(i)(C) is being revised and 

redesignated as § 92.253(c)(10)(i)(B)(4). 

The sentence shall now only describe 

when a tenant unreasonably refuses to 

provide an owner with access to repair 

the unit. Section 92.253(d)(2)(i)(D) of 

the proposed rule is being redesignated 

as § 92.253(c)(10)(i)(B)(5). Section 

92.253(d)(2)(i)(E) of the proposed rule, 

which provided the termination of the 

rental assistance contract as grounds for 

termination of the tenant lease is being 

removed. The Department received 

negative comments on this provision 

and recognizes that this is a decision 

best left to the owner and the tenant. 

After the rental assistance contract 

expires, the tenancy addendum will also 

terminate. The owner may continue to 

lease the unit to the tenant under the 

terms of the tenant lease. Section 

92.253(d)(2)(i)(F) introductory text and 

(d)(2)(i)(F)(1) of the proposed rule are 

being combined and redesignated as 

§ 92.253(c)(10)(i)(B)(6). Section 

92.253(d)(2)(i)(F)(2) is likewise being 

revised for readability and redesignated 

as § 92.253(c)(10)(i)(B)(7). 

The Department added a new ground 

for good cause in response to public 

comment. Section 92.253(c)(10)(i)(B)(8) 

states that if a tenant fails to purchase 

a housing unit within the timeframes of 

a tenant’s lease purchase agreement, 

then this shall be good cause to 

terminate the tenancy. Commenters 

requested that this be a ground for 

termination because otherwise, the 

owner would be required to continue to 

rent to the family, even though the 

family would be in breach of their lease 

purchase agreement. This would 

disadvantage owners who wished to sell 

the homeownership units after a tenant 

fails to purchase the housing and would 

disincentivize lease-purchases. 

Section 92.253(d)(2)(ii) is being 

redesignated as § 92.253(c)(10)(ii) and 

revised to remove the 5-business day 

requirement for the owner to notify the 

participating jurisdiction that it has 

served a notice to vacate to a tenant. 

This is because the new tenant-based 

rental assistance rental assistance 

requirements require the owner and 

participating jurisdiction to have a 

rental assistance contract (see 

§ 92.209(e)). Therefore, instead of 

requiring a time period in the 

regulation, the regulation will defer to 

the rental assistance contract or the 

participating jurisdiction’s policies and 

procedures to govern the issuance of 

notice to the participating jurisdiction. 

The citation in the last sentence was 

also revised because of the 

redesignation of the paragraph. 

Paragraphs § 92.253(d)(2)(iii) and (iv) 

are being redesignated as 

§ 92.253(c)(10)(iii) and (iv) without 

change. Paragraph § 92.253(d) is being 

added to add security deposit assistance 

tenancy addendum requirements. The 

addendum shall prevail over conflicting 

terms of the lease. The terms and 

conditions of the written lease, the 

HOME security deposit assistance 

tenancy addendum, and any addendum 

required by another Federal, State, or 


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764 Federal Register / Vol. 90, No. 3 / Monday, January 6, 2025 / Rules and Regulations 

14See 24 CFR 92.2 project completion. 

local affordable housing program shall 

constitute and contain the sole and 

entire agreement between the owner and 

the tenant. The security deposit 

assistance tenancy addendum shall 

prohibit the prohibited lease terms that 

are currently contained in 

§ 92.253(b)(1)–(9), except that 

§ 92.253(d)(8) shall be revised to state 

that a tenant is only obligated to pay 

costs if the tenant loses and the court so 

orders, consistent with the revisions 

made in § 92.253(b)(4)(v) and 

§ 92.253(c)(4)(v). 

Paragraph § 92.253(e)(4) is being 

revised to specify that participating 

jurisdictions must not exclude an 

applicant with Federal, State, or local 

tenant-based rental assistance. The 

proposed rule did not prohibit 

discriminating against a person because 

they were receiving local rental 

assistance, just State and Federal tenantbased rental assistance. In response to 

comment and consistent with HUD’s 

position that source of income 

discrimination must end, the 

Department is adding this prohibition to 

the tenant selection regulations. 

Paragraph § 92.253(e)(5) is being 

revised to remove the requirement that 

HUD approve alternative waiting list 

procedures for small-scale housing 

projects. The Department believes that 

this is best left to participating 

jurisdictions. The Department reminds 

participating jurisdictions and owners 

that all Federal, State, and local 

nondiscrimination requirements, 

including the Violence Against Women 

Act (VAWA), continue to apply to 

tenant selection, and any approved 

waiting list procedures must comply 

with all applicable requirements. 

Paragraph § 92.253(f) is being revised 

to require that the notification of an 

environmental, health, or safety hazard 

be in writing. The paragraph is also 

being revised to require that when an 

owner becomes aware of such hazards, 

the owner must notify both the 

participating jurisdiction and the 

tenants instead of just the tenants. This 

was requested by commenters and will 

allow tenants to find out as quickly as 

possible if a hazard is affecting their 

unit or project. The paragraph is also 

being revised to add a sentence to 

explain that when an owner or 

participating jurisdiction has notified 

the tenants, this satisfies the 

requirement for the other party. 

24 CFR 92.254 Qualification as 

Affordable Housing: Homeownership 

A. Allowing Over-Income In-Place 

Tenants To Purchase Their Homes 

The Department has determined that 

the Secretary may permit the period of 

affordability for a project to be 

terminated earlier than the time periods 

specified in § 92.252 under the 

circumstances described in detail 

below. The Department is revising 

§ 92.254, which currently prohibits 

over-income in-place tenants from 

purchasing their units. This is in 

response to public comment requesting 

that in-place HOME tenants who are no 

longer income eligible be permitted to 

purchase their housing units, including 

when former tax credit projects are 

converting to homeownership housing 

units. 

It is consistent with the statutory 

language of the Act, as well as the 

purposes of the Act, to allow in-place 

HOME tenants who have saved up for 

a downpayment to use that 

downpayment to purchase the unit that 

they are currently occupying. 

Developing stable homeownership 

models where tenants can live in a 

housing unit, work towards increasing 

their income from very-low income to 

moderate-income, and eventually 

purchase their unit is not only 

consistent with the intent of the drafter 

of the Act but in furtherance of it. As 

such, the Department is revising 

§ 92.254(a)(3) to add a sentence s 

allowing HOME-assisted housing to be 

purchased by an in-place tenant 

pursuant to § 92.255 if the homebuyer’s 

family was low-income at the time the 

homebuyer’s family began occupying 

the HOME rental housing unit. This is 

similar to how families that entered into 

lease-purchase agreements may 

purchase their housing so long as they 

were income-eligible when they entered 

into their lease-purchase agreement. The 

Department believes this is in 

furtherance of the purposes of the Act 

and will increase homeownership 

opportunities for HOME-assisted 

tenants. 

B. Meeting Property Standards PostAcquisition 

The Department is revising 

§ 92.254(a)(3) to provide clearer 

language that explicitly authorizes a 

participating jurisdiction to assist a 

family even if the homeownership unit 

does not meet the property standards at 

acquisition, provided that the written 

agreement between the participating 

jurisdiction and the homebuyer requires 

the property to meet the standards 

within the period specified in 

§ 92.251(c)(3)(ii) and funding is secured 

to complete the rehabilitation necessary 

to comply with the standards. This 

ensures consistency between the 

requirements in § 92.251(c)(3) and 

§ 92.254. 

C. Change in Start of Period of 

Affordability 

The Department revised § 92.254(a)(4) 

in response to public comments. 

Commenters had objected to beginning 

the period of affordability upon project 

completion. For homeownership 

projects, project completion means that 

all necessary title transfer requirements 

and construction work have been 

performed; the project complies with 

the requirements of this part (including 

the property standards under § 92.251); 

the final drawdown of HOME funds has 

been disbursed for the project; and the 

project completion information has been 

entered into the disbursement and 

information system established by 

HUD.14

The Department understands that 

requiring that a homebuyer’s resale or 

recapture period only begin to run after 

the participating jurisdiction completes 

all the information in the disbursement 

and information system can 

disadvantage homebuyers, especially for 

multiple address projects where 

completion of the information in the 

disbursement and information system 

can only occur after all housing units in 

the project meet the requirements in 24 

CFR part 92. The Department is 

changing the provision to instead 

require the period of affordability begin 

after execution of the instrument that 

requires recapture of the HOME 

investment or recordation of the resale 

restrictions against the property. The 

Department is further conditioning the 

execution of the instrument that 

requires recapture of the HOME 

investment or recordation of the resale 

restrictions against the property upon 

both meeting the property standards in 

§ 92.251(c)(3) and the transfer of the 

property title to the homebuyer. The 

Department believes these are 

reasonable restrictions because the 

property must meet the property 

standards at the time of purchase, or 

within 6 months after purchase, if 

permitted by the participating 

jurisdiction (with the ability to extend 

up to 12 months after purchase). If the 

property does not meet the standards 

within the required time period under 

§ 92.251(c)(3), then the participating 

jurisdiction would have to repay the 

investment, and the housing would not 

be a HOME-assisted homeownership 


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15See U.S. Developmental Index; Not Seasonally 

Adjusted, which is an excel sheet within the 

Federal Housing Finance Agency Housing Price 

Index Datasets: https://www.fhfa.gov/data/hpi/ 

datasets?tab=additional-data. 

16By one measure, the Consumer Price Index, the 

dollar has increased by over 200% since the 

establishment of the dollar thresholds used to 

determine the period of affordability for the HOME 

program. See the CPI Inflation Calculator at https:// 

data.bls.gov/cgi-bin/cpicalc.pl?cost1=1%2C000%

2C000.00&year1=199201&year2=202310. 

17See 42 U.S.C. 12722(1) and (7). 

18See 24 CFR 92.254(a)(3). 

19See 42 U.S.C. 12745(b)(1)(B). 

unit (and thus should not have resale or 

recapture provisions applied to it). 

D. Change in Period of Affordability for 

Homeownership 

The Department revised the threshold 

for the periods of affordability in the 

table § 92.254(a)(4) consistent with the 

periods of affordability in § 92.252(d)(4). 

When the homeownership assistance 

provided on a per-unit basis is under 

$25,000, the period of affordability shall 

be for a minimum of 5 years. When the 

homeownership assistance is $25,000 to 

$50,000, then the minimum period of 

affordability shall be 10 years. If the 

amount of homeownership assistance is 

above $50,000, the minimum period of 

affordability shall be 15 years. 

The Department believes that it is 

important to increase the thresholds for 

the periods of affordability for the 

reasons given earlier. The Department 

considered that since 1990, the House 

Price Index has increased by over 

300%.15 The need for HOME 

homeownership assistance outpaced 

inflation, as measured by the Consumer 

Price Index, and has been a driver in 

increasing the amount of HOME 

homeownership assistance that is 

provided per family assisted over the 

course of the HOME program’s history. 

However, given that the appropriations 

for the HOME program have decreased 

by over 50% in inflation-adjusted 

dollars since the 1992 HOME 

appropriation of $1,500,000,000,16 and 

the need to maintain affordable 

homeownership units in accordance 

with the purposes of the Act,17 the 

Department adjusted the thresholds to 

be consistent with the revisions made in 

§ 92.252. 

E. Edit for Consistency in 92.504 

Consistent with § 92.504, the 

Department is revising the first sentence 

of § 92.254(a)(5)(ii)(A) to state that 

recapture provisions must ‘‘require’’ 

that the PJ recoups all or a portion of the 

HOME assistance to the homebuyers if 

the housing does not continue to be the 

principal residence of the family for the 

duration of the period of affordability. 

The Department states this as a 

requirement in other parts of the rule 

and is clarifying the provision here for 

consistency. A similar revision is made 

in § 92.254(g)(3). 

F. Revising Lease-Purchase Provisions 

of 24 CFR 92.254(a)(7) 

The Department considered a variety 

of comments on its revisions to leasepurchase regulations in § 92.254(a)(7). 

After careful consideration of the 

challenges owners encounter when the 

family fails to purchase the property 

pursuant to the lease-purchase 

agreement, the Department is 

substantially revising § 92.254(a)(7). The 

Department is revising the introductory 

sentence of the provision to explain that 

acquisition, rehabilitation or new 

construction of housing to be sold to 

eligible low-income homebuyers for 

lease-purchase is allowable. 

The next provision § 92.254(a)(7)(i) 

explains the statutory requirement of 42 

U.S.C. 12745(b)(2)(B) that a homebuyer 

must qualify as a low-income family at 

the time the lease-purchase agreement is 

signed. The regulation is being revised 

to provide standalone requirements for 

lease-purchases within the section. As a 

result, HUD revised the regulation to 

clarify that the current regulation’s 

requirements that income 

determinations be made based on the 

income of all people living in the 

homeownership unit are applicable to 

lease-purchases.18 The Department is 

also clarifying in § 92.254(a)(7)(i) that if 

a family is also receiving HOME tenantbased rental assistance, the PJ is not 

required to reexamine the family’s 

income during the term of the leasepurchase agreement. The Department 

has received comments that it should 

reduce income examination when it is 

not necessary, and that the Department 

should move to triennial income 

examination. While the Department 

declined to move to such an income 

cycle for the reasons given in the 

preamble to § 92.209 and in the 

applicable responses to public 

comment, the Department realized that 

HOME lease-purchase programs are 

different. The Act clearly states that a 

family’s income is to be determined at 

the signing of the HOME lease-purchase 

agreement 19 and does not require that 

income be reexamined prior to the 

purchase. When a PJ pairs their tenantbased rental assistance with a HOMEassisted lease-purchase program, the 

aim is to allow the family to accumulate 

money for a downpayment and to better 

position themselves for sustainable 

homeownership when they acquire the 

housing. By eliminating the requirement 

that the family’s income be reexamined 

during the term of the lease-purchase 

agreement, the requirement is more 

consistent with the Act, the rule better 

enables families to save up for the 

purchase of the home, and it provides 

burden relief to PJs that would 

otherwise be required to reexamine the 

tenant’s income after 24 months from 

the date of execution of the rental 

assistance contract. 

Paragraph § 92.254(a)(7)(ii) explains 

that the owner and homebuyer must 

execute a lease-purchase agreement 

prior to the family occupying the unit 

and that the lease-purchase program 

must require the family to purchase the 

housing within 36 months of the 

execution of the lease-purchase 

agreement. The provision also retains 

language from the proposed rule 

explaining that owners and homebuyers 

that have entered into a lease-purchase 

agreement are subject to the 

affordability requirements in the 

homeownership section unless the 

housing is not purchased within the 

timeframes described in § 92.254(a)(7) 

in accordance with the lease-purchase 

agreement. 

The Department is adding 

§ 92.254(a)(7)(iii) in response to public 

comments that requested that owners be 

able to sell units to an eligible 

homebuyer if the family that entered 

into the lease-purchase agreement fails 

to purchase the housing pursuant to the 

agreement. The new § 92.254(a)(7)(iii) 

provides that if the first homebuyer does 

not acquire the housing, then the owner 

may sell the housing to an eligible lowincome homebuyer within 48 months of 

execution of the lease-purchase 

agreement. This provides owners 12 

months from the expiration of a 36- 

month lease-purchase agreement to find 

another eligible low-income homebuyer 

and sell the homeownership unit. The 

regulation also permits the PJ to provide 

homeownership assistance to the next 

homebuyer identified for the unit but 

prohibits the owner from entering into 

another lease-purchase agreement for 

the housing. 

The Department has concluded that 

owners should have another chance to 

sell the unit as a homeownership unit 

instead of being required to operate the 

housing as rental housing if the leasepurchase agreement fails to end in the 

sale of the housing. However, since the 

lease-purchase did not succeed the first 

time, the Department is prohibiting 

owners from using the lease-purchase 

model on a second attempt to sell the 

housing. The owner must default to the 

rules that apply in a typical 

homeownership development project. 


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Section 92.254(a)(7)(iv) has been 

amended accordingly to provide owners 

with additional time to sell the housing 

once it has failed to be sold through a 

lease-purchase agreement by allowing 

owners 48 months to complete the sale 

and transfer the title to an eligible lowincome homebuyer (i.e., 36 months for 

lease-purchase under a lease-purchase 

agreement and 12 months to sell the 

housing from the expiration of the 36- 

month lease-purchase agreement). This 

change to allow 12 months to sell the 

housing from the expiration of the 36- 

month lease-purchase agreement is 

consistent with the Department’s 

extension of the period in which an 

owner may sell homeownership housing 

from 9 months to 12 months (see 

§ 92.254(a)(3)). 

The Department inadvertently 

omitted paragraph (a)(8) in the 

publication of the proposed rule. It was 

not the Department’s intent to delete 

paragraph (a)(8), and the Department 

noted some confusion over the use of 

this provision in the public comments. 

In the final rule, the Department is 

retaining the language from 

§ 92.254(a)(8) from the current rule 

without change. 

In response to public comment 

explaining that it is very difficult to 

purchase housing with a right of first 

refusal, bring the property into 

compliance with the PJ’s property 

standards, and resell it to an eligible 

homebuyer within 6 months, the 

Department is revising § 92.254(b)(1)(i) 

and § 92.254(b)(3)(ii) to allow PJs and 

CLTs with up to 12 months to sell the 

housing to the next eligible low-income 

homebuyer. 

G. Preserving Affordability of HOME 

Projects 

The Department is adding an 

additional clarifying sentence to 

§ 92.254(b)(2)(v) to explain that while 

sales proceeds can be used to reimburse 

up to one-hundred percent of the 

administrative funds used by a PJ to 

preserve the affordability, any sales 

proceeds exceeding that amount shall be 

program income for the PJ. 

H. Assisting Homebuyers in Projects 

Developed by Community Land Trusts 

In response to public comments 

requesting that CLTs or PJs be allowed 

to assist homebuyers when a CLT 

exercises a right of first refusal or 

preemptive purchase rights in 

accordance with § 92.254(b)(3), the 

Department is revising § 92.254(b)(3)(iv) 

to explicitly permit the PJ to provide 

homeownership assistance to the next 

eligible homebuyer. PJ always has the 

flexibility to assist a homebuyer through 

a homeownership assistance program, 

regardless of whether the unit the 

homebuyer wishes to purchase was 

originally purchased by another HOMEassisted homebuyer. Since the 

Department is revising § 92.254(b)(3)(iv) 

to explicitly permit PJs to assist the next 

homebuyer, the Department is also 

clarifying both § 92.254(b)(3)(iii) and 

(iv) to state that if a homebuyer is 

provided assistance by the PJ, the period 

of affordability shall be calculated in 

accordance with § 92.254(b)(1)(iii) and 

§ 92.254(b)(1)(iv), and if no additional 

assistance is provided to the 

homebuyer, then the period of 

affordability shall be equal to remaining 

period of affordability on the property. 

However, the Department does not 

believe the statute permits the PJ to 

award HOME funds to the CLT to 

provide homeownership assistance to 

the next eligible homebuyer. The statute 

specifically states that when HOME 

‘‘funds provided in prior and 

subsequent appropriations acts that 

were or are used by community land 

trusts for the development of affordable 

homeownership housing pursuant to 

section 215(b) of such Act,’’ then the 

community land trusts could retain the 

right to purchase the housing without 

violating the period of affordability 

requirements contained in section 

215(b)(3)(A). This type of relief was to 

allow for a unit to temporarily cease to 

be used as affordable housing, as long as 

the housing was rededicated to that 

purpose shortly thereafter. It did not 

establish a new eligible activity or new 

eligible costs but gave CLTs the ability 

to exercise their purchase rights without 

violating the affordability requirements 

and triggering repayment of the HOME 

investment by the PJ. As such, the 

Department is revising the regulation to 

allow the PJ to assist the next eligible 

homebuyer. 

24 CFR 92.255 Purchase of HOME 

Units by In-Place Tenants 

The Department received public 

comments requesting that in-place 

HOME tenants who are no longer 

income eligible still be permitted to 

purchase their housing units. While 

regulations currently do not permit 

over-income in-place tenants to 

purchase their units, the Department 

has determined that the Secretary may 

permit the period of affordability for a 

project to be terminated earlier under 

certain circumstances. See 42 U.S.C. 

12742(a)(1)(E) (noting that rental 

housing qualifies as affordable housing 

under this subchapter only if the 

housing will remain affordable, 

according to binding commitments 

satisfactory to the Secretary, for the 

remaining useful life of the property). 

The Department believes that it is 

consistent with the purposes of the Act 

to allow in-place HOME tenants who 

have saved up for a downpayment to 

use that downpayment to purchase the 

unit that they are currently occupying. 

Developing stable homeownership 

models where tenants can live in a 

housing unit, work towards increasing 

their income from very-low income to 

moderate-income, and eventually 

purchase their unit is not only 

consistent with the intent of the Act but 

in furtherance of it. 

As such, the Department is revising 

§ 92.255(b) to state that if the tenant’s 

family is no longer low-income at the 

time of the purchase, then the family 

may still purchase the home. The 

provision is also being revised to state 

that the family must occupy the housing 

as their principal residence in 

accordance with § 92.254(a)(3) and must 

agree to the imposition of resale 

restrictions on the housing, in 

accordance with § 92.254(a)(5), for the 

remaining period of affordability of the 

housing unit. By adding these 

requirements, it ensures that the intent 

of the Act is fulfilled because the family, 

which began their participation in the 

HOME program as low- or very lowincome, must own and occupy the 

housing for the full period of 

affordability or be subject to the very 

same resale restrictions that all other 

income-eligible families must comply 

with in the event that the family sells or 

transfers the property within the 

housing’s original period of 

affordability. 

Paragraph § 92.255(c) is similarly 

revised to explain that though an inplace HOME tenant may purchase their 

unit even if the tenant’s family is no 

longer low-income, additional HOME 

funds cannot be provided to assist that 

family because the family is not income 

eligible for homeownership assistance. 

24 CFR 92.300 Set-Aside for 

Community Housing Development 

Organizations (CHDOs) 

In the proposed rule, HUD proposed 

to revise the text of § 92.300. The 

Department is making further revisions 

to § 92.300(a)(2) to clarify that rental 

housing owned by a CHDO is rental 

housing if it is ‘‘leased’’ to low-income 

tenants. The Department had 

inadvertently removed necessary words 

from the provision in the proposed rule 

and is clarifying text. HUD also 

determined that it is necessary to further 

revise the text of § 92.300(a)(2) and (3) 

in order to clarify when a community 

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considered to be an owner of rental 

housing. The Department is clarifying 

that if a community housing 

development organization has site 

control of a project through a long-term 

ground lease, such lease must run for 

the full period of affordability in 

§ 92.252. If an owner does not have site 

control for the entire period of 

affordability, then they do not really 

own the housing for the full period of 

affordability and cannot enforce 24 CFR 

part 92 requirements in accordance with 

this section. Accordingly, § 92.300(a)(2) 

and (3) are being revised to more clearly 

explain the ground lease requirements 

that must be met for a community 

housing development organization to be 

considered an owner of rental housing. 

In response to public comments, HUD 

is also making additional changes to 

§ 92.300(a)(3). HUD received public 

comments requesting that 92.300(a)(3) 

more clearly describe how a community 

housing development organization is 

intended to be in charge of the 

development process when it acts as a 

‘‘developer’’ under that provision. The 

Department is adding a clarifying 

sentence that explains that the 

requirement that a CHDO be in charge 

of all aspects of the development must 

be evidenced by an enforceable written 

agreement between the CHDO and the 

other entities sharing responsibility in 

the development of the housing. The 

Department also provided examples of 

different types of written agreements 

that may meet the requirements, 

including joint venture agreements and 

master development agreements. 

Additionally, multiple commenters 

questioned whether the Department’s 

removal of the requirement that rental 

housing developed by a CHDO be 

owned by the CHDO during 

development and for the full period of 

the affordability would allow a loophole 

for CHDOs to sell CHDO developed 

units to for-profit organizations. The 

Department recognized that this 

provision could inadvertently be used 

for that purpose. As a result, the 

Department revised § 92.300(a)(3) to 

require that the housing be owned by a 

CHDO unless the PJ documents that that 

the CHDO no longer has the capacity to 

own and manage the housing for the full 

period of affordability and there are no 

other CHDOs with capacity to own and 

manage the project for the full period of 

affordability. If the PJ authorizes the 

transfer of the housing, then it may only 

be sold to a nonprofit. By requiring that 

the PJ attempt to find another CHDO to 

own the housing unless the PJ cannot 

identify a CHDO that is capable of 

owning and managing the housing in 

accordance with the requirements of 

part 92 for the full period of 

affordability, the regulation is more 

consistent with the purposes of the Act 

and the intent of the CHDO set-aside. It 

also provides adequate safeguards to 

ensure that the CHDO set-aside is not 

being used for the enrichment of private 

for-profit businesses. 

The Department is withdrawing its 

proposed language for the first sentence 

of § 92.300(a)(4)(i), which would have 

barred wholly-owned for-profit CHDO 

subsidiaries from being considered a 

CHDO or valid CHDO subsidiary for 

purposes of meeting the CHDO project 

set-aside requirements. The Department 

recognizes that this is a model that 

CHDOs may be using and does not wish 

to reduce the ways CHDOs can 

participate in HOME projects. 

Commenters welcomed changing the 

term ‘‘downpayment assistance’’ to 

‘‘homeownership assistance’’ in 

§ 92.300(a)(6)(i) and elsewhere. Many 

commenters noted that the new term is 

broader and could include assistance for 

closing costs and mortgage rate buydowns. The Department believes that it 

in addition to changing the term 

‘‘downpayment assistance’’ to 

‘‘homeownership assistance,’’ it will 

also be helpful to revise § 92.300(a)(6)(i) 

to provide additional examples of the 

kinds of homeownership assistance that 

CHDOs can provide. 

24 CFR 92.353 Displacement, 

Relocation, and Acquisition 

The Department is revising the 

reference to § 92.253(d) in 

§ 92.353(c)(2)(ii)(A) to remove the 

pinpoint citation, as the termination of 

tenancy provisions are now contained 

in § 92.253(b)(10) and § 92.253(c)(10). 

24 CFR 92.356 Conflict of Interest 

HUD is clarifying language in 

§ 92.356(d)(1). The Department 

recognizes that there may be some 

confusion over what constitutes a 

‘‘combination’’ of conflict of interest 

disclosure methods provided in the 

proposed rule. The Department is 

clarifying in the final rule that a 

disclosure of a conflict of interest is a 

combination of ‘‘at least two’’ of the 

communication methods provided in 

paragraph (d)(1). 

24 CFR 92.504 Participating 

Jurisdiction Responsibilities; Written 

Agreements 

The Department made revisions to 

§ 92.504(c)(1)(v) and § 92.504(c)(2)(xii) 

to revise the written agreement 

requirements to require that for projects 

involving rental housing, tenant-based 

rental assistance, or security deposit 

assistance, the written agreement 

between the PJ and the State Recipient 

or Subrecipient, as applicable, must 

require that the HOME tenancy 

addendum that applies to the type of 

project is used for all HOME-assisted 

units or tenants. The Department is also 

making technical revisions to 

§ 92.504(c)(3)(ii)(A) to revise the first 

sentence to read in the singular instead 

of the plural. This was done to be 

consistent with the rest of the 

surrounding provisions. 

The Department is revising 

§ 92.504(c)(3)(i) to add the requirement 

contained in § 92.206(d)(1) into the 

written agreement between the PJ and 

the owner of HOME rental housing. 

Paragraph § 92.206(d)(1) requires that if 

HOME funds will be reimbursing 

expenses that were incurred no more 

than twenty-four months before the date 

of the commitment, the written 

agreement must explicitly permit the 

use of the funds for those purposes. 

The Department is making technical 

corrections to § 92.504(c)(3)(ii)(A) to 

read in the singular instead of the 

plural, consistent with how the rest of 

§ 92.504(c)(3) is written. The 

Department is also adding a new 

sentence to the end of the paragraph 

that explicitly requires that the written 

agreement contain the option the PJ 

selected for calculating income in 

accordance with § 92.203(b)(1). This 

information should already have been 

included in the written agreement 

pursuant to § 92.203 but the Department 

is now including this language in the 

written agreement provisions for 

consistency. 

The Department is making technical 

edits to § 92.504(c)(5)(i)(A) to add 

parenthesis around examples of 

allowable forms of assistance that a PJ 

may provide a homebuyer, homeowner, 

or tenant or owner receiving tenantbased rental assistance. 

The Department made technical 

revisions to § 92.504(c)(5)(iii) to add the 

word ‘‘assistance’’ after ‘‘security 

deposit’’ to align with provisions in 

§ 9.253(d) that describe security deposit 

assistance. The Department is also 

making a minor technical edit to 

§ 92.504(c)(6)(i)(A) to add a comma after 

the regulatory citation to § 92.300(a)(2)– 

(5). 

The Department is revising 

§ 92.504(c)(6)(i)(B) in response to public 

comments questioning whether the 

Department was proposing to change 

the treatment of recaptured funds in 

CHDO homeownership projects. The 

Department is clarifying that PJs may 

permit CHDOs to retain recaptured 

funds for additional HOME projects 

pursuant to the written agreement. The 

Department is also adding a descriptive 


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header to the section Retaining proceeds 

and recaptured funds. 

The Department recognized that it 

permits CHDOs to provide 

homeownership assistance to families as 

part of HOME homeownership housing 

developed by the CHDO. This amount of 

assistance is limited to 10 percent of the 

overall amount of HOME funds 

provided to the project. The Department 

is adding § 92.504(c)(6)(i)(B)(2) to more 

clearly establish the written agreement 

requirements for the provision of this 

assistance. The agreement must provide 

the amount of funds for homeownership 

assistance, the number of homebuyers to 

receive the assistance, any matching 

contributions, and the period of the 

agreement. The 10 percent limitation is 

also added, as is the requirement that 

the CHDO’s agreement with the 

homebuyer meet the written agreement 

requirements in § 92.504(c)(5)(i) that 

apply to agreements providing HOME 

homeownership assistance to eligible 

homebuyers. 

24 CFR 92.505 Applicability of 

Uniform Administrative Requirements 

The Department revised § 92.505 to 

explain that 2 CFR 200.344 is applicable 

to HOME as provided in § 92.507. 

Originally, the Department had said that 

2 CFR 200.344 was not applicable to 

HOME PJs, State recipients, and 

subrecipients but this is confusing 

because § 92.507 does make most of 2 

CFR 200.344 applicable to them. By 

adding the caveat that 2 CFR 200.344 is 

not applicable, except as provided in 

§ 92.507, this clarifies that it is 

applicable and that § 92.507 will 

explain how. 

24 CFR 92.507 Closeout 

In the proposed rule, HUD proposed 

to revise § 92.507 in order to specify the 

procedures and actions that must be 

completed by a PJ and HUD to close out 

a grant. In this final rule, the 

Department is further revising § 92.507 

for clarity and consistency with 2 CFR 

part 200. The Department is adding a 

second sentence to the introductory 

provision in § 92.507. This explains that 

the requirements of 2 CFR 200.344 

apply to closeouts in the HOME 

program, with the exception where such 

requirements conflict with the 

requirements in § 92.507. The 

Department was concerned that its 

language was confusing because in 

various parts of § 92.507, such as in 

§ 92.507(b)(10)(v) and (vi), the 

regulation requires that PJs comply with 

2 CFR 200.344. By adding this sentence, 

the Department is clarifying that PJs 

must follow 2 CFR 200.344 unless it 

conflicts with the HOME regulations. 

The Department is revising 

§ 92.507(a)(1) to clarify that HUD will 

close out a grant after the period of 

performance has ended instead of when 

HUD determines that PJ has completed 

all required activities and closeout 

actions. HUD is not limiting its 

discretion here, given under separate 

legal authorities (including the Act, 

individual appropriations laws, and 

provisions within 2 CFR part 200) to 

close out a HOME grant. Additional 

clarification is also being added to 

specify that the PJ must complete all 

required activities and closeout 

activities for the grant, as required by 

HUD. The revised provision directly 

states the PJ’s closeout responsibilities 

under the HOME program. 

The Department is revising 

§ 92.507(a)(2) to explain that to prepare 

for closeout, before the end of the 

budget period of the grant, the PJ shall 

review all eligible activities under the 

grant and reconcile its accounts by 

drawing funds down in a timely manner 

and refunding the proper accounts of 

any previously disbursed balances of 

unobligated cash paid in advance. This 

is clearer language that is more legally 

accurate than the proposed rule, which 

did not explain that these actions were 

to prepare for closeout, did not 

condition each provision on being taken 

during the budget period, and did not 

specify how refunds would be 

performed in sufficient detail. 

The Department is redesignating 

§ 92.507(a)(2)(ii) of the proposed rule by 

redesignating it as paragraph (a)(3) and 

by explaining that after the end of the 

grant budget period, no additional 

activities may be undertaken with that 

particular HOME grant and that there 

are no additional eligible costs incurred 

after the budget period. The provision 

also explains that unused funds shall be 

returned to the U.S. Treasury by HUD, 

and that the PJ must promptly refund 

any unused grant funds not authorized 

to be retained in accordance with HUD’s 

instructions. These clarifications more 

directly state the requirements and the 

conditions without using problematic 

terminology like ‘‘recapture’’ which has 

a different statutory meaning in the 

HOME program than in appropriations 

law. 

The Department is revising 

§ 92.507(a)(4)(ii) in order to remove a 

reference to FAPIIS and instead add a 

reference to SAM.gov, the current 

system being used for reporting. The 

Department is revising § 92.507(b)(2) to 

state that a PJ must demonstrate that it 

has fulfilled all programmatic and 

administrative requirements for the 

project (i.e., property inspections, 

obtaining certificates of occupancy, etc.) 

within the period of performance in 

accordance with 2 CFR 200.344(a). The 

proposed rule’s provision stated that the 

PJ must complete all activities for which 

the funds were expended. This may 

have been confusing to the PJs as HOME 

funds are not to be used after the budget 

period. As such, HUD revised the 

language to appropriately characterize 

the PJ’s actions as providing HUD with 

information demonstrating it has 

completed all the programmatic and 

administrative requirements within the 

period of performance and not that HUD 

was allowing for completion of 

activities after the budget period had 

expired. 

The Department is revising 

§ 92.507(b)(3) to remove the word 

‘‘remaining’’ when characterizing the 

data to be entered into the computerized 

disbursement and information system 

established by HUD. This was for 

clarity. Similarly, the Department is 

revising both paragraph (b)(5) and 

(b)(10) to improve the grammatical 

structure of each provision by removing 

‘‘the participating jurisdiction must.’’ 

This is because the lead-in sentence in 

§ 92.507(b) already states that the PJ 

must take the following actions to close 

out a grant and therefore it is 

unnecessary to repeat the words in 

those provisions. 

The Department is revising 

§ 92.507(b)(10)(i) to specify that instead 

of cancelling the unused grant funds, 

those funds shall be returned to the U.S. 

Treasury. This is clearer language and 

more directly states the mechanics of 

what is occurring during closeout. 

Paragraph § 92.507(b)(10)(iv) and 

§ 92.507(c)(6) are both being revised to 

include both a State and a consortium 

in the list of entities that qualify as a PJ. 

If a jurisdiction is not a PJ as a 

metropolitan city, urban county, State, 

consortium, or consortium member 

when it receives program income, 

recaptured funds, or repayments in 

accordance with § 92.503, then the 

funds are not subject to the 

requirements of 24 CFR part 92. The 

proposed rule inadvertently excluded 

States and consortia, both of which are 

types of PJs. The Department is also 

revising § 92.507(c)(8) to remove the 

parenthetical citation at the end because 

it was unnecessary and confusing. 

The Department is making a technical 

revision to § 92.507(b)(10)(viii) to 

specify that the PJ’s certification 

acknowledges that future monitoring by 

HUD will occur, ‘‘including’’ that 

findings of noncompliance may be taken 

into account by HUD as unsatisfactory 

performance of the PJ and in any riskbased assessment of any future grant 


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20See paragraph (1) of the definition of 

homeownership in 24 CFR 92.2. 

award under the HOME program in the 

future. 

The Department also revised the 

reference to recordkeeping requirements 

in 2 CFR part 200 that are applicable to 

PJs to ‘‘2 CFR 200.345, as applicable.’’ 

The provision references applicable 

provisions in 2 CFR 200.337 through 2 

CFR 200.345, as had been provided in 

the proposed rule, and therefore is a 

non-substantive change. 

24 CFR 92.508 Recordkeeping 

The Department is revising the first 

sentence to § 92.508(a)(3)(vii) to state 

that PJs must maintain records 

demonstrating that each rental housing 

project met the affordability and income 

targeting requirements of § 92.252 for 

the required period or met the 

requirements in § 92.255 for conversion 

to homeownership for in-place tenants. 

This aligns with changes made to 

§ 92.254(a) and § 92.255(b) and provides 

a recordkeeping requirement that 

contemplates conversion of rental 

housing units to homeownership units 

for in-place tenants in accordance with 

§ 92.255. 

Consistent with changes made by the 

Department to other sections requiring 

that there be a minimum level of tenant 

protections for families receiving 

security deposit assistance, HUD is 

adding ‘‘security deposit assistance’’ to 

§ 92.508(a)(3)(ix) to require that the PJ 

maintain records demonstrating that 

each family receiving such assistance 

had a lease that included a HOME 

security deposit assistance addendum in 

accordance with § 92.253(d). 

24 CFR 570.200 General Policies 

In the proposed rule, HUD proposed 

to revise the introductory text of 

§ 570.200(h). However, HUD’s proposed 

revisions would have decoupled the 

effective date of a grant agreement from 

a grantee’s program year start date and 

would have subjected many grantees to 

pre-award costs on an annual basis. 

After considering public comments, 

HUD has determined the need to 

maintain the connection between the 

grant agreement effective date and 

program year start dates to reserve preaward costs to those incurred before a 

program year start date and, therefore, is 

retaining the existing introductory text 

to § 570.200(h). Instead, HUD is adding 

a new § 570.200(h)(3) to make the 

effective date of the grant agreement, in 

a year when an annual appropriation 

occurs less than ninety days before a 

grant recipient’s program year start date, 

the earlier of either the program year 

start date or the date that the 

consolidated plan is received by HUD. 

This change better aligns CDBG with the 

new HOME program regulation at 

§ 91.212(b)(2) and continues practices 

implemented through annual waivers. 

IV. Public Comments 

General Comments 

A. Comments in Support for the 

Proposed Rule 

Multiple commenters expressed 

general support for the regulatory 

proposals described in the proposed 

rule. Commenters stated that they 

support the regulatory proposals 

described in the proposed rule because 

they will simplify and align programs to 

create more affordable housing for 

persons needing housing assistance. 

One commenter stated that the proposed 

rule’s changes would improve housing 

stability of low-income households. 

Another said it would promote program 

flexibility, HUD’s mission, and clarity 

and alignment with other Federal 

programs. One commenter expressed 

support for the proposed rule because it 

will make the HOME program more 

accessible and user-friendly in rural 

places. One commenter stated that they 

support the proposed changes because 

they may lead to shorter waiting periods 

to receive housing. Another commenter 

stated that the proposed rule would 

help to more effectively use resources to 

narrow the racial homeownership and 

wealth gaps. 

HUD Response: HUD thanks the 

commenters for reviewing and is 

moving forward with a final rule. 

B. The Rule Increases Program 

Alignment 

Commenters supported HUD’s 

proposed changes to streamline HOME 

program requirements to align with the 

CDBG and Section 8 programs because 

the commenter believes it would ensure 

consistency with the implementation of 

changes to the HOME program. 

HUD Response: HUD thanks the 

commenters for reviewing the proposed 

rule. The Department further aligned the 

HOME regulations with the CDBG and 

Section 8 programs in this final rule. 

C. The Rule Should Be Revised To 

Account for Manufactured Housing 

One commenter urged HUD to 

explicitly address manufactured homes 

and manufactured home communities 

in the rule and guidance. The 

commenter’s suggestions included 

explicitly clarifying that manufactured 

homes are a permissible HOME housing 

type, that manufactured housing titled 

as real property or personal property are 

eligible for HOME assistance, that 

permissible land tenure types include 

manufactured home on land that is 

owned by the homeowner or leased in 

manufactured home communities, that 

manufactured home communities are 

explicitly named as permissible for 

affordable housing preservation, that 

non-profit shared-equity cooperatives 

are explicitly named as being eligible for 

HOME funding as is the water and 

sewer infrastructure they own. 

HUD Response: Manufactured homes 

and lots are explicitly included in the 

definition of ‘‘housing’’ in § 92.2. To be 

considered a homeowner for purposes 

of the HOME program, a manufactured 

homeowner must only have a ground 

lease as long as the period of 

affordability required in accordance 

with § 92.254.20 This is more flexible 

than the 50-year ground lease required 

to constitute homeownership on Indian 

trust lands and land held by CLTs, and 

is the most flexible definition of 

homeownership in the HOME program. 

While the Department is not explicitly 

revising its regulations to change the 

definition of homeownership for 

manufactured homeowners, HUD notes 

that if manufactured home communities 

structure their ground leases or 

ownership in accordance with the 

HOME homeownership requirements, 

then purchasers may be eligible under 

the HOME regulations. When designing 

their HOME programs, participating 

jurisdictions are required to consider 

the housing needs within their 

jurisdiction, including the needs of 

those who own or wish to purchase a 

manufactured home. 

D. The Rule Is More Burdensome 

Another commenter stated that, while 

supportive of some of the rule’s 

proposed changes, the proposed rule 

would increase administrative burden 

and that this adds to other 

administrative costs from Section 3, 

BABA, and VAWA. 

HUD Response: The Department 

believes that the requirements contained 

in this final rule will reduce burden and 

compliance will be less costly than the 

current requirements. The Department 

understands that Section 3; Build 

America, Buy America; and Violence 

Against Women Act requirements each 

may add different requirements on HUD 

grantees. These requirements may 

change the way that the participating 

jurisdiction contracts for goods and 

services, or how the participating 

jurisdiction assist survivors of domestic 

violence, dating violence, sexual 

assault, stalking, or human trafficking. 

However, these requirements are not 

within the scope of this rulemaking. The 


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Department will continue to assess ways 

to further reduce the burdens of 

compliance with various independent 

statutory requirements. 

E. HUD Should Further Streamline the 

Requirements of the HOME Program 

A commenter stated that HUD’s 

rulemaking should seek to further 

streamline the HOME program and 

reduce regulatory and compliance 

burdens because these burdens detract 

from the value of limited resources 

provided to HOME-assisted projects. 

HUD Response: The Department 

agrees with the commenter and engaged 

in further streamlining of HOME 

requirements including but not limited 

to income examinations, physical 

condition inspections, and rent 

determinations. 

F. Legislative Reform Necessary 

Commenters supported legislative 

reform of modernization of the HOME 

program overall or particular statutory 

provisions. One commenter 

recommended that HUD continue to 

work with Congress to develop and pass 

legislation to reauthorize and further 

modernize the HOME program. 

HUD Response: The Department 

thanks the commenters for sharing their 

view and notes that it also has called for 

legislative reform of HOME in recent 

HUD Budget Requests. 

G. Technical Assistance, Training, and 

Guidance 

Several commenters requested 

technical assistance, guidance, or 

training on various topics in the 

regulation. 

HUD Response: The Department 

agrees with commenters that it must 

provide significant training, guidance, 

and technical assistance on this final 

rule to assist participating jurisdictions 

and other program participants comply 

with new requirements and exercise 

new flexibilities. 

Streamlining Terminology 

A. Replacing ‘‘Downpayment 

Assistance’’ With ‘‘Homeownership 

Assistance’’ 

Commenters supported HUD’s 

proposal to change the definition of 

‘‘downpayment assistance’’ to 

‘‘homeownership assistance.’’ Two 

commenters said this change would 

provide participating jurisdictions and 

HUD regional offices with the clarity 

needed to understand the full breadth of 

homeownership-related activities that 

are allowable using HOME funding in 

addition to downpayment assistance. 

One commenter said that this change 

would increase affordable housing 

supply by facilitating the use of HOME 

funds by developers to construct or 

rehabilitate owner-occupied housing. 

One commenter suggested that a clear 

assertion that HOME covers more than 

downpayment assistance alone will 

more easily allow affordable housing 

developers to use these funds to 

construct or rehabilitate more owneroccupied housing, adding more units to 

a dwindling affordable supply. 

One commenter stated that HUD has 

several instances where the term 

‘‘downpayment assistance’’ is used 

instead of ‘‘homeowner assistance’’ 

despite the noted substitution, which 

has resulted in confusion. The 

commenter noted the following 

instances of ‘‘downpayment assistance’’ 

appearing in several other locations 

within the text of the rule including 

§§ 92.203(d); 92.209(c)(2)(iv); 

92.250(b)(4); § 92.251(c)(3); 

92.300(a)(6)(i); 92.351(a)(1); 

92.504(c)(1)(i); 92.504(c)(2)(i). 

HUD Response: HUD thanks the 

commenters for reviewing and is 

moving forward with this change. In 

examining the regulation and 

comments, the Department determined 

that there were numerous instances 

where the term ‘‘downpayment 

assistance’’ persisted and has made 

revisions to the term in §§ 92.203, 

92.209, 92.250, 92.251, 92.300, 92.351, 

and 92.504. 

B. Replacing ‘‘Dwelling’’ With 

‘‘Housing’’ 

A commenter stated that they support 

the proposed change of replacing the 

term ‘‘dwelling’’ with ‘‘housing’’ for the 

HOME program, TBRA program, and 

income targeting for homeownership. 

HUD Response: HUD thanks the 

commenters for reviewing. HUD will 

move forward with replacing the term 

‘‘dwelling’’ with ‘‘housing’’ where the 

Department determines that this is 

accurate terminology. The Department 

did note that in relation to HOME 

regulations implementing the Uniform 

Relocation Assistance and Real Property 

Acquisition Policies Act (URA) (42 

U.S.C. 4601 et seq.), and its regulations 

at 49 CFR part 24, as amended, and 

Section 104(d) of the Housing and 

Community Development Act (42 U.S.C. 

5304(d)) and its regulations at 24 CFR 

part 42, the term ‘‘dwelling’’ is more 

consistent with the underlying statutory 

and regulatory terminology and will be 

maintaining the usage of the term in that 

area of the HOME regulations. Similarly, 

the Department will be retaining the use 

of this terminology in relation to 

accessibility requirements, which refer 

to applicable definitions outside of 24 

CFR part 92. In performing its review, 

the Department determined there were 

additional areas whether the term 

‘‘housing’’ was more appropriate than 

‘‘dwelling’’ including in §§ 92.2, 92.219, 

92.253, 92.254, and 92.258. The 

Department is revising these regulations 

accordingly. 

C. Replacing ‘‘Affordability Period’’ 

With ‘‘Period of Affordability’’ 

Commenters supported HUD’s 

proposed definition of ‘‘period of 

affordability.’’ One commenter 

supported the consistent use of the term 

but noted that the old term persists in 

certain places in the regulation. 

HUD Response: HUD thanks the 

commenters for reviewing and is 

moving forward with the revised term 

‘‘period of affordability.’’ The 

Department has also revised the 

remaining references to ‘‘affordability 

period’’ to read as ‘‘period of 

affordability’’ to maintain consistent 

terminology. 

D. Replacing ‘‘Single-Family’’ With 

‘‘Single Family’’ 

One commenter thanked the 

Department for streamlining the term 

single family while another commenter 

noted places where certain terminology 

was not corrected. 

HUD Response: The Department 

noted that there were instances in 

which the term was not corrected and 

is making changes to § 92.2. and 

§ 92.220. 

§ 92.2—Commitment Definition 

A. General Support 

One commenter supported changing 

the language of the definition of 

‘‘commitment’’ from ‘‘official’’ to 

‘‘officials’’ And from ‘‘downpayment 

assistance’’ to homeownership 

assistance. 

HUD Response: HUD appreciates the 

commenter’s support and will move 

forward with these changes. 

B. Paragraph (2) of the Commitment 

Definition—Commit to a Specific Local 

Project—Opposition to Requirement To 

Secure All Project Financing Before 

Commitment 

One commenter stated that HUD 

should consider revising paragraph 

(2)(i) of the definition of ‘‘commitment’’ 

in § 92.2 because requiring applicants to 

secure all project funding before 

receiving a commitment of HOME funds 

is overly burdensome, particularly for 

nonprofit developers. The commenter 

explained that this upfront secured 

funding requirement could result in 

fewer applications for HOME funding 

and should be removed. The commenter 

also suggested expanding the meaning 


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of construction to include incurring 

typical pre-development costs such as 

architectural and engineering costs. 

HUD Response: Commenters urged 

HUD to revise the definition of commit 

to a specific local project by removing 

the requirement that all project 

financing be secured before 

commitment. The Department did not 

propose a change to these requirements 

and declines to make these proposed 

changes at the final rule stage. HUD 

believes these requirements to be 

essential to ensuring that HOME funds 

are not committed to and used for 

projects that have not secured all the 

financing necessary to enable the project 

to be successfully and timely 

completed. The Department is not 

defining construction or expanding the 

meaning of construction to include predevelopment activities such as 

architectural and engineering costs. The 

type of costs that the commenter is 

describing are project-related soft costs. 

Under the current regulation, project 

related soft costs, which include 

architectural and engineering costs, may 

be reimbursed if they are incurred not 

more than 24 months before the date 

that HOME funds are committed to the 

project and the participating jurisdiction 

expressly permits HOME funds to be 

used to pay these costs in the written 

agreement committing the funds to the 

project. The proposed rule added the 

cost of environmental reviews and 

studies to this provision. 

The Department received several 

comments on HUD’s revision to 

§ 92.206(d)(1) to allow HUD 

environmental review or other 

environmental studies or assessments to 

be reimbursable costs incurred prior to 

when funds were committed to a 

project. Those commenters urged the 

Department to consider expanding the 

types of costs that would be allowed to 

be incurred to include ‘‘predevelopment’’ or other related soft costs. 

The Department agrees with the 

commenters and is expanding the 

project soft costs that may be incurred 

prior to a commitment to include costs 

to process and settle financing for the 

project, including private lender 

origination fees, credit reports, fees for 

title evidence, legal fees, private 

appraisal fees, and fees for independent 

cost estimates. These were all contained 

in paragraph (d)(2) but will now be 

deleted from paragraph (d)(2) and added 

to paragraph (d)(1). While the 

Department is moving these provisions 

to paragraph (d)(2), the Department 

determined that several provisions 

could not be moved because there is no 

reasonable expectation that they should 

occur prior to commitment. These 

provisions include obtaining building 

permits, which require HUD 

environmental review; fees for 

recordation and filing of legal 

documents, as recorded documents 

relating to an acquisition, rehabilitation, 

or new construction project should 

occur after commitment of HOME 

funds; and builders or developers fees, 

as those fees should not be earned and 

chargeable to the HOME grant for work 

performed prior to the environmental 

review and commitment of the HOME 

funds to the project. 

Additionally, because of specific 

public comment, the Department also 

added ‘‘accounting fees’’, ‘‘filing fees for 

zoning or planning review and 

approval’’, and ‘‘other lender-required 

third-party reporting fees’’ to paragraph 

(d)(1). By moving or adding the soft 

costs into paragraph (d)(1), HUD is 

allowing the above-described costs to be 

paid as long as they were incurred no 

more than 24 months before the date of 

commitment, and they were included in 

the written agreement committing the 

funds. 

C. Paragraph (2) of the Commitment 

Definition—Commit to a Specific Local 

Project—Opposition to Requirement 

That Construction Must Be Scheduled 

To Start Within Twelve Months of the 

Agreement Date 

Commenters urged HUD to lengthen 

the time between commitment and the 

start of construction from the current 12 

months. One commenter proposed 

extending the timeframe to 24 months 

because of the extensive backlog of 

construction work and the loss of 

available and qualified contractors. 

Another commenter stated that HUD’s 

12-month timeline could be challenging 

if the construction cycle is tied to hard 

costs or providing additional guidance 

for circumstances in which the 12- 

month deadline is missed. 

HUD Response: HUD appreciates the 

commenter’s review of the proposed 

rule and this recommendation. The 

Department did not propose a change to 

the 12-month time period between the 

date of the written agreement and the 

start of construction on a HOMEassisted project. The 12-month 

requirement has been in the 

commitment definition since 1991 and 

ensures that HOME funds are not 

prematurely committed to projects that 

are not ready to move to construction. 

HUD declines to adopt the suggested 

change. In addition, HUD notes that the 

12 months is not a deadline; the current 

rule states that a participating 

jurisdiction must have a reasonable 

expectation that construction will begin 

within 12 months when committing 

HOME funds to a specific local project. 

This expectation can be demonstrated 

by the construction schedule appended 

to the written agreement committing the 

funds. 

§ 92.2—Community Housing 

Development Organization Definition 

A. General Comments 

Many commenters supported the 

changes and stated that the proposed 

rule would create more opportunities 

for nonprofits to become CHDOs, 

expand the nonprofit affordable housing 

delivery system, expand the capacity of 

CHDOs, and make it easier for 

participating jurisdictions to use their 

CHDO set-aside funds. Other comments 

expressed concern about or opposition 

to HUD’s proposed changes, particularly 

changes aimed at increasing eligible 

CHDOs in rural areas. One commenter 

stated that, despite having concerns 

about certain HUD proposals, it 

appreciates HUD’s efforts to make 

CHDO designation easier to attain and 

retain particularly in areas with few or 

no CHDOs. Another commenter stated 

that while the commenter is supportive 

of the proposed changes that would 

create opportunities for organizations to 

participate in housing development and 

build their own capacity, HUD should 

consider additional policy safeguards to 

preserve the purpose of the set-aside 

and ensure that unintended 

consequences, such as bad actors 

meeting the letter of the requirements 

but ‘‘not the spirit of the designation,’’ 

do not outweigh the benefits. One 

commenter stated that it appreciates 

HUD’s effort to expand options for 

meeting the low-income board 

requirement but does not believe it will 

make a significant difference in the 

number of organizations that will seek 

the CHDO designation. The commenter 

stated that meeting the 15 percent 

CHDO set-aside requirement will 

continue to be a challenge for many 

participating jurisdictions irrespective 

of the proposed changes. 

HUD Response: HUD believes that 

there are appropriate safeguards in place 

in the final rule because the designees 

of nonprofit organizations that may 

serve on the board only count towards 

the one-third board representation 

requirement if they represent 

organizations that ‘‘address the housing 

or supportive service needs of lowincome residents or residents of lowincome neighborhoods.’’ This 

connection to the community, and the 

list of examples HUD provides to further 

elaborate on the types of groups and the 

role they must play within the 

community, demonstrate that the intent 


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is not to water down a CHDO’s ties to 

the community but to strengthen them. 

Promoting board representation for 

victim service providers, homeless 

providers, organizations involved in 

promoting or defending civil rights, 

disability advocates, and other 

organizations that directly serve the 

community will serve to strengthen 

CHDOs’ boards and provide needed 

input from hard-to-reach groups. 

B. Include Cooperatives as Eligible for 

CHDOs 

One commenter suggested that HUD 

expand CHDO eligibility to affordable 

housing cooperative corporations 

because affordable housing 

cooperatives, including resident owned 

manufactured housing community 

cooperatives, meet the goals of CHDOs 

to advance resident and community 

engagement as cooperative boards are 

made up of their resident owners who 

govern and manage the cooperative. The 

commenter further explained that 

cooperatives would benefit from 

eligibility as CHDOs by gaining greater 

access to CHDO sponsors. The 

commenter stated that if affordable 

housing cooperatives are not granted 

status as CHDOs directly, then it is 

imperative that they are granted access 

to work with a CHDO nonprofit 

501(c)(3) sponsor to access set-aside 

funds that can create lasting affordable 

housing. 

HUD Response: HUD appreciates the 

comments and notes that nothing in the 

existing HOME regulations or in the 

proposed rule would prohibit a 

cooperative housing corporation from 

being designated as a CHDO as long as 

the organization can meet the definition 

of CHDO. The Department has also 

significantly changed the ways that 

CHDOs can be involved in a 

development project in § 92.300 and 

believes that it provides additional 

opportunities for affordable housing 

cooperatives to partner with CHDOs on 

CHDO set-aside projects. 

C. Paragraph (4) of CHDO Definition— 

Align Definition of CHDO in 24 CFR 

92.2 and the Definition of CommunityBased Development Organization in 24 

CFR 570.204 

One commenter recommended that 

the regulations relating to CHDOs align 

more closely with the community-based 

development organization regulations 

through the CDBG program. 

HUD Response: The Department is 

limited by statute in how closely it can 

align the definitions of CHDO and 

community-based development 

organization. By regulation, a CHDO 

qualifies as a community-based 

development organization if it is 

designated as a CHDO by the 

participating jurisdiction, has a 

geographic area of operation of no more 

than one neighborhood, and has 

received HOME funds under 24 CFR 

92.300 or is expected to receive HOME 

funds as described in and documented 

in accordance with 24 CFR 92.300(e) 

(See 24 CFR 570.204(c)(2)). This safe 

harbor is provided in recognition that if 

an organization meets all the 

requirements of community housing 

development organization in § 92.2, 

then the organization will have met the 

statutory requirements in 42 U.S.C. 

5305(a)(15). This is because the 

statutory definition of CHDO is more 

restrictive than the statutory and 

regulatory definition of a communitybased development organization. It is 

because of these statutory and 

programmatic differences that a 

community-based development 

organization cannot automatically 

qualify as a CHDO. 

Under the HCDA statute and CDBG 

regulations, community-based 

development organizations include 

local development corporations, which 

can be for-profit entities (See 42 U.S.C. 

5305(a)(15)) and 24 CFR 

570.204(c)(1)(iii)). Under NAHA, 

CHDOs must be nonprofit organizations 

(42 U.S.C. 12704(6)). Community-based 

development organizations can also 

perform economic development 

activities under the CDBG program, and 

thus the organizations will have more 

expansive purposes and scopes than 

CHDOs, which are required to have 

among their purposes the provision of 

affordable housing. The difference in 

eligible activities also means that 

community-based development 

organizations can have different types of 

representation on their boards, 

including businesses serving lowincome communities (24 CFR 

570.204(c)(1)(iv)). Thus, after a careful 

examination of the two sets of statutory 

and regulatory requirements, the 

Department has determined that no 

change to further align the definitions 

should be made at this time. 

D. Paragraph (4) of CHDO Definition— 

Tax Exempt Status 

One commenter supported the change 

to the CHDO definition that clarifies the 

options for meeting the requirement that 

a CHDO must be exempt from taxation. 

HUD Response: The Department 

appreciates the comment and is 

adopting the language in paragraph 4 of 

the CHDO definition at § 92.2 without 

change. 

E. Paragraph (5) of CHDO Definition— 

General Support for Changes to 

Limitations on Public Officials on a 

CHDO’s Governing Board 

Commenters were broadly supportive 

of the proposed change narrowing the 

individuals who would count toward 

the one-third limitation on governing 

board membership from ‘‘any 

governmental entity’’ to ‘‘officials or 

employees of the participating 

jurisdiction or governmental entity that 

created the community housing 

development organization.’’ 

Commenters stated that the proposed 

change would provide more flexibility 

to nonprofit organizations in meeting 

the board requirements while 

maintaining the freedom from 

governmental control of CHDOs 

intended by statute. One commenter 

stated that the change would help 

CHDOs create boards with expertise in 

the field of affordable housing, while 

appropriately addressing conflict of 

interest considerations that may arise. 

Another commenter stated that the 

change will facilitate resource-sharing 

between CHDOs and governmental 

entities such as councils of 

governments, Tribal entities, and 

regional planning commissions in rural 

communities. 

Commenters also supported the 

proposal to clarify that no governmental 

entity, not only the one that created the 

CHDO, may appoint more than onethird of the CHDO’s board members, as 

well as the language clarifying that not 

only may the board members appointed 

by a government entity not appoint the 

remaining two-thirds of a CHDO’s board 

members, the board members who are 

officials or employees of the 

governmental entity that created the 

CHDO may not appoint any of the 

remaining two-thirds board members. 

One commenter recommended that 

HUD emphasize that the one-third 

public official restriction on board 

membership does not apply to all 

CHDOs, only those CHDOs that were 

created by a governmental entity. The 

commenter stated that this would 

involve promulgating a Notice clarifying 

the new and correct interpretation of 

this paragraph, and an intense training 

and communication plan to educate 

participating jurisdictions across the 

country. 

HUD Response: HUD thanks the 

commenters for sharing their views. 

HUD is adopting the proposed rule 

language without change. The 

Department also agrees that its guidance 

should be clearer that, while all CHDOs 

must be free from governmental control, 

the one-third limitation on public 


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21 42 U.S.C. 12721. 

officials only applies to CHDOs that 

were created by the participating 

jurisdiction or another governmental 

entity. For CHDOs not created by a 

governmental entity, the participating 

jurisdiction must determine that the 

CHDO is not a governmental entity and 

is not controlled by a governmental 

entity. 

F. Paragraph (5) of CHDO Definition— 

Opposition to Public Officials on a 

CHDO’s Governing Board 

A commenter questioned why HUD 

would require a CHDO to include 

elected officials on the CHDO board. 

The commenter stated that requiring 

CHDOs to include elected officials on 

the CHDO board would constitute a 

conflict of interest because elected 

officials approve the funding for HOME 

projects. The commenter stated that a 

CHDO would have to turn to 

neighboring communities to select 

elected officials for the CHDO board to 

avoid any conflict. 

HUD Response: The commenter 

incorrectly believes that HUD is 

requiring CHDOs to include elected 

public officials on the CHDO governing 

board. HUD revised paragraph (5) of the 

Community Housing Development 

Organization definition in § 92.2 to 

make the existing limitation on public 

officials and employees of a 

governmental entity on the CHDO 

governing board less restrictive should a 

CHDO choose to include public officials 

on the governing board. 

G. Paragraph (5) of CHDO Definition— 

Limitation on Public Officials on a 

CHDO’s Governing Board—Volunteer 

Members Planning or Zoning 

Commissions 

One commenter recommended that 

HUD allow volunteer members of 

planning or zoning commissions or 

other local advisory boards to serve as 

CHDO board members and not count 

against the public sector limit. 

HUD Response: HUD is not adopting 

this recommendation. Whether a 

volunteer member of a planning or 

zoning commission or other local 

advisory board may count towards the 

public sector limit depends upon a 

variety of factors including whether the 

organization the person is volunteering 

for created the CHDO, whether the 

person is considered an employee or 

official, whether the entity is considered 

part of the participating jurisdiction, etc. 

It is likely that many volunteer members 

of planning or zoning commissions or 

other local advisory boards may not 

count towards the limits described in 

paragraph (5) of the definition of 

community housing development 

organization contained in § 92.2. 

H. Paragraph (5) of CHDO Definition— 

Statutory Basis for Limitation on Public 

Officials on a CHDO’s Governing Board 

One commenter was supportive of 

changes to the CHDO board but also 

encouraged HUD to go further and fully 

address the ‘‘public officials’’ issue. The 

commenter disputed that there was a 

statutory basis for limiting participation 

of public officials or employees of 

governmental entities from being board 

members of CHDOs. The commenter 

believed that it was entirely at HUD’s 

discretion whether to include this 

language in its regulations, or not, and 

how to interpret it. 

HUD Response: When the Act was 

created, CHDOs, which had existed 

prior to the Act, were nonprofit, private 

sector organizations that had deep ties 

to the community. The Congressional 

findings of the Act explicitly stated that 

CHDOs are nonprofit organizations 

acting in the private sector.21 If a 

governmental entity creates a CHDO, 

then it is consistent with the purposes 

and findings of the Act to place a 

reasonable limitation on the public 

sector board membership of the CHDO. 

This limitation is necessary to ensure 

that the CHDO is not simply an affiliate 

or an alter ego of a governmental entity 

but a robust community-based nonprofit 

organization with capacity to develop, 

sponsor, and own affordable housing in 

the jurisdiction. The Department is 

moving forward with its revisions to 

paragraph (5). 

I. Paragraph (5) of CHDO Definition— 

Further Narrow Limitation on Public 

Officials on a CHDO’s Governing Board 

Another commenter suggested that 

HUD could further reduce barriers to 

meeting low-income representation and 

public official requirements by counting 

only elected or appointed officials 

toward the public official limitation and 

permit civil service employees to serve 

on CHDO boards, subject to a conflict of 

interest policy. 

HUD Response: The Department 

believes that it has struck the correct 

balance in its new final rule 

requirements and is not adopting this 

recommendation. The limits in 

paragraph (5) of the definition of 

community housing development 

organization only apply when the 

CHDO was created by a governmental 

entity and the civil service employee is 

working for the governmental entity that 

created the organization or the 

participating jurisdiction that is funding 

the organization. This is already a 

narrow subset of all cases. Even when 

the limit in paragraph (5) of the 

definition of community housing 

development organization applies, HUD 

regulations are not barring the person’s 

representation but stating that the 

person counts towards the limit and 

cannot be an officer or employee of the 

organization in order to consider the 

organization a CHDO. 

J. Paragraph (5) of CHDO Definition— 

Low-Income Public Officials on a 

CHDO’s Governing Board 

Commenters suggested that HUD 

should revise the rule to state that if an 

appointed official or employee of a 

participating jurisdictions lives in a 

low-income community and is 

themselves low-income, they will be 

allowed to be counted toward the lowincome representation on the board of 

the CHDO and not count as a public 

official. One commenter stated the 

regulation should explicitly state that 

this applies in rural areas or areas where 

significant low-income representation 

does not exist. 

HUD Response: If a person meets the 

definition of low-income under § 92.2 or 

lives within a low-income community, 

then under paragraph (8)(i) of § 92.2 

Community housing development 

organization, the person would be 

included in the one-third representation 

requirement. If a CHDO is created by a 

governmental entity, no more than onethird of its board may be officials or 

employees of the participating 

jurisdiction providing HOME funds to 

the CHDO or the governmental entity 

that created the CHDO. In the 

commenter’s example, if the CHDO was 

created by a governmental entity, and 

the person was an employee or official 

of the participating jurisdiction funding 

the CHDO or the governmental entity 

that created it, then the person would 

also count towards the one-third 

limitation under paragraph (5) of the 

definition of community housing 

development organization in § 92.2. 

These are independent requirements 

and serve to prevent potential abuses. 

The Department would also note that 

under the commenter’s recommended 

approach, the entire board of an 

organization created by a governmental 

entity could be employees or officials so 

long as they were low-income or lived 

in low-income neighborhoods. This is 

not the intent of the drafters of the Act 

in creating the set-aside requirement 

and the Department is declining the 

commenters’ recommendations. 


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K. Paragraph (5) of CHDO Definition— 

Further Limit Public Officials on a 

CHDO’s Governing Board to Officials or 

Employees Administering HOME 

Assistance 

One commenter that is a State 

participating jurisdiction stated that it 

supports the proposal to narrow public 

officials to the participating jurisdiction 

but questioned what unit of government 

is considered the participating 

jurisdiction. The commenter asked 

whether all State employees would be 

considered part of the participating 

jurisdiction or whether the limitation 

would apply to the lead agency, the 

consolidated planning partners or the 

administrator of the HOME grant. The 

commenter recommended that the 

language be updated to apply the 

limitation only to employees of the 

entity that administers the HOME 

funding. 

HUD Response: In the scenario raised 

by this commenter, the participating 

jurisdiction is the State, and the 

limitation would apply to officials and 

employees of any State agencies, not 

solely officials and employees of the 

agency that administers the State’s 

HOME grants. HUD declines to change 

the regulation so that only employees of 

the agency that administers the HOME 

funds for the participating jurisdiction 

count towards the one-third limitation 

or the prohibition against being an 

officer or employee of a CHDO. This 

change would be inconsistent with the 

statutory intent that CHDOs not be 

controlled by the participating 

jurisdiction. An official or employee of 

a participating jurisdiction, even when 

not affiliated with the specific agency 

administering HOME assistance, is still 

potentially subject to the influence of 

that participating jurisdiction. 

Consequently, when they serve on a 

CHDO board, HUD believes that they 

should count toward the one-third 

limitation on public sector participation 

on the board of a CHDO created by a 

participating jurisdiction. 

L. Paragraph (8) of CHDO Definition— 

Support for Inclusion of ‘‘Designees’’ of 

Low-Income Neighborhood 

Organizations 

Several commenters supported the 

proposed change to expand the CHDO 

low-income board representation 

requirement under paragraph (8)(i) of 

the definition of community housing 

development organization to include 

‘‘designees’’ of low-income 

neighborhood organizations rather than 

only the elected representatives of such 

organization, stating that the change is 

helpful and will widen the pool from 

which CHDOs may find board members. 

A commenter who supported the 

proposed changes stated that they 

would be particularly helpful for 

communities with rising incomes where 

board members who previously 

qualified as residents of a low-income 

neighborhood may now be residents of 

a middle-income neighborhood. 

HUD Response: The Department 

appreciates the comments and is 

adopting this change. 

M. Paragraph (8) of CHDO Definition— 

Difference Between ‘‘Designee’’ and 

‘‘Authorized Representative’’ 

Multiple commenters asked that HUD 

clarify or provide examples in the final 

rule of the difference between a 

‘‘designee’’ and an ‘‘authorized 

representative,’’ as used in paragraph 

(8)(i) of its proposals regarding 

nonprofit representatives on CHDO 

boards because the proposed rule 

implies a difference that is not 

explained. Another commenter noted 

that there is some ambiguity in the term 

‘‘authorized representatives’’ in 

paragraph (8)(i) and encouraged HUD to 

broaden the scope of the language as it 

could be construed to mean only 

individuals who have legal authority to 

bind the nonprofit. 

HUD Response: The Department 

recognizes that using two different 

terms ‘‘designee’’ and ‘‘authorized 

representative’’ created confusion 

because low-income neighborhood 

organizations and nonprofit 

organizations that address housing or 

supportive services needs of residents of 

low-income-neighborhoods may have 

similar corporate structures and 

organizational requirements. The 

Department believes that the term 

‘‘designee’’ is the appropriate term. A 

low-income neighborhood organization 

or a nonprofit organization that 

addresses the housing or supportive 

service needs of low-income residents 

or residents of low-incomeneighborhoods can designate one or 

more persons to serve on the board of 

a CHDO. Accordingly, the Department 

has revised paragraph (8)(i) of the 

definition of CHDO to read ‘‘designees 

of nonprofit organizations in the 

community that address the housing or 

supportive service needs of low-income 

residents or residents of low-income 

neighborhoods . . . .’’ 

N. Paragraph (8) of CHDO Definition— 

Support for Inclusion of Authorized 

Representatives of Nonprofit 

Organizations in the Community That 

Address the Housing or Supportive 

Service Needs of Residents of LowIncome Neighborhoods 

Many commenters stated that they 

support the proposals to permit 

authorized representatives of local nonprofit organizations and members of 

low-income neighborhood organizations 

to meet the CHDO board requirements 

for low-income residents. One 

commenter stated that representatives 

from organizations who serve lowincome persons, even when an 

organization’s focus is on a topic other 

than housing, should count towards the 

low-income representation. Other 

commenters objected to the proposed 

rule’s addition of ‘‘authorized 

representatives of nonprofit 

organizations’’ to the definition of 

CHDOs in § 92.2, citing concerns about 

accountability and connection of a 

CHDO board to the low-income 

neighborhood. One commenter stated 

that relaxing the requirement for direct 

community involvement on CHDO 

boards would dilute the intended 

impact of the designation as a means for 

maintaining accountability to lowincome community residents because 

authorized representatives from 

nonprofit organizations are not required 

to reside in the neighborhood nor be 

low-income themselves. The commenter 

recommended that HUD remove the 

‘‘authorized representative’’ option for 

meeting the CHDO board member 

eligibility requirement. Another 

commenter stated that the expanded 

definition is not community-centered 

and does not truly connect the 

governance of the CHDO to the 

community. 

One commenter stated that although 

they were not firmly opposed to the 

change, they were concerned about the 

potential of the proposed changes to 

water down the representation of lowincome people in CHDO governance, 

which is an important source of 

accountability. The commenter urged 

the Department to consider the 

possibility of layering using a tandem 

requirement to preserve the 

opportunities for low-income people to 

participate in this process. 

HUD Response: The Department is 

moving forward with language allowing 

for designees of nonprofit organizations 

in the community that address the 

housing or supportive service needs of 

low-income community residents or 

residents of low-income neighborhoods 

to count towards the one-third board 


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22See earlier preamble discussion on why the 

Department is using the term ‘‘designee.’’ 

23See paragraph (10) of the definition of 

community housing development organization in 

24 CFR 92.2. 

membership requirement in paragraph 

(8)(i) of the definition of community 

housing development organization in 

§ 92.2.22 The Department believes that 

designees of nonprofit organizations 

that house or provide supportive 

services to low-income residents or 

residents of low-income neighborhoods 

are accountable to the people they serve, 

understand the challenges they face, 

and are in a position to represent the 

beneficiaries of their services in making 

decisions on the design, siting, 

development, and management of 

affordable housing, in accordance with 

42 U.S.C. 12704(6)(B). 

Designees of nonprofit organizations 

that address the housing or supportive 

service needs of low-income community 

residents or residents of low-income 

neighborhoods may not always live in 

low-income neighborhoods or be lowincome, but they directly serve those 

that are, including persons with 

disabilities, victims of domestic 

violence, homeless persons, people 

suffering from food insecurity, and 

victims of civil rights violations. Their 

participation strengthens the board of 

CHDOs because these organizations 

have deep ties to the community and 

the people they serve. Far from watering 

down the requirements for board 

members, the Department believes that 

this better enables CHDOs to retain 

subject matter experts that better 

understand the community being served 

by the CHDO. 

O. Paragraph (8) of CHDO Definition— 

Building More Equity Into Governing 

Boards 

One commenter stated that it was 

concerned about recruitment and 

retention of low-income residents for 

board membership and understands 

HUD’s proposal to relax board member 

restrictions, but would appreciate 

further consideration/guidance toward 

instilling equity in board member 

criteria requirements because this 

impacts board member 

representativeness. The commenter 

stated that this relaxation may 

eventually have potentially negative 

effects on low-income tenants residing 

in the affordable housing development. 

The commenter further stated that a 

board that is technically allowed per 

HUD requirements may not be 

representative of the community it 

serves. 

HUD Response: The Department 

appreciates the comment and recognizes 

the tension inherent in simplifying 

qualification requirements to increase 

the number of organizations that can 

qualify as CHDOs and maintaining 

accountability to the low-income 

neighborhood where a project is located. 

HUD believes that the requirement in 

paragraph (8)(ii) that a CHDO have a 

formal process for low-income program 

beneficiaries to advise the organization 

in its decisions regarding the design, 

siting, development, and management of 

affordable housing helps maintain 

accountability to low-income tenants 

residing in projects. HUD is attempting 

to build equity in this by including 

‘‘designees of nonprofit organizations in 

the community that address the housing 

or supportive service needs of lowincome residents or residents of lowincome neighborhoods, including 

homeless providers, Fair Housing 

Initiatives Program (FHIP) providers, 

Legal Aid, disability rights 

organizations, and victim service 

providers.’’ 

HUD has determined that the entities 

used as examples in this section each 

assist protected classes including 

persons with disabilities; survivors of 

domestic violence, dating violence, 

stalking, sexual assault, and human 

trafficking; and persons suffering from 

various forms of discrimination. By 

clarifying how FHIPs, Legal Aid 

organizations, and other civil rights 

organizations can count towards 

representation, HUD is advancing equity 

in CHDO board composition. Moreover, 

the Department believes that each hold 

a connection to the community and will 

make CHDOs more representative of the 

community and the needs of lowincome residents within the 

community. 

P. Paragraph (8) of CHDO Definition— 

Examples of Nonprofit Organizations 

That Address the Housing or Supportive 

Service Needs of Residents of LowIncome Neighborhoods 

Commenters requested that HUD 

clarify in the final rule or supplemental 

guidance whether the list of community 

serving organizations included in the 

proposed rule is organizations from 

which authorized representatives can 

qualify for the low-income portion of 

the CHDO board is exhaustive or 

illustrative in nature. Some commenters 

urged HUD to be as expansive as 

possible in identifying the types of 

organizations included in this 

provision. Some commenters suggested 

other types of organizations that should 

be specifically listed in the regulation, 

including health and behavioral 

healthcare providers, healthcare 

organizations, food pantries, workforce 

development organizations, Native 

American- and Tribal-serving 

organizations, and faith-based 

organizations. Commenters stated that 

the inclusion of faith-based institutions 

could further HUD’s goals of supporting 

CHDOs in rural areas. One commenter 

cited the historically significant 

relationship between faith-based 

organizations and housing development 

organizations, especially in rural areas. 

One commenter recommended against 

the HOME program rule listing out 

specific organizations that meet the lowincome representative requirement for 

CHDO boards. The commenter stated 

that if HUD wishes to include a specific 

list of organizations, then HUD should 

make sure the list explicitly states that 

the listed organizations are just 

examples of organizations that qualify to 

meet the low-income representative 

requirement for CHDO boards. 

HUD Response: The Department 

appreciates the recommendations made 

by the commenters. The Department 

believes the current list of examples of 

nonprofit organizations that address 

housing or supportive service needs of 

low-income residents or residents of 

low-income-neighborhoods in 

paragraph (8)(i) of the definition of 

CHDO in § 92.2 is sufficient for the 

public to understand what type of 

organizations meet this requirement. 

Some of the commenters’ 

recommendations, like faith-based 

organizations, are already explicitly 

mentioned in HOME regulations.23

Many of the other organizations that 

commenters mention will qualify if they 

meet the nonprofit requirements and 

provide needed housing or supportive 

services to community residents. The 

Department will provide additional 

implementation guidance on the new 

CHDO requirements. 

Q. Paragraph (8) of CHDO Definition— 

Reduce Low-Income Board Membership 

Requirements 

Commenters encouraged HUD to 

reduce the low-income board 

requirement below the current one-third 

or eliminate the low-income 

representation requirement altogether. 

One commenter stated that expanding 

low-income board eligibility to include 

‘‘designees of low-income neighborhood 

organizations’’ will not increase 

nonprofit interest in becoming CHDOs 

because nonprofit organizations do not 

want to make significant changes to 

their board composition. One 

commenter who supported the proposed 

changes also recommended reducing the 

low-income board representation from 


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one-third to 10 or 15 percent, stating 

that this would still constitute 

significant representation by lowincome community residents. 

HUD Response: The Department 

believes that the one-third board 

representation requirement is consistent 

with the statutory intent in 42 U.S.C. 

12704(6)(B), which requires that CHDOs 

maintain accountability to low-income 

community residents through 

‘‘significant’’ representation on the 

organization’s governing board and ‘‘to 

the extent practicable, to low-income 

beneficiaries with regard to decisions on 

the design, siting, development, and 

management of affordable housing.’’ 

Reducing the percentage or eliminating 

the requirement would not be consistent 

with the intent of the Act and would 

decrease the CHDO’s connection with 

the people they serve. The Department 

is declining to change the one-third 

board representation requirement. 

R. Paragraph (8) of CHDO Definition— 

Meeting the Low-Income Representation 

Requirement in Rural Communities 

A commenter stated that in their rural 

service area there are no low-income 

neighborhood organizations and that 

one of their board members works at a 

nonprofit as the school district’s 

homeless liaison and family support 

specialist. The commenter stated that 

because there are no low-income 

neighborhoods in the school district, the 

noted board member would not count 

toward the one-third low-income 

representation. The commenter 

suggested that HUD consider using 

tandem requirements to preserve the 

opportunities for low-income people to 

participate in this process. Another 

commenter with a rural service area 

suggested that the language in paragraph 

(8)(i) of § 92.2 be changed to ‘‘. . . 

authorized representatives of nonprofit 

organizations in the community that 

address the housing or supportive 

service needs of low-income residents of 

the CHDO’s service area . . . .’’ 

HUD Response: The Department 

recognizes the challenges in rural 

communities where nonprofit 

organizations may be providing 

supportive services to low-income 

individuals but may not be serving in a 

low-income community. The 

Department believes that it has 

sufficiently broadened paragraph (8) to 

account for designees of nonprofit 

organizations that serve low-income 

residents within the community that the 

CHDO serves. This should address the 

commenter’s concerns and better enable 

people who serve low-income 

community residents to represent their 

interests on the board of a CHDO. 

S. Paragraph (8) of CHDO Definition— 

The Use of the Term ‘‘Residents of LowIncome Neighborhoods’’ Is Too Limiting 

Another commenter also suggested 

that HUD reconsider the phrasing 

‘‘residents of low-income 

neighborhoods’’ because it suggests that 

service organizations who are regional 

or whose clients are not defined by the 

clients’ neighborhood of residence are 

not eligible. The commenter stated that 

agencies that are included in this 

criterion necessarily have regional 

footprints, and the residents they serve 

are defined by some income or other 

‘‘need’’ characteristic, not the income 

level of the neighborhood in which the 

client lives. 

HUD Response: The Department 

agrees that the phrasing of ‘‘residents of 

low-income neighborhoods’’ could be 

read as too narrow and does not fully 

capture the statutory intent of the 

definition contained in 42 U.S.C. 

12704(6). 42 U.S.C. 12704(6)(B) requires 

that a CHDO be a nonprofit organization 

that ‘‘maintains, through significant 

representation on the organization’s 

governing board and otherwise, 

accountability to low-income 

community residents and, to the extent 

practicable, low-income beneficiaries 

with regard to decisions on the design, 

siting, development, and management of 

affordable housing . . .’’ HUD has 

determined that adding ‘‘low-income 

beneficiaries of HUD programs,’’ to the 

list of individuals that may count 

towards the one-third board 

membership requirement contained in 

paragraph (8)(i) of the definition of 

CHDO in § 92.2 can partly address the 

commenter’s concern while also being 

more consistent with the statutory 

requirement. HUD believes this will 

address the commenter’s concerns 

because status as a low-income 

beneficiary of HUD programs is not 

connected to the immediate geography 

of the person served. HUD encourages 

CHDOs, to the greatest extent 

practicable, to include low-income 

beneficiaries of HUD programs because 

their inclusion will lead to increased 

accountability. HUD recognizes that not 

all HOME rental projects and not all 

people served by HUD programs reside 

in low-income communities and 

believes that this addition will make 

this representation more inclusive. HUD 

encourages siting projects outside of 

areas of concentrated poverty but still 

wants accountability to the beneficiaries 

of the program served. Therefore, HUD 

believes this change is a meaningful 

revision. HUD would note that while 

HUD is proposing this revision to make 

it clearer that beneficiaries of HUD 

programs can count towards the 

representation requirements, the 

Department would like to clarify that 

the term ‘‘other low-income community 

residents’’ is already part of the 

regulation and the term ‘‘community’’ 

can be considered a multi-county area. 

So, it is very possible that many of the 

people the commenter described may 

already be eligible to count towards the 

one-third board representation 

requirement contained in paragraph 

(8)(i) of the definition of CHDO in 

§ 92.2. 

The Department is also addressing the 

commenter’s concerns by expanding the 

type of designees of nonprofit 

organizations to include nonprofit 

organizations that serve ‘‘low-income 

residents’’ instead of organizations 

serving ‘‘residents of low-income 

neighborhoods.’’ Therefore, in the 

example the commenter gave, if the 

person was a designee of a nonprofit 

organization that provided services to a 

low-income resident of the CHDO’s 

community, then the person would be 

able to count towards the one-third 

board representation requirement in 

paragraph (8) of the definition of CHDO. 

T. Paragraph (8) of CHDO Definition— 

Lived Experience Should Count 

Towards Low-Income Board 

Representation Requirements 

Commenters stated that HUD should 

consider individuals who are not lowincome but have previous lived 

experience as a low-income person or a 

homeless person to qualify as a lowincome community resident for the 

purposes of meeting the requirement for 

one-third low-income representation on 

the CHDO governing board. These 

commenters stated that the changes in 

circumstance, such as increases in 

income, do not eliminate such a board 

member’s lived experience, which make 

them a valuable representative of the 

interests of low-income people and 

places. 

Other commenters recommended that 

HUD revise the regulation to permit 

individuals who joined the board as a 

low-income community resident to 

retain that designation even if their 

income rises above the low-income 

level. Some commenters stated that 

HUD should provide a grace period in 

such cases because it is difficult for 

CHDOs to replace board members when 

their eligibility as a low-income 

representative unexpectedly ends. 

Similarly, a commenter suggested that if 

a board member moves or has their 

home address re-designated into a 

different census tract, HUD should 

allow a grace period not to exceed the 

lesser of their board term or five years 


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for that board member to continue to 

qualify as living in a low-income 

community. Commenters suggested 

grace periods of varying length, 

including three years and 10 years. 

HUD Response: The Department 

agrees that current lived experience 

should count towards board 

representation requirement and has 

expanded the list of people that can 

count towards the one-third board 

representation requirement in paragraph 

(8) of the definition of CHDO to include 

low-income beneficiaries of HUD 

programs. HUD also considered whether 

persons with former lived experience of 

being low-income or homeless should 

qualify towards the requirement that an 

organization’s governing board maintain 

accountability to low-income 

community residents and low-income 

beneficiaries. Unfortunately, the 

Department believes that this does not 

satisfy the statutory requirement that 

board members be connected and 

answerable to low-income community 

residents because they might not 

appropriately account for the present 

challenges impacting low-income 

persons in the community being served. 

The Department also considered 

providing a set time period in which a 

person could qualify as a low-income 

board member regardless of whether the 

board member’s income increased. The 

Department believed that doing so could 

lead to a result where individuals who 

were not low-income, no longer lived in 

low-income communities, and had no 

ties or accountability structures to the 

low-income community would be 

counted towards the board 

representation requirement. This is not 

consistent with the intent of the Act and 

does not provide accountability to the 

people that the CHDO serves. As a 

result, the Department has declined to 

make the commenters’ recommended 

revisions. 

U. Paragraph (8) of CHDO Definition— 

Expanding the Definition of 

‘‘Community’’ To Be Statewide 

Some commenters supported the 

proposed change to allow the definition 

of the community to include the entire 

State because it would address 

challenges rural communities face in 

meeting the governing board and staff 

capacity requirements and increase the 

usage of CHDO set-aside funds in rural 

areas. One commenter stated that HUD’s 

proposed rule would benefit rural 

organizations that have experienced 

negative impacts from the existing high 

standards in the definition of CHDO in 

HUD’s regulations. 

Many commenters raised concerns or 

strongly objected to expanding 

community to mean the entire State. 

These commenters believed it would 

weaken the connection of a CHDO to the 

low-income community being served. 

One commenter noted that the proposed 

change would disincentivize State 

participating jurisdictions from working 

to build the capacity of local groups, 

which is antithetical to the intent of the 

CHDO set-aside requirement. One 

commenter expressed concern regarding 

the change to allow Statewide CHDOs, 

particularly for very large and 

geographically diverse States such as 

California, and recommended HUD 

allow State participating jurisdictions 

the flexibility to evaluate the capacity of 

CHDOs to serve the entire State, 

especially rural and underserved areas 

of the State. Commenters stated that the 

proposed change went too far in 

permitting rural CHDOs to qualify based 

on board representation from the areas 

being served. Several commenters stated 

the proposed change would 

inappropriately characterize all rural 

areas as equal for purposes of lowincome representation. One commenter 

stated that under the proposed 

regulation, a Statewide CHDO could 

develop a board with no low-income 

presence, accountability, or connection 

with the community served. Another 

commenter asked HUD to consider the 

tension between the need to drive more 

CHDO dollars to rural communities and 

the need to build capacity and provide 

opportunities for smaller rural-serving 

CHDOs when moving forward with the 

consideration of Statewide CHDOs. 

Commenters stated that while they 

recognized the critical need for more 

CHDOs in rural areas, they were 

concerned that the proposed change 

would result in small community-based 

organizations having to compete for 

CHDO set-aside funds with large, highcapacity Statewide organizations. One 

commenter stated that small, rural 

CHDOs would be disadvantaged by their 

greater need for capacity building 

funding. Commenters stated that if HUD 

adopts the proposed change, it should 

also implement mechanisms to ensure 

that Statewide CHDOs consider local 

community input and priorities in the 

rural communities they serve and 

consider how to ensure smaller 

organizations are not wholly cut out 

from accessing CHDO resources. 

Some commenters recommended that 

HUD allow CHDOs with Statewide 

service areas to be eligible as CHDOs but 

only award project dollars to CHDOs 

(located anywhere in the State) with at 

least three years of service to the 

community in which the project is 

located, as opposed to one year of 

service anywhere in the State. 

Commenters noted that the 

regulations already allow for rural 

communities to be defined as a multicounty area. One such commenter stated 

that 42 U.S.C. 12704 prohibits 

participating jurisdictions from 

requiring such a CHDO with such a 

community to have board representation 

from each of its counties. The 

commenter stated that there is currently 

no regulatory barrier for a CHDO to 

claim as its community every county in 

a State with the exception of areas 

within a Metropolitan Statistical Area; 

the barrier that exists is participating 

jurisdictions’ interpretation of ‘‘multicounty.’’ The commenter suggested that 

a better proposal would be for HUD to 

direct the most expansive interpretation 

of ‘‘multi-county’’, and to allow 

individual Statewide participating 

jurisdictions to apply for waivers from 

the existing regulation to create 

Statewide CHDOs only if needed. 

HUD Response: The Department 

appreciates the many thoughtful 

comments submitted by many 

commenters on both sides of this 

difficult issue. While HUD remains 

concerned about the challenges many 

participating jurisdictions have in 

identifying and sustaining CHDOs that 

serve rural areas, it has decided not to 

adopt the change to the definition of 

community in paragraph (8) of the 

CHDO definition. The Department is 

persuaded by commenters that adopting 

this proposal would impair or eliminate 

the accountability of CHDOs to the lowincome communities being served with 

CHDO set-aside funds and would 

negatively affect small rural CHDOs by 

putting them in competition with larger 

Statewide organizations with more 

capacity but less connection to the lowincome community being served. 

HUD appreciates commenter 

suggestions that if the proposal were to 

be adopted, the Department should 

impose mechanisms to help ensure that 

Statewide CHDOs consider local 

community input, require a longer 

history of serving a specific rural 

community, or mitigate the 

disadvantage that smaller rural CHDOs 

would have in comparison to Statewide 

organizations in competing for CHDO 

set-aside funds. However, the 

Department recognizes that the 

qualification of nonprofit organizations 

as CHDOs is already substantially 

regulated and believes that additional 

regulation would be counterproductive. 

Instead, HUD considers the adoption of 

other proposed changes to the CHDO 

definition in paragraphs (8) and (9) of 

§ 92.2, to the developer and sponsor 

roles at § 92.300(a)(2) and (3), and the 

elimination of the proposed revision of 


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the definition of community in § 92.2 to 

be a middle ground that will hopefully 

increase the availability of CHDOs to 

serve rural areas without diminishing 

the accountability of those CHDOs to 

the low-income communities being 

served. 

In response to the commenter that 

stated that 42 U.S.C. 12704 prohibits a 

participating jurisdiction from requiring 

a CHDO serving rural areas to have 

board representation from each of its 

counties, HUD notes that this 

interpretation of the Act is incorrect. 

The Act prohibits HUD, not 

participating jurisdictions, from 

requiring that an organization must have 

representation from each county in its 

service area to be designated as a CHDO. 

Because HOME is a block grant 

program, participating jurisdictions 

have discretion to establish 

requirements for their programs and 

select projects as they choose through 

requests for proposals or other legally 

permissible methods. Consequently, 

participating jurisdictions can establish 

their own requirements for designating 

or awarding funds to CHDOs that are 

more stringent and take into account 

these types of considerations. 

V. Paragraph (9) of CHDO Definition— 

Using Volunteers To Demonstrate 

Capacity 

Some commenters supported the 

proposed change in paragraph (9)(i) that 

would permit the capacity and 

experience of volunteers who will work 

directly on a HOME-assisted project and 

are officers or board members to be 

considered as part of demonstrated 

capacity. Commenters stated that the 

proposed change would make it easier 

for organizations to qualify as CHDOs. 

One commenter suggested that HUD 

not limit volunteers to board members 

as they considered this limitation 

unnecessary. The commenter noted that 

if there are concerns about 

dependability or ongoing capacity, then 

the standard should be broadened to 

also include ‘‘contracted volunteers.’’ 

Other commenters that supported the 

proposed change suggested that HUD 

consider imposing guardrails on 

volunteer capacity such as applying a 

limit on the period that the experience 

of a volunteer official or board member 

may be counted toward a CHDO’s 

capacity. Some commenters 

recommended a three-year limit. One 

commenter stated that prolonged 

reliance on officials and board members 

will harm an organization when it 

comes to meeting development capacity 

requirements, especially because 

nonprofits have high staff turnover. The 

commenter stated that this will affect 

the ability of nonprofits to train new 

staff on HOME requirements and place 

the burden of such education on the 

participating jurisdiction. 

One commenter stated that they had 

serious concerns about volunteers 

serving on a board in meeting the 

capacity requirements for an 

organization. The commenter stated 

they had these concerns because a 

volunteer will generally not dedicate the 

same time and effort as an employee. 

The commenter also stated that the 

proposed change would allow for 

people to create shell organizations that 

have a representative board who are also 

real estate professionals and have that 

qualify as a CHDO organization. 

A commenter noted that the 

definition of CHDO in § 92.2(9) states 

that ‘‘the nonprofit organization must 

have employees or volunteers,’’ which 

appears to allow an organization with 

volunteers and no employees to be 

designated as a CHDO. The commenter 

requested that HUD clarify whether this 

language was intentional or 

unintentional. The commenter stated 

further that HUD could refine the 

language to add clarity on the 

relationship between ‘‘employees’’ and 

the nonprofit seeking CHDO 

designation. 

HUD Response: The Department 

thanks the commenters for reviewing 

the rule. The Department especially 

thanks the commenter that informed the 

Department that the provision as drafted 

in the proposed rule could have allowed 

a CHDO to meet the capacity 

requirement without paid staff. This 

was not what the Department intended. 

The Department is revising paragraph 

(9)(i) of the definition of CHDO. The 

Department believes that requiring paid 

staff and then allowing their capacity to 

be supplemented by volunteers strikes 

an appropriate balance. The Department 

also believes this addresses commenters 

who requested that there be guardrails 

or time limitations. 

Under the final rule, CHDOs must 

maintain paid staff that will manage the 

development process. CHDOs can also 

rely upon board members and officers of 

the organization with significant 

development experience because those 

board members and officers have more 

lasting ties to the organization than 

typical volunteers, who may only be 

volunteering for individual projects or 

for a limited time. 

The Department is also declining to 

allow the use of a ‘‘contracted 

volunteer,’’ which is an amorphous term 

that could lead to abuse or indirect 

control of a CHDO by a for-profit entity, 

or lead to determining that an 

organization lacks the capacity when 

the person demonstrating capacity is not 

contracted for the full development 

cycle. Even if the volunteer is 

contracted for the amount of time 

overlaps with the development cycle for 

a particular project, the ties of 

contracted volunteer service are not 

nearly as strong or as binding as paid 

staff, board members, or officers. 

Typically, the consequences are far less 

significant if a contracted volunteer 

ends their volunteer term early, while 

volunteer board members and officers 

have terms of office, and the 

organization generally has mechanisms 

for replacement of former officers or 

board members written into their 

organizational documents to ensure 

proper governance. 

W. Paragraph (9) of CHDO Definition— 

Experience With Other Funding Sources 

and Programs 

Commenters stated that they support 

the proposed rule language that would 

broaden the requirement that an 

organization have demonstrated staff 

capacity for carrying out projects 

assisted with HOME funds to include 

housing projects funded with other 

Federal funds, LIHTC, or local and State 

affordable housing programs. One 

commenter expressed support because 

the proposed change would help small 

rural CHDOs meet organizational 

capacity requirements. 

Commenters also requested that HUD 

explicitly include experience with the 

New Markets Tax Credits and Federal 

Home Loan Bank Affordable Housing 

Program. 

HUD Response: The Department 

agrees with commenters that the list of 

types of programs or forms of assistance 

could be broadened and that experience 

in the Federal Home Loan Bank 

Affordable Housing Program is 

sufficient to demonstrate capacity. The 

Department is therefore adding this 

program to this list of programs that 

demonstrate capacity in paragraph (9) of 

the definition of CHDO in § 92.2. The 

Department is declining to add 

experience with the New Market Tax 

Credits as these credits are exclusively 

for non-residential uses and experience 

in commercial development alone is not 

sufficient to demonstrate experience 

with the challenges of housing 

development. 

X. Paragraph (9) of CHDO Definition— 

Use of Donated Labor, Consultants, and 

Others 

Commenters made suggestions 

regarding other individuals whose 

experience should be counted toward a 

CHDO’s capacity. Commenters 

recommended that the final rule permit 


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24The Consolidated Appropriations Act, 2016 

Public Law 114–113, div. L, title II, Dec. 18, 2015, 

129 Stat. 2878 said that notwithstanding the 

affordability requirements contained in section 

215(b)(3)(A) of the Act [42 U.S.C. 12745(b)(3)(A)], 

community land trusts may ‘‘hold and exercise 

purchase options, rights of first refusal or other 

preemptive rights to purchase the housing to 

preserve affordability, including but not limited to 

the right to purchase the housing in lieu of 

foreclosure.’’ 

the experience of staff from affiliated 

entities, parent companies, for-profit 

developers, public housing authorities, 

and regional planning commissions 

whose services are donated to the CHDO 

be considered as capacity of a CHDO. 

One commenter stated that HUD should 

clarify the difference between donated 

time and volunteer time. Several 

commenters also recommended that 

CHDOs be allowed to demonstrate 

capacity and experience through the use 

of consultants and non-employee 

compensation. 

HUD Response: The Department does 

not believe that donated labor is 

sufficient to meet the statutory 

requirement in 42 U.S.C. 12704(6)(C) 

that a CHDO have staff with 

demonstrated capacity to own, develop, 

or sponsor a HOME project. The CHDO 

itself must be capable of participating in 

the housing development process. When 

an organization relies upon the 

expertise of donated labor or 

individuals who work for affiliated 

organizations, those individuals lack 

lasting ties to the organization and may 

only be donated for individual projects 

or for a limited time. The donated labor 

also may lead to situations where 

organizations that are not CHDOs 

exercise outsized influence over CHDO 

projects, thereby potentially 

undermining the purposes of the Act. 

The Department does allow the use of 

a consultant in the first year that a 

CHDO is provided HOME funds; 

paragraph (9)(i) reads as follows: ‘‘[f]or 

its first year of funding as a community 

housing development organization, an 

organization may satisfy [the capacity] 

requirement through a contract with a 

consultant who has housing 

development experience to train 

appropriate key paid staff of the 

organization.’’ The Department believes 

that it is appropriate to retain this 

provision but is adding clarification that 

the staff that are to be trained must be 

paid staff, as per the Department’s 

earlier comment response on the 

importance of paid staff in 

demonstrating capacity to develop 

HOME projects. 

Y. Revise the CHDO Definition To 

Enable Participation of More ResidentOwned Communities 

One commenter who supported the 

flexibility provided to CHDOs in the 

proposed rule stated that the changes do 

not allow resident-owned communities 

to qualify as CHDOs. The commenter 

stated that such communities cannot 

meet the 501(c)(3) status and 

demonstrated capacity requirements, 

even though they fully meet the intent 

of CHDOs. The commenter stated that 

resident-owned manufactured housing 

communities are owned by 

predominantly low-income community 

members organized to govern and 

preserve their communities and have 

flourished for 40 years due to a system 

of professional technical assistance, 

training, and ongoing business 

coaching. The commenter urged HUD to 

support capacity building systems for 

resident-owned communities and other 

eligible manufactured housing 

communities. 

HUD Response: The Department 

appreciates the comments and agrees 

that using HOME funds, including 

CHDO set-aside funds, for manufactured 

housing communities presents some 

challenges. The Act requires that to 

qualify as a CHDO, an organization must 

be a non-profit organization. The 

regulations implement that statutory 

provision through a requirement that a 

CHDO have tax-exempt status 

evidenced by a 501(c)(3), 501(c)(4), or 

section 905 designation from the 

Internal Revenue Service. In addition, 

the Act and the Consolidated and 

Further Continuing Appropriations Act 

of 2012 (Pub. L. 112–55) and the 

Consolidated and Further Continuing 

Appropriations Act of 2013 (Pub. L. 

113–6) require that a CHDO have staff 

with demonstrated capacity to 

undertake HOME-assisted housing 

activities. These requirements do not 

apply to HOME funds outside of the 

CHDO set-aside making those funds 

possibly a better fit for such projects. 

The Department provides a broad range 

of technical assistance through its 

Community Compass demand-response 

system, which can be of assistance in 

developing approaches to use HOME 

funds to assist manufactured home 

communities. 

§ 92.2—Community Land Trust 

Definition 

A. General Comments on the Definition 

Several commenters expressed 

support for HUD’s proposed definition 

of the term ‘‘community land trust’’ 

with many commenters noting that the 

proposed definition allows for 

flexibility in the composition of the 

organizational board and governance of 

community land trusts across the 

country. One commenter specifically 

noted that the proposed definition does 

not specify the structure of the 

community land trust’s governing board 

yet retains the nonprofit purpose, the 

centrality of land, the lasting 

affordability, and codifies the 

preemptive purchase rights of 

community land trusts to prevent the 

loss of units to the open market. 

Two commenters support the 

elevation of the term ‘‘community land 

trust’’ to the definition section of the 

regulation noting that the placement 

makes it clear that the definition applies 

throughout the HOME program. 

Two commenters noted the 

importance of community land trusts to 

the affordable housing market noting 

that community land trusts help 

families bridge the gap between rental 

housing and homeownership, benefit 

residents of color in communities facing 

displacement, increase resilience 

against climate extremes, pass lower 

property taxes through to the project or 

end user, and are a dedicated partner for 

local government funding for affordable 

housing. Several commenters also stated 

that the proposed definition will enable 

more community land trusts to 

participate in the HOME program, while 

two commenters noted that rural 

community land trusts in particular 

would be encouraged to participate in 

the HOME program. Two commenters 

also added that the proposed changes 

would allow community land trusts to 

fully realize the benefits of the HOME 

program and the right to a preemptive 

purchase option provided in 2016. 

Several commenters expressed 

concern about or opposition to HUD’s 

proposed definition of community land 

trust. 

HUD Response: The Department is 

moving forward with including a 

definition of community land trust in 

§ 92.2. The definition of community 

land trust better enables these 

organizations to participate in the 

HOME program in the manner 

envisioned by the Act and the drafters 

of the Consolidated Appropriations Act, 

2016.24

B. Opposition to the Definition Over 

Concerns of Conflict With 

Environmental Requirements 

One commenter asked if HUD’s 

proposal regarding community land 

trusts would violate other HUD 

requirements, including the 

environmental review process 

requirement that prevents proposed 

projects from being built too close to 

other low-income housing. 

HUD Response: The commenter is 

mistaken. There are no low-income 


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25The Consolidated Appropriations Act, 2016 

Public Law 114–113, div. L, title II, Dec. 18, 2015, 

129 Stat. 2878 said that notwithstanding the 

affordability requirements contained in section 

215(b)(3)(A) of the Act [42 U.S.C. 12745(b)(3)(A)], 

community land trusts may ‘‘hold and exercise 

purchase options, rights of first refusal or other 

preemptive rights to purchase the housing to 

preserve affordability, including but not limited to 

the right to purchase the housing in lieu of 

foreclosure.’’ 

26The Consolidated Appropriations Act, 2016 

only allows community land trusts to exercises 

purchase rights for ‘‘funds provided in prior and 

subsequent appropriations acts that were or are 

used by community land trusts for the development 

of affordable homeownership housing pursuant to 

section 215(b) of such Act.’’ Public Law 114–113, 

div. L, title II, Dec. 18, 2015, 129 Stat. 2878. 

housing concentration requirements as 

part of the HOME environmental review 

process. Section 92.202(b) requires that 

new rental housing meet the site and 

neighborhood requirements contained 

in 24 CFR 983.57(e)(2) and (3) but those 

requirements are not applicable to 

homeownership projects that are 

developed by community land trusts. 

C. Add ‘‘Membership’’ or ‘‘CommunityGoverned’’ to the Organizational 

Requirements of Community Land 

Trusts 

Two commenters objected to the 

proposed definition noting that HUD 

should add the phrase ‘‘membership or 

community-governed’’ to the definition 

to reflect the community governance 

structure inherent in community land 

trusts. The commenters added that HUD 

should address the underlying concerns 

about participating jurisdictions’ 

difficulty determining the legitimacy of 

the governing models through 

education. 

HUD Response: The Department 

understands the commenter’s concern 

but does not believe that adding 

additional community governance 

structures to the definition of 

community land trusts in § 92.2 is 

appropriate at this time. Community 

land trusts may also attempt to meet the 

definition of CHDO in § 92.2, and own, 

develop, or sponsor HOME projects in 

accordance with § 92.300. Adding 

additional community governance 

requirements in addition to those 

contained in § 92.2 or § 92.300 may 

create too high of a bar for participation 

in the HOME program. 

Moreover, community land trust 

governance structures vary from State to 

State, based upon State laws and local 

models. In the materials that various 

commenters provided and in the State 

laws that were reviewed in the 

preparation of the proposed rule text, 

the board requirements and best 

practices varied significantly. Given the 

wide variety of community land trust 

models operating over a significant 

period of time throughout the nation, 

the Department does not wish to 

inadvertently narrow the definition or 

eliminate consideration of an 

organization that would have met the 

intent of the drafters of the Act or the 

Consolidated Appropriations Act, 

2016.25

The Department is committed to 

making it easier for participating 

jurisdictions to support CHDOs and 

better implement statutory provisions 

that enable community land trusts to 

participate in the HOME program. 

D. The Definition of Community Land 

Trusts Is Too Restrictive 

Another commentor objected to 

HUD’s proposed definition of 

community land trust as too restrictive, 

stating that the proposed definition 

could disqualify many community land 

trusts from using the additional tools 

that the revised rule would provide. The 

commenter stated that the use of the 

phrase ‘‘development and maintenance’’ 

would exclude community land trusts 

that carry out non-development 

activities such as land acquisition and 

noted that few community land trusts 

provide maintenance services, which 

are generally the responsibility of the 

owner. The commenter suggested 

replacing the phrase ‘‘development and 

maintenance’’ with the word 

‘‘provision,’’ as in ‘‘the provision of 

housing that is permanently affordable 

to low- and moderate-income persons,’’ 

thereby aligning the proposed 

community land trust definition with 

the HOME definition of a CHDO as 

‘‘[having] among its purposes, the 

provision of decent housing.’’ 

HUD Response: The Department 

agrees with the commenter that many 

community land trusts do not develop 

or maintain housing. As models vary 

nationwide, the Department recognizes 

that the wording of the definition was 

too narrow to permit community land 

trusts that acquire and hold existing 

housing to be considered land trusts. 

Likewise, the use of the term 

maintenance was confusing for some 

community land trusts that do not have 

the responsibility of maintaining the 

housing during the term of the ground 

lease. The Department would note that 

in order to exercise a right of first 

refusal, the housing must have been 

developed by a community land trust 

using HOME funds.26 Therefore, while a 

community land trust may have, as its 

purposes, ‘‘acquiring’’ or ‘‘holding’’ 

land, in order to exercise rights of first 

refusal, the housing must have been 

developed by the community land trust. 

E. Revise Organizational Requirements 

of Community Land Trusts To Allow 

New Smaller Community Land Trusts 

One commenter stated that HUD 

should consider amending the 

community land trust board 

requirements to allow flexibility for new 

community land trusts with small 

portfolios of homes that do not have 

sufficient lessees to comply with the 

requirements. 

HUD Response: The definition of 

community land trusts in § 92.2 does 

not have strict board requirements other 

than the community land trust not be 

sponsored by a for-profit entity. A new 

organization is a community land trust 

once it meets all of the requirements of 

the definition. If a new organization 

meets the requirements in the 

definition, even if it was only for a small 

portfolio, it is a community land trust 

for the purposes of the HOME program 

definition. The Department would like 

to remind the public that to exercise the 

right of first refusal described in 

§ 92.254, which is what the definition of 

community land trust is used for, the 

new community land trust must 

develop HOME homeownership 

housing in accordance with the 

requirements of 24 CFR part 92. 

F. Conflicts Between the Definition of 

Community Land Trust in § 92.2 and 

§ 92.302 

One commenter stated there is an 

internal conflict between the proposed 

definition of a ‘‘community land trust’’ 

in § 92.2 and the proposed housing 

education and organization support 

language at § 92.302(b)(3)(i). 

Specifically, the commenter stated there 

is a conflict between the language of the 

proposed community land trust 

definition, which allows a combination 

of a deed restrictions and a preemptive 

purchase right at a formula price in lieu 

of a ground lease, and § 92.302(b)(3)(i), 

which is limited to community land 

trusts that retain title and convey it via 

a ‘‘long-term ground lease.’’ The 

commenter noted there is no easy 

solution because allowing non-ground 

lease approaches may inadvertently 

expand the definition of a community 

land trust in a manner HUD may not 

have anticipated. 

HUD Response: The Department 

acknowledges that the community land 

trust requirements established in 

§ 92.203(b)(3)(i) differ from the 

definition of community land trust 

proposed by the Department in § 92.2. 

Under NAHA, to receive housing 

education and organizational support 


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funds, a community land trust must 

meet the requirements established in the 

statute, including but not limited to the 

requirement that a community land 

trust acquire parcels of land, held in 

perpetuity, primarily for conveyance 

under long-term ground lease. The 

Department codified these requirements 

in the regulations at § 92.302(b)(3)(i). 

The Consolidated Appropriations Act, 

2016, which for the first time permitted 

community land trusts to exercise 

preemptive purchase rights for HOMEassisted homeownership units, required 

that HUD establish a revised definition 

of community land trust for this 

purpose that did not limit program 

participation to the narrower definition 

of community land trusts that solely 

enforce restrictions through a ground 

lease, as is required for housing 

education and organizational support 

funds under NAHA. The proposed 

definition of community land trust in 

§ 92.2 is reflective of how community 

land trusts enforce restrictions 

nationwide, including in the HOME 

program. The requirements of 

homeownership in § 92.2, as revised, 

still apply, as do the period of 

affordability requirements in § 92.254. 

The Department understands that there 

are different dates and different 

definitions for related requirements and 

will provide additional implementation 

guidance on the definitions of 

community land trust in § 92.2 and 

§ 92.302, how to meet the requirements 

for homeownership, and preserving 

affordability when a community land 

trust exercises a purchase right. 

The Department will continue to use 

the definition of community land trust 

established in the Act and promulgated 

at § 92.302(b)(3)(i) should the 

Department receive funds for housing 

education and organizational support in 

the future. The Department is moving 

forward with the separate regulatory 

definition of community land trust in 

§ 92.2 for those community land trusts 

that will be eligible to exercise 

preemptive purchase rights pursuant to 

the Consolidated Appropriations Act, 

2016, as codified in § 92.254(b)(3). 

G. Concern Regarding 30-Year Ground 

Lease Term and Conflicts Between the 

Definition of Community Land Trust in 

§ 92.2 and the Definition of 

Homeownership in § 92.2 

Several commenters expressed 

concern or opposition to the proposed 

regulatory definition that would, in part, 

require community land trust housing 

and related improvements to be 

affordable for at least 30-years. Two 

commenters noted that community land 

trusts typically impose ground leases of 

90-plus years and are concerned about 

the reduced 30-year ground lease 

included in the community land trust 

definition. One commenter 

recommended that HUD increase the 

ground lease for community land trusts 

to 90-plus years. The commenter stated 

that it dilutes the mission of community 

land trusts to reduce the ground lease to 

30 years. The commenter stated that the 

community land trust movement 

internationally is focused on 

permanent-affordability with 98- and 

99-year ground leases or land use 

restrictions. In support of their 

comments, the commenter included 

additional information regarding 

community land trusts, including the: 

(1) Grounded Solutions Network, 2011 

Model Ground Lease & Commentary 

(2018); (2) National League of Cities, 

Community Land Trusts: A Guide for 

Local Governments (2021); and (3) 

Burlington Associates in Community 

Development, Frequently Asked 

Questions about Community Land 

Trusts (2007). Another commenter 

stated that community land trust ground 

leases typically restrict resale of a home 

to an income eligible buyer at an 

affordable price for 99 years, and 

typically require that the buyer enter 

into a new 99-year ground lease upon 

purchase. The commenter referred HUD 

to Grounded Solutions Network Model 

Declaration of Affordability Covenants 

and Model Ground Lease (Article 10). 

One commenter stated that there is an 

internal conflict within the definitions 

of a ‘‘community land trust’’ and 

‘‘homeownership.’’ The commenter 

noted that the definition of community 

land trust includes organizations that 

provide ground leases of at least 30 

years while the definition of 

homeownership requires that 

community land trust ground leases be 

for at least 50 years. The commenter 

stated that these definitions could allow 

organizations to qualify as a community 

land trust by offering ground leases of 

only 30 years but make said community 

land trusts ineligible to receive HOME 

funds unless the HOME-assisted units 

were accompanied by 50-year ground 

leases. 

HUD Response: The definition of 

community land trust at § 92.2 

establishes the minimum requirements 

an organization must meet to qualify to 

hold a preemptive purchase option on a 

HOME-funded homebuyer unit, 

including but not limited to the 

requirement that a community land 

trust must use a lease, covenant, 

agreement, or other enforcement 

mechanism to require housing and 

related improvements on land held by 

the community land trust to be 

affordable to low- and moderate-income 

persons for at least 30 years. 

Organizations that meet these minimum 

requirements may exercise the purchase 

option, right of first refusal, or other 

preemptive rights afforded to 

community land trusts by the 

Continuing Appropriations Act, 2016 

(Pub. L. 114–113) and codified in 

§ 92.254(b)(3). Community land trusts 

that do not meet this definition are not 

precluded from receiving HOME funds 

for projects; however, if they exercise a 

preemptive purchase right within the 

period of affordability, then the housing 

will cease to be considered affordable 

housing under the Act and the 

participating jurisdiction will be 

required to repay the HOME investment 

associated with that housing unit 

pursuant to 42 U.S.C. 12745(b)(3)(A) 

and 42 U.S.C. 12749(b). 

The Department understands that 

community land trust models 

throughout the country often impose a 

90 or 99-plus-year ground lease. 

Because the definition of community 

land trust at § 92.2 only establishes a 

minimum ground lease term for the 

purposes of determining an 

organization’s eligibility to hold or 

exercise a preemptive purchase right on 

a HOME-assisted unit without violating 

the Act and requiring repayment of the 

HOME investment, community land 

trusts imposing longer ground lease 

terms are still permitted. 

The Department also acknowledges 

that it is using different minimum terms 

for ground leases in the definition of 

community land trust and the definition 

of homeownership in § 92.2. The 

definition of homeownership at § 92.2 

defines homeownership under a 

community land trust as fee simple 

ownership of a dwelling, or equivalent 

form of ownership approved by HUD, 

on land with a ground lease that meets 

one of the requirements in § 92.2. Under 

this definition, if a ground lease is 

provided by a community land trust and 

is not in an insular area, the minimum 

required ground lease for the unit to be 

considered a homeownership unit 

under the HOME program is 50 years. 

As noted above, the definition of 

community land trust only requires that 

an organization impose a minimum 30- 

year ground lease for the organization to 

be considered a community land trust 

for purposes of exercising a right of first 

refusal to preserve affordability under 

§ 92.254(b). The Department 

understands that this establishes a 

higher threshold for the term of a 

ground lease to be considered 

homeownership under the HOME 

program than it does for an organization 

providing that ground lease to be 


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27See 42 U.S.C. 12773(a)(2), expressly permitting 

housing education and support to community land 

trusts to assist them in developing HOME 

community housing development organization 

projects, and see and Public Law 114–113, div. L, 

title II, Dec. 18, 2015, 129 Stat. 2878 permitting 

community land trusts to hold and exercise certain 

purchase rights without violating the affordability 

requirements contained in the homeownership 

provisions of Section 215 of NAHA. 

considered a community land trust, but 

the Department also wanted to remain 

consistent with State laws and 

community land trust models that may 

require ground leases of fewer years 

when considering whether an 

organization meets the definition of 

community land trust. 

H. Opposition to Community Land 

Trust Model 

One commenter opposed the use of 

governments subsidies for 

homeownership projects under the 

community land trusts model. The 

commenter stated that government 

subsidies for community land trusts 

should be reserved for affordable rental 

housing. The commenter also stated that 

downpayment assistance is a better 

method for building financial security 

and generational wealth through 

homeownership because community 

land trusts are closer to rental housing 

than homeownership. The commenter 

submitted a study conducted by the 

National League of Cities comparing the 

results of community land trust and 

downpayment assistance models. The 

commenter supported greater use of the 

HUD’s 203(k) Loan Program to create 

accessory dwelling units and tax 

exemptions to encourage 

homeownership. 

HUD Response: HUD thanks the 

commenter for reviewing the proposed 

rule and notes that by statute, 

community land trusts may participate 

in the HOME program and HOME 

homeownership activities.27 Congress 

explicitly authorized their participation, 

and the Department must faithfully 

adopt the language of the Consolidated 

Appropriations Act, 2016 and the 

provisions of 42 U.S.C. 12773 of the Act. 

§ 92.2—Homeownership Definition 

A. Require That Long-Term Ground 

Leases to HOME-Assisted Manufactured 

Homeowners Are Affordable 

One commenter recommended 

requiring participating jurisdictions to 

remove barriers to manufactured home 

homebuyers and homeowners to access 

HOME programs regardless of the 

manufactured home being on ownedland, leased-land, Tribal land, or in 

manufactured home communities. The 

commenter also specifically urged HUD 

to ensure that HOME-funded 

manufactured home communities offer 

homeowners a standard, long-term lease 

with predictable rent provisions that 

support affordable ‘‘home-only’’ 

financing, notice of sale and 

opportunity to purchase the community, 

and require that projects with HOME 

funding for 30 years or more include 

shared-equity affordability provisions of 

resident-owned communities and rent 

limitations. The commenter urged HUD 

to issue guidance and education for 

participating jurisdictions, 

subrecipients, and developers. 

HUD Response: While the definition 

of homeownership in § 92.2 requires 

that manufactured housing ground 

leases be for at least the period of 

affordability in § 92.254, the Department 

has not specified the amount that may 

be charged under such ground leases. 

The Department believes that adding 

such restrictions could have the 

unintended effect of reducing the 

amount of manufactured home 

purchasers that can be assisted with 

HOME funds and defers to participating 

jurisdictions in designing their 

programs. The Department also believes 

that it provided insufficient information 

the public to appropriately place the 

public on notice of any changes to the 

ground lease requirements for 

manufactured housing owners and that 

doing so without additional comment 

would be unwise. 

B. Explicitly Include Cooperative 

Owners as Owners for Purposes of the 

Definition of Homeownership in 

Paragraph (4) 

One commenter suggested that to 

ensure eligibility status for affordable 

housing cooperatives, HUD should 

consider revising its definition of 

homeownership to include housing 

cooperative members as homeowners 

directly. The commenter explained that 

designating co-op member-owners as 

homeowners will grant additional 

flexibility to participating jurisdictions, 

creating another tool to be utilized to 

create affordable homeownership for 

low-income households and to reduce 

persistent wealth inequities. 

HUD Response: Unfortunately, HUD 

cannot always draw bright line rules in 

this area. Much of what the commenter 

is requesting depends upon State law 

and is a fact-sensitive inquiry that must 

be engaged in by the participating 

jurisdiction. Paragraph (4) of the 

definition of Homeownership in § 92.2 

states that the ‘‘participating jurisdiction 

must determine whether or not 

ownership or membership in a 

cooperative or mutual housing project 

constitutes homeownership under State 

law; however, if the cooperative or 

mutual housing project receives LowIncome Housing Credits (26 U.S.C. 42), 

the ownership or membership does not 

constitute homeownership.’’ The 

Department believes these are the 

correct considerations. The Department 

defers to State law on whether 

membership within a cooperative or 

being a shareholder of a cooperative 

constitutes homeownership. It also 

defers to the participating jurisdiction to 

determine whether the cooperative’s 

governing documents provide the 

necessary rights to the member or 

shareholder to constitute 

homeownership. Under many State laws 

and cooperative governing documents, 

the commenter may be right that a 

member or shareholder is an owner. 

However, this is a fact-sensitive inquiry 

and HUD is declining to state that as a 

rule a member or shareholder of a 

cooperative is an owner of the housing. 

HUD also continues to maintain that 

where a cooperative is receiving LIHTC 

and is within its compliance period, it 

is not engaging in a homeownership 

activity. 

§ 92.2—Period of Affordability 

Definition 

Commenters supported HUD’s 

proposed definition of ‘‘period of 

affordability.’’ One commenter noted 

that distinguishing between the Federal 

period of affordability and any 

participating jurisdiction-imposed 

additional period will be useful and 

follows a similar model to the LIHTC 

compliance period. One commenter 

noted that it was an important 

clarification that addressed confusion 

about whether this term applied to time 

periods beyond 20 years. 

One commenter stated they supported 

the proposal because it would clarify 

that this term is different from an 

extended period of affordability or an 

additional compliance period. The 

commenter explained that this 

clarification would permit States and 

localities to continue to prioritize longterm affordability. 

HUD Response: HUD thanks the 

commenters and is moving forward with 

the revised definition of period of 

affordability without change. 

§ 92.2—Program Income Definition 

Commenters stated that they oppose 

changing the definition of program 

income to include the phrase ‘‘at any 

time.’’ The commenters stated that this 

change would extend the participating 

jurisdiction’s monitoring obligations, 

potentially in perpetuity, which would 

strain limited participating jurisdiction 

resources. 


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One commenter opposed HUD’s 

proposal to clarify that program income 

is gross income received ‘‘at any time’’ 

by the participating jurisdiction, State 

recipient, or subrecipient. The 

commenter stated that defining program 

income as going beyond the period of 

affordability or the closeout of the grant 

puts an administrative burden on 

participating jurisdictions, 

subrecipients, and developers. The 

commenter recommended that HUD 

limit repayment of program income to 

either the duration of the period of 

affordability for housing supported by 

HOME funds or to the closeout of the 

grant. 

Two commenters suggested limiting 

repayment of program income to the 

duration of the period of affordability 

for homes supported by HOME funds or 

at the close out of the grant in order to 

ease the administrative burden on 

participating jurisdictions, subrecipients 

and developers. One of these 

commenters asked that HUD provide 

more clarity to participating 

jurisdictions and program participants 

on how any final changes would be 

operationalized if HUD determines to 

move forward on this question. 

HUD Response: The addition of ‘‘at 

any time’’ to the definition of program 

income was a clarification of the 

existing requirement. The Department is 

aware that there is an administrative 

burden associated with tracking and 

spending program income. However, 10 

percent of program income received 

may be used to administer the HOME 

program. A participating jurisdiction is 

also capable of providing Subrecipients 

and State recipients with the ability to 

retain program income if it is specified 

in the written agreement (see 

§ 92.504(c)(1)(iii), § 92.504(c)(2)(ii)). The 

Department is concerned that limiting 

the reporting and use of program 

income to the period of affordability or 

to the time period before grant closeout 

will result in participating jurisdictions 

waiting until the end of those 

timeframes to require the collection of 

program income to avoid reporting on 

the source and avoid the restrictions on 

the use of program income. This might 

also result in participating jurisdictions 

misunderstanding program income 

requirements and using such funds for 

purposes not eligible under the Act and 

regulations in 24 CFR part 92. The 

Department declines to make a change 

and is moving forward with the 

language clarifying existing 

requirements. 

§ 92.2—Reconstruction Definition 

One commenter stated that it supports 

applying new construction standards in 

§ 92.251 to newly constructed units 

within reconstruction projects. 

However, the commenter noted that 

some projects involve reconstruction of 

some units and rehabilitation of others. 

The commenter objected to applying 

new construction standards to these 

rehabilitated units, noting that it would 

not be a prudent use of resources. The 

commenter opposed the revised 

definition of ‘‘reconstruction’’ but 

supported applying new construction 

standards in § 92.251 to newly 

constructed units within reconstruction 

projects. 

HUD Response: The Department 

understands there is confusion over 

how to apply a participating 

jurisdiction’s property standards when a 

project consists of a combination of 

rehabilitation, reconstruction, and new 

construction. In projects where there is 

a combination of types of development, 

units that are rehabilitated but not 

reconstructed may be inspected to the 

participating jurisdiction’s 

rehabilitation standards. Units that are 

newly constructed or reconstructed will 

be subject to the participating 

jurisdiction’s new construction 

standards. Accordingly, the Department 

has revised the regulations at 

§ 92.251(d) to address the commenter’s 

concerns and provide clarity on this 

issue. 

§ 92.2—Single Family Housing 

Definition 

Commenters stated that they support 

the proposal to amend the definition of 

‘‘single family housing’’ to refer to units. 

HUD Response: The Department 

thanks the commenters and is moving 

forward with the changes to the ‘‘single 

family housing’’ definition. 

§ 92.2—Small-Scale Housing Definition 

A. General Comments on Definition 

One commenter supported the 

proposed new definition of ‘‘small-scale 

housing’’ because it would reduce 

administrative burden and would, 

according to the commenter, benefit 

areas with little development like small 

rural towns and Tribal areas because 

smaller projects that are not 30–50 units 

cannot attract LIHTC or other program 

investors and become financially 

infeasible. 

One commenter stated their support 

for the addition of the definition of 

‘‘small-scale housing’’ because it could 

help spur development in rural 

communities. 

HUD Response: The Department 

thanks the commenters for reviewing 

the proposed rule and agree that the 

reduced ongoing monitoring 

requirements for small-scale housing 

projects will make using HOME funds 

more feasible nationwide. The 

Department is moving forward with the 

definition of ‘‘small-scale housing’’ 

without change. 

B. Expanding Definition To Include 

Projects With More Units or Scattered 

Site Projects 

One commenter suggested that HUD 

consider expanding the definition of 

‘‘small-scale housing’’ to apply to rental 

projects with up to 10 units (rather than 

4) to allow the benefits of HUD’s 

proposed streamlined procedures to 

apply to projects with up to 10 units, 

which would be especially helpful in 

rural areas. One commenter stated that 

for compliance monitoring, further 

clarification on the definition of ‘‘smallscale housing’’ and the applicability to 

both the rental housing projects and 

homeownership funded projects is 

requested. That same commenter 

believed that as written, it is unclear 

whether scattered-site rental housing 

projects would be considered smallscale housing or not. 

One commenter stated that HUD’s 

proposed definition of ‘‘small-scale 

housing’’ to mean 1–4 units is not in 

line with the housing industry’s use of 

the term. The commenter recommended 

that HUD revise the definition of 

‘‘small-scale housing’’ to be more 

consistent with the industry’s 

definition. 

HUD Response: The purpose of the 

small-scale housing definition is 

primarily to provide relief to 

participating jurisdictions and small 

landlords in the management of small or 

scattered site housing projects. 

Consequently, the Department has 

determined that a 1–4-unit project, 

either managed on the same site or on 

multiple sites (i.e., scattered site 

housing) shall constitute a small-scale 

housing project. The Department 

considered larger project sizes, as the 

commenter requested. However, in 

HUD’s experience, 5–10-unit projects 

can be more difficult to manage than 1– 

4-unit projects, especially when they are 

managed as scattered site projects. 

The Department did note that there is 

confusion over whether small-scale 

projects must all be on contiguous sites 

or be single family housing. While the 

Department is not revising the 

definition of ‘‘small-scale housing,’’ the 

Department is clarifying in this 

preamble and will clarify again in 

guidance that small-scale housing 

projects can be on either contiguous 

sites or scattered sites and still 

constitute small-scale housing projects 


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as long as they meet the definition of 

‘‘small-scale housing’’ in § 92.2. 

§ 92.2—Subrecipient Definition 

A. Opposition to Change in Definition 

To Prohibit a Governmental Entity or 

Nonprofit From Being a Subrecipient if 

it Uses HOME Funds as a Developer or 

Owner of a Housing Project 

One commenter does not support the 

removal of a subrecipient’s ability to 

acquire and temporarily own standard 

housing, as subrecipients are often 

partners in locating and purchasing 

housing. 

HUD Response: HUD appreciates the 

comment but is declining to make the 

change. In the HOME program, a 

subrecipient administers an activity or 

entire program on behalf of the 

participating jurisdiction. An 

organization that partners with other 

entities to locate and purchase housing 

is not a subrecipient as an organization 

cannot oversee an activity in which it 

also functions as an owner, developer, 

or sponsor as there is an inherent 

conflict of interest. HUD believes the 

approach described by the commenter is 

ineligible for HOME assistance. 

B. Comment in Support of the Revised 

Definition of Subrecipient Because it 

Allows Greater Flexibility in Income 

Determinations 

A commenter stated that the proposed 

update to the definition of 

‘‘subrecipient’’ is helpful because this 

updated definition allows HOME funds 

to be more readily used with rental 

housing based on the program’s own 

income determination guidelines for 

eligibility. 

HUD Response: The commenter is 

incorrect. Income determinations in the 

HOME program must be made in 

accordance with § 92.203. The 

definition of subrecipient does not 

allow a subrecipient to use a different 

set of income requirements than the 

participating jurisdiction uses when 

determining income under § 92.203. 

§ 92.2—Unit of General Local 

Government Definition 

One commenter pointed out that the 

proposed rule does not address 

eligibility of Tribes nor adds new 

mentions of Tribes even though the 

definition of CHDO in § 92.2 includes 

Tribes in the definition of 

‘‘governmental entity’’ in paragraph (5). 

The commenter requested that HUD add 

clarifying language through the 

proposed regulations to clarify that 

Tribes are eligible, including Indian 

Tribes, Indian Housing authorities, and 

Tribally Designated Housing Entities as 

defined at 25 U.S.C. 4103(22), and 

requested that HUD clarify that these 

entities may be project owners 

anywhere that the terms are not 

synonymous with State recipient. The 

commenter suggested such changes in 

§ 92.2 Definitions, State recipient; § 92.2 

Definitions, Subrecipient; 

§§ 92.220(a)(1)(iii)(A) and 

92.220(a)(1)(iii)(B) regarding matching 

funds provided by an Indian Tribe, 

Indian Housing Authority, or Tribally 

Designated Housing Entity. 

HUD Response: Each of the 

definitions of State Recipient and 

subrecipient uses the term ‘‘unit of 

general local government’’ and not 

‘‘governmental entity.’’ The Department 

is not changing its interpretation of the 

term unit of general local government. 

Indian Tribes, Indian Housing 

Authorities, and Tribally Designated 

Housing Entities may participate in the 

HOME program in a variety of 

capacities, including as developers, 

owners, or contractors. Indian Housing 

Authorities or Tribally Designated 

Housing Entities, if established as 

nonprofits, may be eligible to be 

Subrecipients in HOME as well. HUD 

will provide additional information on 

how HOME funds can be used by Indian 

Tribes, Indian Housing Authorities, and 

Tribally Designated Housing Entities in 

future guidance. 

Below-market interest rate loans 

originated by Tribally Designated 

Housing Entities and Indian Tribes that 

are legally constituted as corporations 

are already eligible as match under the 

current regulation. HUD will clarify this 

in guidance. 

§ 92.3—Effective Date and Applicability 

of This Final Rule 

One commenter requested that HUD 

clarify which provisions are applicable 

to all HOME-funded developments and 

which changes are applicable only to 

properties that received commitments of 

HOME funds after the effective date of 

the final rule. Another commenter 

requested that HUD provide phased 

implementation and permit permissive 

compliance for a set period of time 

before mandating required compliance, 

to allow participating jurisdictions time 

to update information systems, inform 

partners and ensure proper policies and 

procedures are in place. One commenter 

said that because the changes in the rule 

will require a significant effort to 

educate stakeholders and ensure a 

smooth transition to the new regulatory 

framework, HUD should dedicate 

adequate technical assistance resources 

to this effort. Another commenter stated 

that HUD should expand training for 

participating jurisdictions and HUD 

field officials on implementation of this 

rule to ensure uniform application, 

particularly for homeownership 

projects, because of uncertainty about 

interpretation of HOME regulations 

among participating jurisdictions. 

HUD Response: The Department 

agrees with the commenters that it will 

take time for participating jurisdictions 

to prepare to comply with certain 

provisions of this final rule. HUD has 

carefully considered the appropriate 

timeframes for compliance with each 

provision and has established effective 

dates in § 92.3. HUD shall provide 

participating jurisdictions up to one 

year to perform income determinations 

and reexaminations under the final 

rule’s § 92.203. HUD shall also allow 

participating jurisdictions, 

subrecipients, state recipients, and 

owners to comply with the HOME 

requirements as they existed 

immediately prior to the effective date 

of the final rule for HOME commitments 

made up to one year after the effective 

date of the final rule. 

§ 92.50—Formula Allocation 

One commenter suggested that one 

way to target funding to rural CHDOs 

would be to increase the awards for 

State-wide participating jurisdictions 

via a change to HUD’s formula 

allocation regulations. Instead of 

measuring the number of families living 

in poverty, which as an absolute 

measure disadvantages rural areas, the 

commenter said the metric could 

instead measure either the percentage of 

families living in poverty or the 

percentage of counties in a State that are 

designated as Persistent Poverty 

Counties. The commenter stated that 

either of these approaches would be 

consistent with the statute, which 

directs that the formula reflects 

‘‘poverty, and the relative fiscal 

incapacity of the jurisdiction to carry 

out housing activities eligible under 

section 12742 of this title without 

Federal assistance.’’ Another commenter 

also noted that the HOME program does 

not proportionately serve rural areas 

because the smallest and least-resourced 

places must compete for the balance of 

State funds, while larger communities 

receive guaranteed funding. 

HUD Response: HUD appreciates the 

commenters’ contributions and notes 

that changes to the calculation of HOME 

program formula allocations are outside 

the scope of this rulemaking. The 

Department was making minor revisions 

to clarify that ‘‘rental units built before 

1950 occupied by poor households’’ 

meant ‘‘rental units built before 1950 

occupied by households below the 

poverty line’’ but was otherwise not 


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changing the actual data that is used in 

the calculation. The Department does 

not believe it has provided sufficient 

notice to the public of a possible change 

in formula elements and declines to 

change any data elements included in 

the HOME formula in this rulemaking. 

§ 92.203—Income Determinations 

A. General Support 

Commenters stated that they support 

the proposed changes to income 

determination for HOME because 

participating jurisdictions can use 

income determinations made by other 

Federal agencies. 

HUD Response: The Department 

agrees with commenters that providing 

additional flexibilities to comply with 

income requirements for HOME-assisted 

rental housing will further reduce the 

administrative burden on participating 

jurisdictions, project owners, and on 

low-income families. Therefore, in this 

Final Rule, HUD streamlines income 

procedures, reduces the frequency of 

income determinations for HOMEassisted small-scale rental projects and 

for families receiving HOME tenantbased rental assistance, and expands a 

safe harbor to permit participating 

jurisdictions to rely upon the income 

determinations made under the rules of 

other Federal programs or forms of 

public assistance for HOME-assisted 

rental units and for tenant-based rental 

assistance programs. 

B. Reducing the Frequency of Income 

Determinations 

Commenters said they support 

reducing the frequency of income 

determinations. One commenter asked 

for clarification if the proposed change 

to income recertification from annual to 

every two years applied to Federally 

funded projects such as housing 

developed with LIHTC. Another 

commenter supported the proposal and 

encouraged HUD to consider triennial 

income recertifications for all HOME 

programs, not just small-scale housing, 

because it would help families 

experience the intended benefits of the 

program, help families build wealth, 

and not inadvertently punish them for 

increasing their income. 

HUD Response: HUD reduced the 

frequency of income determinations for 

HOME-assisted small-scale rental 

projects and tenants receiving tenantbased rental assistance. Triennial 

income examinations do not apply to 

HOME-assisted rental projects or to 

tenant-based rental assistance programs. 

For HOME-assisted rental housing, 

HUD expanded an income safe harbor 

which permits a participating 

jurisdiction to rely upon the income 

determination conducted under the 

rules of another form of public 

assistance for HOME-assisted rental 

units where Federal funds overlap. This 

safe harbor significantly reduces 

instances of when the annual income of 

a family must be calculated in HOMEassisted units that are also assisted with 

Federal or State project based rental 

subsidy programs, developed with 

LIHTC, or occupied by a family that 

receives Federal tenant-based rental 

assistance or another form of public 

assistance such as SNAP or TANF. This 

means that if the HOME-assisted unit or 

a family is applying for or occupying an 

assisted unit that is covered by any of 

these safe harbors, then a participating 

jurisdiction may apply these flexibilities 

to all income determinations performed, 

including at initial occupancy and 

subsequent income determinations 

during the HOME period of 

affordability. HUD is also clarifying in 

§ 92.252(g)(3) that an owner is not 

required to examine source documents 

under § 92.203(b)(1)(i) if the 

participating jurisdiction is accepting an 

annual income determination pursuant 

to § 92.203(a)(1), § 92.203(a)(2), or 

§ 92.203(a)(3). 

For HOME tenant-based rental 

assistance, the income determination is 

aligned with the term of the rental 

assistance contract, which can have a 

term of up to 24 months. HUD declines 

to apply a triennial income 

determination to HOME tenant-based 

rental assistance programs because it 

could not be implemented given the 24- 

month statutory limitation on the term 

of the rental assistance contract. HUD 

considered many scenarios that would 

trigger a new income examination and 

how reliant participating jurisdictions 

are on calculation of adjusted income in 

determining the amount of assistance 

for a tenant receiving tenant-based 

rental assistance and believes that tying 

the income examination to the rental 

assistance contract is the best policy. 

HUD also believes that reducing the 

frequency of income determinations in 

HOME-assisted rental units and aligning 

income determination to the terms of 

the tenant-based rental assistance 

contract will encourage families to 

increase income without fear of losing 

their assistance or ability to occupy an 

assisted unit. 

C. Change the Requirement in 

§ 92.203(a)(1) That a Participating 

Jurisdiction ‘‘Must’’ Accept the Income 

Determination Made Under a ProjectBased Program 

One commenter objected to requiring 

participating jurisdictions to use the 

income determinations made by owners 

and program administrators in Federal 

and State project-based rental assistance 

programs, including both the Section 8 

project-based voucher and project-based 

rental assistance programs. The 

commenter believes that requiring the 

use of the income determinations is too 

strong of a stance and that HUD should 

provide participating jurisdictions with 

discretion to choose whether to accept 

an income determination made under a 

Federal or State project-based rental 

assistance program. In the commenter’s 

experience monitoring personnel, they 

have determined that program 

administrators may overlook income 

sources or fail to properly verify income 

and assets. 

HUD Response: The Department 

recognizes the commenters’ concerns 

that HUD created an income safe harbor 

as a requirement rather than a choice in 

the HOTMA Final Rule, published in 

the Federal Register on February 14, 

2023. Under HOTMA, HUD required a 

participating jurisdiction to accept a 

public housing agency, owner, or rental 

subsidy provider’s determination of a 

family’s annual and adjusted income for 

each HOME-assisted unit that is assisted 

by a Federal or State project-based 

rental subsidy program. HUD’s intent 

was to create alignment in HUD rental 

programs and to reduce the 

administrative burden on participating 

jurisdictions and owners of having to 

meet two sets of income requirements 

for the same unit. HUD agrees with the 

commenter that participating 

jurisdictions should be provided the 

choice, as a matter of program design, of 

whether to accept an income 

determination made under a Federal or 

State project-based rental assistance 

program. Therefore, HUD is revising the 

‘‘must’’ to a ‘‘may’’ in §§ 92.203(a)(1) 

and 92.203(f)(2) and permitting a 

participating jurisdiction to decide 

whether to apply this safe harbor. HUD 

recommends that when making this 

decision, a participating jurisdiction 

undertakes an assessment of staff 

capacity, size and scope of its HOMEassisted rental portfolio, annual 

monitoring schedules, and the 

availability of trained and 

knowledgeable housing partners. HUD 

reminds participating jurisdictions that 

whatever choice they make should be 

explicitly described in the HOME 

written agreement with project owners 

to reduce instances of noncompliance 

with the HOME program income 

requirements. 


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28See 61 FR 48769. 

D. Opposition to 2-Month Source 

Documentation Requirements in 

Paragraph (b) of the Definition 

One commenter suggested that HUD 

remove the 2 month source of income 

documentation requirement in 

§ 92.203(b)(1)(i) and (b)(2) and instead 

follow the HUD 4350.3 Chapter 5 

requirement for all HOME activities 

which considers circumstances when 2 

months of documentation are not 

available, allows for third party 

verification, and would allow 

participating jurisdictions to establish a 

uniform income review process across 

HOME and HTF. 

HUD Response: The Department 

recognizes the commenters’ concerns 

that HOME’s income documentation 

and verification process is different than 

the processes in other HUD rental 

programs, but HUD is not revising 

§ 92.203(b)(1)(ii) to remove the 

requirement to examine 2 months of 

source documents when determining 

annual income. The Department has 

required source documents since the 

1996 HOME regulations 28 and believes 

that examination of source documents 

provides needed safeguards to ensure 

that tenants meet the income 

requirements of the Act. 

Notwithstanding that fact, the 

Department has also identified other 

forms of documentation that may also 

satisfy the requirements, including 

documentation required to use the safe 

harbors in § 92.203(a)(1)–(3). 

Moreover, HUD disagrees that 

adopting the income documentation and 

verification procedures in Chapter 5 of 

HUD Handbook 4350.3 would establish 

a uniform income review process across 

all HOME and the Housing Trust Fund 

activities. The requirements explained 

in Chapter 5 of HUD Handbook 4350.3, 

including the mandatory use of source 

documents for a period beyond 2 

months and the required use of the 

Enterprise Income Verification (EIV) 

System, are more burdensome than 

HOME’s current income requirements. 

Under the HOTMA regulations in 24 

CFR 5.609, annual reexaminations must 

consider all income made in the 

previous 12 months (See 24 CFR 

5.609(c)). HOME regulations at 

§ 92.203(b)(1)(ii) only require an 

examination of 2 months of income to 

project the prevailing rate of income for 

the upcoming 12 months. This is a less 

burdensome process than what is 

required in 24 CFR 5.609. HUD’s 

Technical Guide for Determining 

Income and Allowances for the HOME 

program (income guidebook), which 

will be updated to provide guidance 

related to this Final Rule, already 

provides participating jurisdictions with 

the flexibility to establish their own 

verification procedures or to implement 

verification procedures consistent with 

the Housing Choice Voucher Program. 

E. Accepting Determinations by Other 

Federal Assistance Providers in 

§ 92.203(b) 

A commenter stated that the policy 

should be extremely clear that a 

certification by another Federal 

assistance provider is sufficient to 

document income eligibility and no 

additional documentation would be 

needed outside of a certification to the 

owner or participating jurisdiction. 

Other commenters stated that HUD 

should expand HOME reciprocity with 

other Federal agency programs and 

harmonize income eligibility standards. 

The commenters requested that HUD 

engage in reciprocity with the USDA 

Rural Home Development 502 Direct 

Mortgage program in a manner similar 

to how it honored income eligibility 

under its Self-Help Opportunity 

Program (SHOP). Specifically, the 

commenter urged that HUD adopt the 

USDA Rural Development 502 Direct 

mortgage program’s ‘‘income banding’’ 

approach to eligibility that the 

commenter said has been beneficial in 

rural areas around the country and was 

a direct response to the lack of access 

for broad swaths of persistent poverty 

areas of the country. 

HUD Response: In the HOTMA Final 

Rule, HUD aligned the HOME income 

regulations with those of other Federal 

or State rental subsidy programs and 

with those of other Federal tenant-based 

rental assistance programs that 

determine income eligibility consistent 

with the HOME program to facilitate the 

layering of funds in a HOME-assisted 

project and to reduce the administrative 

burden on participating jurisdictions 

and project owners. While the HOTMA 

safe harbor expanded the number of 

rental programs that a participating 

jurisdiction may accept income 

determinations from, HUD agrees that it 

can expand this safe harbor to include 

additional Federal agency programs and 

other forms of public assistance that are 

compatible with the HOME program. 

To accomplish this, HUD is 

broadening an existing income safe 

harbor in § 92.203(b)(1)(iii) which 

permits a participating jurisdiction to 

determine the annual income of a family 

by obtaining a written statement from 

the administrator of a government 

program under which the family 

receives benefits, and which examines 

each year the annual income of the 

family. The expansion of this safe 

harbor includes additional forms of 

public assistance provided under other 

Federal agencies such as Supplemental 

Nutrition Assistance Program (SNAP), 

Temporary Assistance for Needy 

Families (TANF), Medicaid, as well as 

LIHTC income determinations for 

families living in tax credit units. This 

means that instead of calculating the 

annual income of a family, a 

participating jurisdiction may rely on 

the annual income determination made 

by the administrators of those programs 

or forms of public assistance without 

having to take additional steps to verify 

the income calculation or 

determination. 

To implement this new safe harbor 

provision, the participating jurisdiction 

must obtain a written statement from 

the administrator of the assistance 

which contains the amount of annual 

income and household composition 

(e.g., two-person household). A 

participating jurisdiction can then 

implement this safe harbor for all rental 

housing income determinations 

including but not limited to those 

performed at initial occupancy and 

every sixth year of the period of 

affordability. This relieves the 

participating jurisdictions of the 

requirement to calculate the annual 

income of a family by using 2 months 

of source documents if the family is 

receiving one of these forms of public 

assistance and the participating 

jurisdiction is able to obtain a statement 

fulfilling the requirements of the new 

safe harbor in § 92.203(a)(3). 

With respect to granting reciprocity 

with the United States Department of 

Agriculture’s (USDA) ‘‘income banding’’ 

approach for determining income 

eligibility for the Rural HOME 

Development 502 Direct Mortgage 

program, HUD declines to adopt this 

approach of determining income 

eligibility for HOME-assisted 

homeownership programs. HUD has 

determined that the USDA’s method for 

defining a low-income family is not 

compatible with HOME’s program 

definition of a low-income family. 

Under the HOME program, a lowincome family means a family whose 

annual incomes do not exceed 80 

percent of the median income for the 

area, as determined by HUD, with 

adjustments for smaller and larger 

families, except that HUD may establish 

income ceilings higher or lower than 80 

percent of the median for the area on the 

basis of HUD findings that such 

variations are necessary because of 

prevailing levels of construction costs or 

fair market rents, or unusually high or 

low family incomes. An individual does 


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29See 42 U.S.C. 12745(b)(2)(A)–(C). 

30See 42 U.S.C. 12704(9) and (10). 

31Please note, 24 CFR 5.609 provides certain 

income exclusions for live-in aides, foster children, 

and foster adults. 

32The HOME program uses the definition of 

family contained in 24 CFR 5.403, see 24 CFR 92.2 

Family. 

33Section 42 U.S.C. 12704(11) of the Act states 

that ‘‘families’’ shall have the same meaning as the 

definition of ‘‘families’’ in 42 U.S.C. 1437a. 42 

U.S.C. 1437a(b)(3) provides the definition of 

persons and families. 

not qualify as a low-income family if the 

individual is a student who is not 

eligible to receive Section 8 assistance 

under 24 CFR 5.612. In contrast, the 

USDA uses two categories of income 

structure: one category is for one-to-four 

person households and a second 

category is for five-to eight-person 

households. The USDA’s two-tier 

income structure is significantly 

different than the HOME program’s 

income structure and does not take into 

account other disqualifying factors 

under the HOME regulations and 

statute. Creating a safe harbor for the 

USDA’s two-tier income structure is too 

significant of a change and is outside 

the scope of this rulemaking because it 

involves changing the definition of a 

low-income family and not just 

providing an expanded safe harbor to 

defining an eligible family. 

F. Revise § 92.203(e) To Extend the 

Length of Time That an Income 

Determination Is Valid in 

Homeownership Programs 

A commenter stated that for owneroccupied rehabilitation and 

homeownership assistance for new 

construction, it is unclear if the income 

certification before loan closing can 

remain valid for 12 months now or if the 

rule is still limited to 6 months. 

Another commenter stated that, for 

new construction, developers should be 

able to confirm that buyers are eligible 

to purchase the unit more than 6 

months out because of the potential for 

construction delays. Two commenters 

recommended that this rule revise the 

regulations found at § 92.203(e)(2) to 

indicate that the participating 

jurisdiction is not required to reexamine the family’s income at the time 

the HOME assistance is provided unless 

24 months has elapsed since the 

homebuyer was determined to be 

income-qualified at the start of program 

participation. These commenters also 

recommended revising the regulations 

to state that at re-examination, the 

participant’s income should be 

considered eligible so long as their 

income has not grown to the point of 

exceeding the low-income threshold by 

more than 10 percent. 

HUD Response: The Department 

recognizes the commenters’ concerns 

but is not revising § 92.203(e)(2) to 

allow an income determination to be 

valid for a period of 12 or 24 months as 

requested by the commenters. The Act 

is clear that a family must qualify as a 

low-income family at the time of the 

home purchase.29 This means that if a 

family is being assisted to purchase 

existing housing, they must be a lowincome family at the time of transfer of 

ownership (usually at settlement or 

closing). If a family is being assisted to 

purchase existing housing or housing to 

be constructed under a lease-purchase 

program, the family must be low-income 

at the time the lease-purchase agreement 

is executed pursuant to § 92.504(c)(5). If 

a family is being assisted to purchase 

housing to be constructed, the family 

must be low-income at the time the 

contract to purchase housing to be 

constructed is signed in accordance 

with § 92.254(a)(8). The HOME 

assistance is provided at execution of 

the contract to purchase housing to be 

constructed in accordance with 

§ 92.504(c)(5). HUD wants to clarify that 

if the family was determined to be 

income eligible at the time the contract 

to purchase housing to be constructed 

was executed, there is no additional 

requirement to redetermine income if 

there are delays in construction. 

HUD understands the complexity of 

homeownership programs and how it 

can vary by locality. HUD permits an 

income determination to be valid for six 

months for homeownership activities to 

account for this complexity and delays 

in property settlement. The Department 

has determined that permitting the 

income determinations to remain valid 

for six months is consistent with the Act 

but that providing a longer time period 

for homeownership activities creates a 

more tenuous standard, as prospective 

homebuyers may already have relatively 

higher incomes than other low-income 

participants in the HOME program. 

The commenter’s recommendation 

that families be considered eligible if 

their annual income has not exceeded 

the low-income threshold by more than 

10 percent, is not statutorily permissible 

(see 42 U.S.C. 12744(2)). HUD declines 

to revise the income regulations to 

permit families to exceed the HOME 

income limits and still be considered 

eligible low-income families. 

G. Counting Income From All Family 

Members in § 92.203(e) 

One commenter stated that the HOME 

method of income determination, which 

counts the income of all household 

members with some exclusions, does 

not account for multi-generational 

households where some family 

members do not contribute financially. 

The commenter explained that this 

method leads to an inflated household 

income calculation that does not reflect 

the financial burdens or capacities of 

families. The commenter recommended 

that HUD revise its regulations to allow 

household members who are not 

immediate family (which the 

commenter defined as anyone other 

than parents, siblings, spouses, and 

children) to be excluded from the 

income eligibility calculation. 

HUD Response: The Department 

recognizes the commenters’ concerns, 

but HUD is not revising § 92.203(e)(1) to 

remove the requirement to include the 

income from all persons in the 

household when calculating the annual 

income of a family under the HOME 

program. The HOME statute specifically 

requires that the low- and very lowincome thresholds be determined with 

respect to smaller and larger families,30

and necessarily intends that the income 

of all members of the household 31 be 

used in determining family income 

under the HOME program. 

The definition of family 32 used in the 

HOME program covers multigenerational households. This is 

pursuant to the Act, which requires that 

the definition of ‘‘families’’ in the 

HOME program be the same definition 

of ‘‘families’’ contained in the 1937 Act 

that is applicable to other HUD 

programs such as the Housing Choice 

Voucher Program and the public 

housing program.33 The Department has 

codified the definition of family found 

in the 1937 Act in 24 CFR 5.403, and 

HUD is maintaining a consistent 

interpretation of the 1937 Act across 

HUD programs by using the definition 

of family in 24 CFR 5.403 for the HOME 

program. Therefore, the Department 

must decline the commenter’s 

suggestion to narrow the definition of 

family for purposes of determining 

income in the HOME program. 

Specific Solicitation of Comment #7 

The Department seeks input on 

whether and how the rule should 

facilitate the conveyance of a financial 

benefit to low-income tenants when the 

project owner makes energy efficiency 

upgrades such as the installation of 

small-scale wind or solar facilities in 

connection with an eligible Federal or 

State program. HUD has issued 

guidance that currently describes how 

certain utility discounts or rebates can 

be treated under HUD income and 

utility allowance regulations. HOME is 

subject to the same income 

requirements under 24 CFR 5.609 as 


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788 Federal Register / Vol. 90, No. 3 / Monday, January 6, 2025 / Rules and Regulations 

34See https://www.hud.gov/sites/dfiles/Housing/ 

documents/MF_Memo_Community_Solar_Credits_

signed.pdf https://www.hud.gov/sites/dfiles/ 

Housing/documents/MF_Memo_re_Community_

Solar_Credits_in_MM_Buildings.pdf and https:// 

www.hud.gov/sites/dfiles/PIH/documents/

Community%20Solar%20Credits%20in%

20PIH%20Programs.pdf. 

35 Id. 

other program areas issuing guidance 

on the treatment of these discounts and 

rebates. The Department therefore also 

requests comment from the public on 

whether to go farther than this guidance 

for HOME projects through this HOME 

rulemaking. For example, should HUD 

maintain the same utility allowance for 

the project following energy efficiency 

upgrades to allow the tenant to realize 

the benefit of decreased utility costs? 

Both the current income regulations at 

24 CFR 5.609 and 24 CFR 5.609 as 

revised in the HOTMA Final Rule 

exclude lump-sum additions to assets, 

as well as non-recurring income. 

However, if a HUD program provided a 

recurring financial benefit directly to a 

low-income tenant, should the rule 

exclude this income from the HOME 

income determinations? 

A. Comments Supporting Conveying a 

Financial Benefit to Tenants 

One commenter supported efforts to 

ensure that tenants are able to receive 

the benefits of energy efficiency cost 

savings but requested that HUD 

eliminate or streamline any obligations 

on participating jurisdictions to monitor 

and ensure compliance with this benefit 

because monitoring would be difficult at 

best. 

One commenter supported 

conveyance of a financial benefit to 

tenants through the design of HOME 

utility allowances which would exclude 

energy efficient features from the model. 

The commenter explained that the 

benefit should go to residents because 

building owners will receive benefits by 

virtue of decreased energy costs and use 

in common areas and building systems. 

HUD Response: The Department 

appreciates the commenters’ responses 

to this specific solicitation, but HUD is 

declining to adopt a policy conveying a 

financial benefit to tenants in this final 

rule. It was difficult for the Department 

to determine how to convey a financial 

benefit in a way that would be fair, 

equitable, and permissible under the 

Act. Unfortunately, commenters also 

did not provide sufficient information 

on how the Department could 

effectively convey all or a portion of the 

benefits of energy efficiency measures to 

HOME tenants without disincentivizing 

owners from paying for energy 

efficiency upgrades. The Department 

may revisit this topic in a future 

rulemaking. The HOME program will 

follow current HUD guidance that 

describes how certain utility discounts 

or rebates can be treated under HUD 

income and utility allowance 

regulations.34

B. Comments Opposing Conveying a 

Financial Benefit to Tenants 

One commenter opposed HUD 

attempting to include any benefit 

produced by the use of energy efficiency 

upgrades. The commenter pointed out 

that if energy efficiency upgrades result 

in returns to the project, financial 

benefits could flow to the participating 

jurisdiction if the HOME loan requires 

‘‘cash flow’’ payments. The same 

commenter also stated that it would be 

better if developers and owners invested 

in long-term benefits instead of focusing 

on decreased costs and updating utility 

allowances for all tenants. 

A few commenters supported 

allowing the owner to recalculate the 

utility allowance based on the energy 

efficiency upgrades so that the owner 

can benefit from a lower utility 

allowance deduction from the HOME 

rent. One of these commenters 

cautioned HUD against reducing an 

owner’s incentives for undertaking 

energy efficiency upgrades. One 

commenter noted that it will be 

important to ensure that utility 

allowances are not prematurely lowered 

before energy savings are realized, 

which would cause financial harm to 

economically vulnerable tenants. 

HUD Response: The Department 

appreciates the responses from 

commenters in opposition to the 

conveyance of financial benefit to 

tenants when an owner makes energy 

efficient upgrades. The Department is 

not adopting any change in this final 

rule. However, HUD may further study 

how a financial benefit could be 

provided to both low-income tenants of 

HOME-assisted rental units and project 

owners to incentivize energy efficiency 

measures. The HOME program will 

follow current HUD guidance that 

describes how certain utility discounts 

or rebates can be treated under HUD 

income and utility allowance 

regulations.35

C. Comments Stating That Determining 

How To Convey a Financial Benefit for 

Tenants Is Difficult 

Two commenters stated that the cash 

benefit or discount to tenants would be 

difficult for owners to implement. One 

commenter noted that including 

revenues generated as a result of 

enhanced efficiency as income to the 

tenant would also place an 

administrative burden on the owner, the 

tenant, as well as on the monitoring 

participating jurisdictions for a likely 

small change per month. 

HUD Response: The Department 

thanks the commenters for reviewing 

the proposed rule and agrees that it 

would be administratively difficult to 

convey such benefit, particularly 

because consumption of utilities vary by 

tenant and by season. HUD will not be 

adopting measures related to providing 

a financial benefit directly to lowincome tenants at this time. 

Commenters’ insights on the difficulty 

of such a measure’s implementation and 

the administrative burden will be taken 

into account if HUD chooses to revisit 

this question in a future rulemaking. 

D. Comments Suggesting Methods To 

Convey Financial Benefit to Tenants 

Many commenters agreed that HUD 

should permit projects to maintain the 

same utility allowance following energy 

efficient upgrades. One commenter 

stated that this would allow the tenant 

to realize the benefit of decreased utility 

costs and allow the owner to benefit by 

making them eligible to access tax 

credits when pursuing energy efficiency 

upgrades. Other commenters indicated 

that utility allowances often do not 

reflect actual costs of utilities paid for 

by tenants because there is significant 

variation among units that are the same 

type, therefore, increasing rent based on 

imprecise estimates of theoretical cost 

savings would make HOME-assisted 

housing less affordable for tenants after 

energy efficiency upgrades are made. 

One commenter said utility 

allowances should only be updated if 

there is a risk that utility costs will rise, 

say, due to electrification of heating. 

This commenter also said that owners 

also need to benefit from green 

construction in order to incentivize 

them to do the work, and they need 

green projects to be financially viable. 

The commenter suggested that one 

approach may be to rely on the addition 

to the project subsidy, along with other 

tax incentives, and Federal and local 

funding to incentivize owners toward 

green construction. 

HUD Response: The Department 

thanks the commenters for their 

suggestions to permit projects to 

maintain the same utility allowance 

following energy efficient upgrades, 

which could decrease utility costs and 

increase affordability for tenants while 

providing owners with the opportunity 

to access relevant tax credits. The 


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36Paragraph 24 CFR 92.252(d)(1) of the HOME 

rule existing immediately before the effective date 

of this final HOME rule, requires the utility 

allowance be determined annually. The Department 

is redesignating and revising this as a paragraph (b) 

but is not changing the requirement that the utility 

allowance be determined annually. 37See 42 U.S.C. 12745. 

38See https://www.hud.gov/sites/dfiles/Housing/ 

documents/MF_Memo_Community_Solar_Credits_

signed.pdf https://www.hud.gov/sites/dfiles/ 

Housing/documents/MF_Memo_re_Community_

Solar_Credits_in_MM_Buildings.pdf and https://

www.hud.gov/sites/dfiles/PIH/documents/ 

Community%20Solar%20Credits%20in%20PIH

%20Programs.pdf. 

Department agrees with the commenter 

that owners must be able to obtain the 

benefit of energy efficiency upgrades. As 

a result, the Department is declining to 

change the current requirement that 

utility allowances be redetermined 

annually.36 The Department believes 

holding utility allowances constant 

would disincentivize owners from 

making energy efficiency improvements 

during the period of affordability, as it 

would deny the owner the benefit of any 

energy efficiency improvements for 

those HOME-assisted units without 

guaranteeing that the owner obtained 

the benefit of tax credits or other 

financial incentives. The Department 

considered whether to maintain the 

same utility allowance and convey the 

financial benefit to the tenant by making 

such a program optional to the owner or 

dependent upon the owner’s 

participation in a program that 

conditioned the tax credit or assistance 

upon providing a financial benefit to the 

tenant, but determined that this 

increased the complexity of the HOME 

program to align with time-limited 

Federal and state programs without 

necessarily providing adequate 

incentive to owners to participate in 

such programs. As such, the Department 

is declining to make the change here. 

The Department is adopting a change 

that will allow participating 

jurisdictions to use either the HUD 

Utility Schedule Model, the utility 

allowance established by the local 

public housing authority (PHA), or 

another method approved by HUD as 

their maximum monthly allowances in 

the final rule. The Department believes 

that this added flexibility will allow 

participating jurisdictions to select 

methods that are most appropriate for 

the project, and which can adequately 

incentivize owners to perform energy 

efficiency upgrades on their projects. 

D. Owners Should Perform a Rental 

Assistance Demonstration (RAD) Capital 

Needs Assessment To Determine and 

Incentivize Owners To Perform Energy 

Efficiency Upgrades 

One commenter recommended that 

HUD permit owners pursuing energyefficiency retrofits or other energysaving measures to pursue the process 

outlined for RAD conversions in prior 

HUD notices since owners are not 

incentivized to pursue energy efficiency 

measures that would reduce tenant costs 

when tenants who pay their own 

utilities and rent are calculated for a 

utility allowance. The commenter 

suggested permitting owners to submit 

the engineering study contemplated by 

the RAD guidance, along with a request 

for rent adjustment so that the utility 

allowance could be conservatively reset 

and suggested that HUD should grant 

waivers to facilitate this approach. 

HUD Response: The Department 

appreciates the responses from 

commenters recommending that HUD 

permit project owners seeking energy 

efficiency upgrades to pursue the 

process outlined for RAD conversions. 

The Department declines to adopt this 

suggestion in this final rule because it 

adds a significant level of complexity to 

the HOME program without necessarily 

providing adequate benefits to owners. 

Requiring a physical conditions 

assessment delays the work to be 

performed and requires owners to incur 

additional costs before engaging in 

energy efficiency upgrades. Absent 

project development subsidy, which is 

only available to new HOME projects or 

troubled HOME projects that are 

provided new HOME funds pursuant to 

§ 92.210, the owner would have to pay 

for these costs themselves. Moreover, 

the mechanism that the commenter is 

proposing to use to incentivize owners, 

increasing rents, cannot be performed 

under the HOME program because rent 

limits are statutory.37

E. The HOME Program Should Align 

With Other Federal Programs in the 

Treatment of Utility Discounts and 

Rebates in Determining Income 

Two commenters recommended 

aligning requirements for utility 

discounts and rebates for HOME 

assisted projects and income and utility 

allowance requirements with other 

Federal programs, to the greatest extent 

possible. One of these commenters 

noted that the utility allowance could be 

difficult to enforce if it becomes 

mandated and instead recommend that 

the utility allowance be preserved for to 

tenants up to the net credit on the 

allowance. In addition, one commenter 

also urged HUD to consider July 2022 

guidance published by the Office of 

Multifamily Housing on the treatment of 

solar credits in utility allowance and 

annual income calculations to facilitate 

conveyance of financial benefit to 

residents and to exclude such benefits 

from HOME income determinations. 

HUD Response: The Department 

thanks the commenters for their 

responses to this specific solicitation. In 

revising the Final HOME Rule and 

soliciting comment on energy efficiency 

measures, HUD examined other Federal 

programs’ utility allowance and income 

regulations and requirements at length. 

The Department believes that there is no 

single approach or method to align 

income and utility allowances across 

other Federal programs. The Department 

has attempted to expand options for 

aligning with other programs by 

allowing participating jurisdictions to 

select a the applicable local PHA utility 

allowance in § 92.252(b). However, the 

Department is declining to make further 

changes such as providing tenants 

additional financial benefits or sizing 

and maintaining an artificially inflated 

utility allowance up to the net amount 

of the credit received by the owner. As 

stated earlier, the HOME program will 

follow current HUD guidance that 

describes how certain utility discounts 

or rebates can be treated under HUD 

income and utility allowance 

regulations, including the guidance 

from Multifamily housing.38

F. Exclude From HOME Income 

Determination Any Recurring Financial 

Benefit Which Results From Energy 

Efficiency Upgrades 

Commenters stated that HUD should 

exclude this financial benefit, even 

when regularly recurring, from HOME 

income determinations. One commenter 

expressed concern that including the 

financial benefits from reduced costs 

resulting from investment in energy 

efficiency upgrades as income could 

cause some tenants to become overincome. The commenter explained that 

this unforeseen income could result in 

extended negative impacts on the rents 

charged and compliance of the HOMEassisted units. 

HUD Response: The Department 

appreciates commenters’ 

recommendations that HUD exclude a 

recurring direct financial benefit to 

tenants resulting from energy efficiency 

upgrades from the HOME program’s 

income determinations. The Department 

recognizes commenters’ concern that 

the inclusion of such benefits in income 

determination may result in some lowincome tenants being considered overincome, resulting in program 

noncompliance. HUD will not be 

adopting measures related to providing 

a direct financial benefit to tenants in 


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39See 42 U.S.C. 12745, which defines the rent 

limits for HOME-assisted rental housing; maximum 

home sales price for HOME-assisted 

homeownership housing; and use of resale or 

recapture provisions in preserving affordability of 

HOME-assisted homeownership housing. 

upgraded, energy efficient properties in 

the final rule. 

G. Do Not Exclude From HOME Income 

Determination Any Recurring Financial 

Benefit Which Results From Energy 

Efficiency Upgrades 

Two commenters opposed any 

addition of further income requirements 

and stated that HOTMA has simplified 

the income eligibility process, and that 

any further requirements would prove 

cumbersome, especially given that so 

many HOME projects also receive 

Section 8 assistance. 

Another commenter opposed the use 

of discount and rebate allowances for 

income determinations because saved 

resources are not typically given back to 

tenants. The commenter also said that if 

discounts and rebates were to be treated 

as recurring income, HUD would need 

to clarify how this income would be 

documented and to which tax standard 

the income would be subject. The 

commenter was also concerned about 

HUD issuing a single rebate formula for 

a nationwide implementation and about 

the fact that carve outs for HOME 

rebates is not aligned with other HUD 

programs. 

HUD Response: The Department 

appreciates commenters’ 

recommendations that HUD does not 

exclude any recurring financial benefit 

to tenants from the HOME program’s 

income determinations and 

acknowledges that were such a measure 

to be implemented, the income 

documentation, tax standard, and 

coordination with other HUD programs 

would need to be determined. HUD 

declines to convey a financial benefit to 

low-income tenants following energy 

efficiency upgrades and excludes said 

benefit from HOME income 

determinations in this rule. 

H. Clarify Supply Sources and Energy 

Efficiency Measures 

One commenter recommended that 

HUD clarify that small-scale wind and 

solar facilities are supply sources, not 

energy efficient upgrades, because they 

do not reduce the energy demands of 

the building/unit. One commenter 

stated that it is exploring energy 

efficiency benchmarking opportunities 

and would welcome the opportunity to 

share its findings. 

HUD Response: The Department 

appreciates the commenter’s request 

that HUD make a distinction between 

energy efficient upgrades and supply 

sources. HUD is not proposing a 

definition of energy efficiency 

improvements. The Department 

understands that creating small-scale 

wind or adding solar power generation 

is increasing the supply of power to a 

project and not decreasing the energy 

demands of the project. The Department 

solicited comment on these forms of 

power supply because they may 

decrease or eliminate the amount an 

owner or tenant must pay utility 

providers for utilities to their project or 

unit respectively. The Department 

recognizes that one of the commenters 

is engaged in energy benchmarking and 

would be happy to share its findings. 

The Department is happy to discuss this 

matter with the participating 

jurisdiction after publication of this 

final rule but cannot consider these 

findings for this rulemaking at this time. 

I. Other Comments Received— 

Affordability of Housing 

One commenter believed HUD was 

requesting comment on whether 

requiring HOME-assisted units to meet 

a higher energy efficiency standard will 

negatively impact the affordability of 

the housing. This commenter strongly 

urged HUD to consider a broader 

definition of ‘‘affordability,’’ which it 

argues is incomplete in that it has 

historically been limited to the marketrate price of a home and upfront costs 

like downpayment requirements. 

Instead, this commenter said, housing 

affordability must also include the costs 

associated with staying in the home 

long-term, which can include heating 

and cooling. The commenter argued that 

energy costs disproportionately impact 

low-income homes and that costs 

related to energy-efficiency 

improvements are often mitigated in the 

first few years. The commenter 

ultimately suggested HUD examine a 

formulaic approach to determining 

affordability that includes 

downpayment costs, monthly mortgage 

payments, and monthly utility expenses 

and regard with skepticism comments 

that make hyperbolic claims about price 

increases caused by energy efficiency, 

green building, or resilience 

requirements. 

HUD Response: The Department 

thanks the commenters for their insight 

into potential affordability issues that 

could arise from imposing energy 

efficiency requirements and the 

definition of affordability in the context 

of energy efficiency improvements. 

However, the suggestions are beyond 

the scope of the proposed HOME rule. 

The Department must use the rent limits 

and homeownership provisions under 

the Act when determining and 

preserving affordability of HOMEassisted housing.39

§ 92.205—Eligible Activities: General 

A. Comments in Opposition to 

Limitations on Land Banking 

A commenter stated that, in paragraph 

(a)(2) of § 92.205, the commenter 

opposes HUD explicitly tying the use of 

HOME funds for acquisition of vacant 

land to the definition of ‘‘commitment,’’ 

specifically as it relates to uses of the 

program to support land banking. The 

commenter stated that the use of HOME 

funds for land banking leads to the 

creation of affordable housing units and 

increases affordability but just on a 

slightly longer timeline than other uses. 

The commenter noted that in many 

places there are no other funding 

sources for land banking and enabling 

partnerships between units of local 

governments and nonprofit affordable 

housing developers to take advantage of 

opportunities to purchase at lower 

prices is a flexible, efficient use of very 

limited funding to ensure not only 

production pipelines but also 

affordability. 

HUD Response: Land banking is 

statutorily prohibited under 42 U.S.C. 

12742(a)(1):‘‘Funds made available 

under this part may be used by 

participating jurisdictions to provide 

incentives to develop and support 

affordable rental housing and 

homeownership affordability through 

the acquisition, new construction, 

reconstruction, or moderate or 

substantial rehabilitation of affordable 

housing.’’ The Act further explains that 

[f]or the purpose of this part, the term 

‘‘affordable housing’’ includes 

permanent housing for disabled 

homeless persons, transitional housing, 

and single room occupancy housing. 

Purchase of property without a defined 

end-use that results in ‘‘permanent 

housing for disabled homeless persons, 

transitional housing, and single room 

occupancy housing’’ is not a permissible 

use of HOME funds under statute. HUD 

permits a participating jurisdiction to 

provide HOME assistance to an owner if 

the participating jurisdiction reasonably 

expects construction to begin within 12 

months of the project set-up date in 

paragraph (2) Commit to a specific local 

project of the definition of Commitment 

in § 92.2 but cannot permit using HOME 

funds to acquire and indefinitely hold 

land until such time as enough funds 

are available to permit development. 

The participating jurisdiction must not 

use HOME funds for acquisition of these 

types of properties if this is the 


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40See 42 U.S.C. 12705(b)(16). 

participating jurisdiction’s or owner’s 

intent. 

B. Concerns About Clarifications to 

‘‘Demolition’’ in § 92.205(a)(2) and Onefor-One Replacement Requirements 

Commenters expressed concerns that 

HUD’s clarification regarding 

demolition could lead to overly strict 

interpretations requiring a one-to- one 

rebuild following demolition. 

HUD Response: By statute, HOME 

participating jurisdictions are required 

to comply with the requirements 

contained in Section 104(d) of the 

Housing and Community Development 

Act (42 U.S.C. 5304(d)) (Section 104(d)) 

and must certify that they have in effect 

and follow a residential antidisplacement and relocation assistance 

plan (RARAP) developed in accordance 

with Section 104(d) as further provided 

in 24 CFR part 42.40 If a participating 

jurisdiction provides HOME assistance 

for a project involving demolition, as in 

the commenters’ example, Section 

104(d) requires that all occupied or 

vacant occupiable lower-income 

dwelling units that are demolished be 

replaced with lower-income dwelling 

units on a one-for-one basis. Please see 

§ 92.353(e) and 24 CFR 42.375, which 

remain unchanged in this rulemaking. 

C. Concerns About How Strictly the 

Requirement That ‘‘Demolition’’ and 

‘‘Vacant Land’’ Be Used for Affordable 

Housing in § 92.205(a)(2) Will Be 

Applied 

Some commenters were also 

concerned that HUD’s clarification 

regarding acquisition of vacant land 

could lead to overly strict 

interpretations that require affordable 

housing on each acquired and 

aggregated parcel. These commenters 

suggested adding language to 

§ 92.205(a)(2) to permit the acquisition 

of vacant land or demolition of 

structures on parcels adjoining or 

contiguous to a project that will provide 

affordable housing, so long as those 

activities are in furtherance of 

strengthening property values and 

promoting public health and safety of 

future residents as part of a cohesive 

affordable housing development plan. 

Another commenter said that permitting 

acquisition of vacant land or demolition 

of structures on adjoining or contiguous 

parcels will enable more affordable 

housing. Another commenter noted that 

so long as these activities will further 

neighborhood stabilization, the nature 

of vacancy and demolition continues to 

align with the purpose of the HOME 

program. 

HUD Response: The revisions to the 

HOME regulations at § 92.205(a)(2) are 

not intended to disallow reasonable site 

assembly or demolition activities that 

are integral to the development of the 

affordable housing. The revisions are 

intended to disallow land banking or 

demolition activities that are not 

directly tied to the provision of 

affordable housing through a ‘‘specific 

local project’’ as defined in § 92.2. If 

acquisition of vacant land is integral to 

assembling a site for a specific local 

project, then the acquisition of the land 

is a permissible acquisition cost. 

Similarly, demolition is a permissible 

cost under the HOME program when the 

demolition is integral to the creation of 

an affordable housing project, such as 

when the demolition removes a 

structure that would have prevented the 

owner from developing the affordable 

housing project. While the Department 

was revising its regulations for clarity, 

these revisions do not represent a 

change in the statutory or regulatory 

requirements. 

The Department also notes that the 

HOME program is subject to one-for-one 

replacement requirements. Please see 

earlier comment responses on the 

statutory requirement that HOME funds 

be used to construct affordable housing. 

D. Comments About Requirement That 

‘‘Demolition’’ and Acquisition of 

‘‘Vacant Land’’ Must Be Used for a 

Specific Local Project Within 12 Months 

in § 92.205(a)(2) 

One commenter stated that common 

delays caused by issues such as securing 

financing, public entitlement, site 

assembly, and other requirements make 

the proposed rule’s commitment 

deadline of 12 months for the 

acquisition of vacant land or demolition 

work unreasonable, especially for 

nonprofit developers. These challenges 

led the commenter to recommend that 

HUD extend the 12-month requirement 

or establish separate deadlines for 

vacancy and demolition work. 

HUD Response: HUD understands the 

commenter’s concern but is not revising 

the 12-month requirement contained in 

paragraph (i) of the definition of 

Commit to a specific local project for the 

reasons stated in HUD’s earlier 

comment response on this subject. 

Demolition and acquisition of vacant 

land are only eligible costs as part of an 

affordable housing project and are not 

standalone costs or activities under the 

Act. Therefore, the Department will not 

treat these costs different from other 

costs associated with site assembly, 

preparation, or development. 

E. Rewording of Project Completion 

Requirements for Homeownership in 

§ 92.205(e) 

A commenter stated that they disagree 

with the proposed change in wording 

from ‘‘[i]f a participating jurisdiction 

does not complete a project within 4 

years of the date of commitment of 

funds, the project is considered to be 

terminated . . .’’ to ‘‘[i]f project 

completion, as defined in § 92.2, does 

not occur within 4 years of the date of 

commitment of funds for a specific local 

project, the project is considered to be 

terminated . . . .’’ The commenter 

explained that a participating 

jurisdiction should not have to repay 

HOME funds for multi-address activities 

where some houses were completed and 

sold to eligible families since the units 

that were completed and sold in a 

timely fashion are HOME-assisted units. 

The commenter requested HUD provide 

additional guidance on multi-address 

activities. 

HUD Response: HUD was clarifying 

that the phrase ‘‘complete a project’’ in 

this regulation means ‘‘project 

completion’’ as defined in § 92.2. This 

was not a change in existing policy and 

was a clarification of how HUD 

interprets existing policy. Regarding 

project completion for multi-address 

projects, the commenter is correct that 

in HUD’s IDIS data system, a multiaddress development is set up as one 

activity in IDIS and as such construction 

must be completed for all addresses 

before the activity can meet the 

definition of completed and the period 

of affordability starts. This system 

functionality is not new and has been 

established for the entire history of the 

HOME Program. 

F. Support for the Four-Year Project 

Completion Deadline in § 92.205(e) 

One commenter stated that a four-year 

deadline to complete the project from 

the commitment of HUD funds is 

reasonable. 

HUD Response: HUD thanks the 

commenter for reviewing the proposed 

rule. HUD is not revising the four-year 

project completion deadline. The 

current regulation is consistent with the 

comment. 

§ 92.206—Eligible Project Costs 

A. Support for Clarification on Ground 

Lease Costs 

One commenter supported the 

clarification that acquisition through a 

ground lease is an eligible HOME cost 

and sought clarification on whether the 

costs are limited to those eligible under 

2 CFR 200.465. 


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41The other reimbursable expenses in 24 CFR 

92.206(d) will now include: ‘‘Architectural, 

engineering, or related professional services 

required to prepare plans, drawings, specifications, 

work write-ups; for HUD environmental review or 

other environmental studies, assessments, or fees; 

and for certain costs to process and settle the 

financing for a project, such as private lender 

origination fees, credit reports, fees for title 

evidence, legal fees, accounting fees, filing fees for 

zoning or planning review and approval, private 

appraisal fees, fees for independent cost estimates, 

and other lender required third-party reporting 

fees.’’ 

HUD Response: Acquisition of 

affordable housing through a ground 

lease that is at least as long as the time 

periods stated in paragraph (1) of § 92.2 

Homeownership is a permissible 

acquisition cost under § 92.206. HUD 

clarified this in the proposed rule by 

revising § 92.206(c) to explicitly state 

that ‘‘(c) Acquisition costs. Costs of 

acquiring improved or unimproved real 

property and costs for a long-term 

ground lease, including costs of 

acquisition by homebuyers.’’ The cost 

principles contained in 2 CFR part 200, 

subpart E are all applicable to HOME 

project costs, including eligible 

acquisition costs through a ground 

lease. To the extent that 2 CFR 200.465 

applies to the ground lease, the 

participating jurisdiction must 

determine that the cost of the ground 

lease is reasonable, determine if there 

are less than arms-length transactions, 

and act accordingly. 

B. Support for Revising Soft Costs in 

§ 92.206(d) 

Commenters stated that they support 

the proposal to allow property 

insurance during project development 

as an eligible HOME soft cost. 

Commenters stated that they support the 

proposal to permit the costs associated 

with conducting environmental 

assessments and reviews as costs 

eligible for reimbursement with HOME 

funds. One commenter explained that 

time and costs associated with 

environmental reviews of sites proposed 

for development often stall or restrict 

execution of affordable housing projects, 

and that HUD’s proposal, while not a 

total solution, would advantage 

programs, especially those providing 

downpayment assistance. 

A commenter suggested that 

oversight-related fees for environmental 

assessments should qualify for this 

reimbursement as well, as they can be 

substantial and cited one example of 

$96,000 for a 14-unit project. One 

commenter stated that they support the 

clarifications made at § 92.906(d)(1) 

regarding ensuring that developers can 

be reimbursed for environmental 

assessments or reviews on successfully 

awarded HOME projects. 

HUD Response: HUD thanks the 

commenters for reviewing the proposed 

rule. The Department is accepting the 

comment regarding oversight fees for 

environmental reviews and 

environmental studies and revising the 

final rule text to include such fees as 

eligible for reimbursement. 

C. Opposition to Requiring the 

Participating Jurisdiction Explicitly 

Approve of the Soft Costs in 

§ 92.206(d)(1) in the Written Agreement 

A commenter stated that they do not 

support the proposed requirement that 

the costs for conducting environmental 

assessments and reviews are only 

eligible for reimbursement with HOME 

funds when expressly permitted in the 

written agreement. The commenter 

stated that conducting environmental 

assessments and reviews are consistent 

requirements and therefore the 

reimbursement should be automatically 

approved. 

HUD Response: The Department 

thanks the commenters for reviewing 

and is moving forward with the 

revisions to § 92.206(d)(1). Under 42 

U.S.C. 12756(a) and § 92.504, 

participating jurisdictions must enter 

into written agreements that bind the 

owner to comply with HOME program 

requirements. A written agreement 

between a participating jurisdiction and 

an owner must include a description of 

the eligible uses of the project funds to 

comply with the regulation. The 

Department is declining to treat 

environmental assessments differently 

from other reimbursable expenses listed 

in§ 92.206(d)(1),41 all of which must be 

explicitly mentioned in the written 

agreement to be eligible for 

reimbursement. 

D. Clarification of Requirement to State 

Eligible Soft Costs in § 92.205(d)(1) in 

the Written Agreement 

One commenter stated that 

participating jurisdictions and other 

participants do not understand that only 

the costs expressly listed in 

§ 92.206(d)(1) may be reimbursed with 

HOME funds notwithstanding that they 

were incurred up to 24 months prior to 

the commitment of HOME funds. The 

commenter recommended that HUD 

address this issue with additional 

education or clearer regulatory 

language. 

HUD Response: The Department 

thanks the commenters for reviewing 

and is moving forward with the 

revisions to § 92.206(d)(1) without 

change. The Department will consider 

providing implementation guidance on 

this regulatory change in the future. 

E. Allow Additional Predevelopment or 

Holding Costs To Be Reimbursed if 

Specified in the Written Agreement 

One commenter stated HUD should 

consider whether it is appropriate to 

permit predevelopment costs otherwise 

allowed under § 92.206(d)(2) to be 

reimbursed with HOME funds in the 

same manner as predevelopment costs 

otherwise allowed under § 92.206(d)(1). 

The commenter noted that it is common 

for developers to have incurred various 

predevelopment legal/accounting costs, 

filing fees for planning/zoning reviews, 

appraisals and other lender-required 

third-party reports, etc. prior to the 

commitment of HOME funds (and often 

as a predicate for meeting the conditions 

for commitment). The commenter 

believed that most of those costs would 

be ‘‘anchored’’ in § 92.206(d)(2) and that 

HUD should consider whether it is 

appropriate to allow predevelopment 

costs otherwise allowed by 

§ 92.206(d)(2) to be reimbursed with 

HOME funds in the same manner as 

other pre-commitment predevelopment 

costs identified in § 92.206(d)(1). 

One commenter requested that HUD 

delineate other holding and interim 

costs during development that the other 

parts of industry regularly characterize 

as soft costs with specific focus on 

property assessments and taxes, as well 

as utilities, groundskeeping, and 

security costs. The commenter stated 

that this clarification is necessary 

because these types of costs are not 

eligible for coverage once the project is 

ready for lease-up. 

HUD Response: The Department 

agrees with the commenters and is 

expanding the project soft costs that 

may be incurred prior to a commitment 

to include costs to process and settle 

financing for the project, including 

private lender origination fees, credit 

reports, fees for title evidence, legal fees, 

private appraisal fees, and fees for 

independent cost estimates. These were 

all contained in paragraph (d)(2) but 

will now be deleted from paragraph 

(d)(2) and added to paragraph (d)(1). 

While the Department is moving these 

provisions to paragraph (d)(2), the 

Department determined that several 

provisions could not be moved because 

there is no reasonable expectation that 

they should occur prior to commitment. 

These provisions include obtaining 

building permits, which require HUD 

environmental review; fees for 

recordation and filing of legal 

documents, as recorded documents 

relating to an acquisition, rehabilitation, 


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42See 24 CFR 92.205(d)(1) and (2). 

43See 42 U.S.C. 12742 and 42 U.S.C. 12749. 

or new construction project should 

occur after commitment of HOME 

funds; and builders or developers fees, 

as those fees should not be earned and 

chargeable to the HOME grant for work 

performed prior to the environmental 

review and commitment of the HOME 

funds to the project. HUD declines to 

make reimbursement of holding costs 

incurred before the commitment of 

HOME funds eligible as the Department 

considers these operating costs not 

project-related soft cost associated with 

predevelopment. 

F. Revise § 92.206(d)(6) To Allow for 

Additional Costs To Be Reimbursed 

One commenter stated HUD should 

clarify when participating jurisdiction 

overhead and staff costs remain eligible 

for reimbursement even when incurred 

prior to commitment under 

§ 92.206(d)(6) because the rule does not 

explicitly identify these as eligible costs. 

HUD Response: Staff and overhead 

cost of the participating jurisdiction are 

eligible for reimbursement as an 

administrative and planning cost under 

§ 92.207(b) or as a project-related cost 

under § 92.206(d)(6). However, 

participating jurisdiction staff and 

overhead costs for a project that does 

not proceed as a HOME-assisted project 

is only eligible to be reimbursed as an 

administrative cost under § 92.207(b). A 

participating jurisdiction may only 

reimburse itself for project-related soft 

costs under § 92.206(d)(6) after it enters 

into a written agreement committing 

funds to the project and funding the 

project in IDIS. 

G. Revise Eligible Project Costs To 

Include Additional Costs 

One commenter suggested expanding 

HOME’s eligible costs so that 

developing and rehabilitating garage 

structures would be an eligible cost for 

the HOME program. The commenter 

stated that garages provide secure places 

to maintain personal property, like 

vehicles and mowers, and also support 

higher densities in urban neighborhoods 

through the creation of Accessory 

Dwelling Units (ADUs). 

HUD Response: HUD thanks the 

commenter for reviewing the proposed 

rule. HOME funds can be used for the 

cost of attached garages, i.e., garages that 

are part of the housing structure 

receiving HOME funds. Unfortunately, 

the Act does not authorize the use of the 

HOME funds for appurtenances. 

Consequently, costs related to 

construction of freestanding garages or 

community buildings are not eligible to 

be paid with HOME funds. 

§ 92.207—Eligible Administrative and 

Planning Costs 

A. Raise Administrative and Planning 

Cost Cap 

One commenter stated that given the 

addition of new requirements, including 

BABA and VAWA, and the reduction in 

recent years of entitlement funding, the 

limit on only spending 10 percent on 

administration and planning costs is not 

sufficient to meet obligations in running 

compliant programs. 

HUD Response: HUD understands the 

commenter’s concerns about the 

potential increased costs of compliance 

and the limited amount of 

administrative and planning funds. 

Unfortunately, the 10 percent cap on 

each administrative and planning costs 

for each grant is statutory. See 42 U.S.C. 

12742(c). 

B. Reimbursement of Program Costs for 

Projects That Do Not Proceed 

One commenter stated that HOME 

applicants often drop out of the process 

prior to closing, which means grantees 

are unable to recover the extensive staff 

time invested in considering or 

processing applications. The commenter 

recommended that HUD allow 

reimbursement of program costs if the 

grantee can demonstrate they acted in 

earnest to achieve the national objective. 

This could include demonstration of 

standard program deliverables, 

including inspection reports, work-write 

ups, bid packages and construction 

contract materials. 

HUD Response: HOME regulations at 

§ 92.207 currently permit payment of 

administrative costs, including staff and 

overhead costs for considering or 

processing applications, monitoring 

owners, inspections, and other 

administrative costs associated with 

program governance. However, for a 

cost to be an eligible project cost under 

§ 92.206, it must be for a project that 

provides affordable housing in 

accordance with 24 CFR part 92. 

C. Inability To Pass Along Costs to 

Program Beneficiaries Necessitates 

Additional Administrative Funds 

A commenter noted that State 

participating jurisdictions often develop 

rules regarding eligible administrative 

and project costs forcing many small 

cities and counties to exit the program 

because costs cannot be reimbursed 

fully. The commenter believes that not 

allowing costs for work specifications, 

needed inspections, and title insurance 

to be charged to successful HOME 

beneficiaries unfairly limits 

compensation for program delivery in 

homebuyer and home rehabilitation 

programs. 

The commenter stated that HUD 

should increase support for 

administrative and activity delivery 

costs because participating jurisdictions, 

State recipients, or local recipients 

require grantees to provide additional 

funding from general funds to cover cost 

overruns that stem from these 

categories. The commenter suggested an 

increase in allowable administrative 

costs to 12 percent if a State recipient 

contractor or subrecipient is utilized. 

The commenter suggested allowing 

project delivery cost reimbursement 

housing rehabilitation, homebuyer 

assistance, and ADU programs. 

HUD Response: Program beneficiaries 

in HOME homeownership programs 

(i.e., homebuyers and homeowners) may 

only pay costs in accordance with 

§§ 92.254, 92.251, and 92.214. Under 

§ 92.504(a) participating jurisdictions 

are responsible for managing the day-today operations of its HOME program, 

ensuring that HOME funds are used in 

accordance with all program 

requirements and written agreements, 

and taking appropriate action when 

performance problems arise. The 

participating jurisdiction must have and 

follow written policies, procedures, and 

systems, including a system for 

assessing risk of activities and projects 

and a system for monitoring entities 

consistent with HOME requirements in 

24 CFR part 92, and must take all 

necessary steps to require compliance 

with the HOME requirements. The 

Department is not changing these 

requirements or removing discretion 

from participating jurisdictions to 

determine the terms of the HOME 

assistance. Many of the costs that the 

commenter mentioned are within the 

discretion of the participating 

jurisdiction to pay if they are included 

in the written agreement, this includes 

work-write-ups; environmental reviews, 

studies, or assessments; and title 

insurance fees.42 The HOME rule at 

§ 92.205(d)(6) requires that these costs 

only be charged as activity costs if the 

project is funded, and the individual 

becomes the owner or tenant of the 

HOME-assisted project. The Department 

believes this is a reasonable restriction 

of the costs because, by statute, project 

delivery costs may only be paid for 

completed projects that meet the 

requirements of 24 CFR part 92.43

Finally, the Department understands 

that the commenter is requesting 

additional administrative and planning 

funds. The 10 percent cap on each FY’s 


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administrative and planning costs is 

statutory. See 42 U.S.C. 12742(c). There 

is no HUD-imposed cap on project 

delivery cost reimbursement for the 

costs required in § 92.206(d)(1). 

Reimbursement of those costs are at the 

discretion of the participating 

jurisdiction and must explicitly be 

included in the written agreement 

committing the funds to be eligible 

HOME project costs. 

§ 92.208—Eligible Community Housing 

Development Organization (CHDO) 

Operating Expense and Capacity 

Building Costs 

A. General Support 

Commenters supported the proposed 

rule revisions to correct a drafting error 

that created an unintended barrier to 

using CHDO operating expense and 

capacity building funding to assist 

nonprofit organizations seeking CHDO 

designation to meet the demonstrated 

capacity requirements. 

HUD Response: The Department 

thanks the reviewers for commenting, 

agrees with the commenters in support 

of the change, and is moving forward 

with the change. 

B. Concern About Requirement That 

Operating Assistance Be Provided to an 

Organization That the Participating 

Jurisdiction Expects To Commit 

Assistance to for a Project Within 24- 

Months 

One commenter recommended adding 

the requirement described in § 92.300(e) 

of the existing rule, that a participating 

jurisdiction may only provide operating 

expense assistance under § 92.208 to a 

CHDO if the participating jurisdiction 

expects to commit CHDO set-aside 

funds to the CHDO for a project within 

24 months, to § 92.208. The commenter 

believed this to ensured that the 

limitation is not overlooked. A 

commenter asked that HUD clarify the 

consequences of providing operating 

funds to a CHDO that does not receive 

CHDO set-aside funding for a project 

within 24 months and recommended 

that HUD not require repayment of the 

operating assistance funds if the CHDO 

has made good faith efforts to qualify for 

project funding. Another commenter 

recommended providing examples of 

good faith efforts in sub-regulatory 

guidance and two commenters provided 

potential examples of good faith efforts. 

One commenter stated that CHDOs 

receiving capacity building funds 

should receive more time because 

developing affordable housing for lowincome persons is complex and 

difficult. Other commenters 

recommended extending the time 

period for organizations receiving 

operating expense funds to secure 

project-related set aside funds from 24 

months to 36 months. Some 

commenters noted that a 36-month 

timeline would align CHDO TA with 

other Federal programs, such as the 

CDFI Fund, which requires that 

organizations receiving TA awards 

become certified as a CDFI within three 

years of receiving their TA award. A 

commenter also suggested that the 

longer timeframe would align with the 

needs of low-income communities, 

recognizing the unique challenges and 

longer timelines that are often faced in 

those areas. 

HUD Response: Based on the 

comments received, the Department 

recognizes that there is some confusion 

among commenters about the use of 

operating assistance funding for 

capacity building activities, and the 

separate category of capacity building 

funding for development of CHDOs by 

new participating jurisdictions during 

their first 24 months of participation of 

the HOME program. To eliminate this 

confusion, HUD is revising the language 

in the proposed rule’s paragraph 

§ 92.208(c) to strike the term ‘‘capacity 

building.’’ 

In response to the query about the 

consequences of a CHDO that received 

operating assistance not receiving a 

commitment of project funding, in most 

cases repayment is not required but the 

participating jurisdiction must cease 

providing operating assistance to the 

organization when it determines that it 

will not be committing funds to the 

organization for a HOME project. 

C. Expand CHDOs That May Receive 

Operating Funds Under § 92.208(a) 

One commenter stated that CHDOs 

experiencing employee turnover should 

have access to CHDO operating funds 

under § 92.208(a). 

HUD Response: The Department 

thanks the commenter for reviewing the 

proposed rule and notes that the current 

regulations and this final rule permit 

participating jurisdictions to provide 

CHDO operating assistance funds to 

CHDOs experiencing employee 

turnover. 

D. Expand Eligibility for CapacityBuilding Funds in § 92.208(b) 

A commenter supported the proposed 

changes but urged HUD to remove the 

language at § 92.300(b) that restricts 

capacity building funding only to 

participating jurisdictions within the 

first 24 months of participation in the 

HOME program as there are many 

participating jurisdictions that have not 

identified a sufficient number of capable 

CHDOs and struggle to use their CHDO 

set-aside each year. 

HUD Response: The restriction that a 

participating jurisdiction may only 

engage in capacity building activities for 

CHDOs in the first 24 months of a 

participating jurisdiction’s participating 

in the program is statutory. 42 U.S.C. 

12771(a) states in relevant part that ‘‘[i]f 

during the first 24 months of its 

participation under this subchapter, a 

participating jurisdiction is unable to 

identify a sufficient number of capable 

community housing development 

organizations, then up to 20 percent of 

the funds allocated to that jurisdiction 

under this section, but not to exceed 

$150,000, may be made available to 

carry out activities that develop the 

capacity of community housing 

development organizations in that 

jurisdiction . . . .’’ If a participating 

jurisdiction has been participating in 

the HOME program for more than 24 

months, it may still provide CHDOs 

with CHDO operating funds in 

accordance with § 92.208(a) and (c). 

E. General Requests To Enhance CHDO 

Capacity 

Commenters urged HUD to provide 

technical assistance to help CHDOs 

build and maintain capacity, 

particularly in rural areas. A commenter 

that is an organization that serves 

persons with disabilities and has 

previously sought CHDO designation 

requested that HUD provide technical 

assistance to existing communityserving organizations that wish to or 

that are becoming CHDOs. One 

commenter urged HUD to use capacity 

building money in non-entitlement 

communities because it would provide 

needed funding to nonprofit 

organizations in those communities to 

address their affordable housing needs. 

HUD Response: HUD acknowledges 

the importance of providing technical 

assistance to rural CHDOs to help them 

succeed in competitive funding cycles 

administered by their participating 

jurisdictions. The Department 

recognizes that rural CHDOs face unique 

challenges that can be addressed 

through targeted support. However, 

HUD can only provide direct program 

assistance to entities that receive funds 

directly from HUD. Partners, 

subrecipients, or project sponsors that 

receive HUD funds through a 

participating jurisdiction must 

coordinate with the participating 

jurisdiction to submit a request for indepth program assistance on their 

behalf. HUD will continue to develop 

training and tools aimed at providing 

broad assistance that is relevant to rural 

CHDOs. 


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§ 92.209—Tenant-Based Rental 

Assistance 

A. Request for Clarification on Rental 

Assistance Contract 

One commenter asked HUD to clarify 

§ 92.209 by stating that the rental 

assistance contract is the one under 

which HOME funds are committed to 

the activity, not the agreement between 

the tenant, landlord, and participating 

jurisdiction/State recipient. 

HUD Response: The Department 

thanks the commenters for reviewing 

the proposed rule. The definition of 

‘‘Commit to specific local project’’ in 

paragraph (2) of the definition of 

‘‘Commitment’’ in 24 CFR 92.2 states 

that the committing document for 

HOME tenant-based rental assistance is 

the rental assistance contract. When a 

participating jurisdiction is 

administering its own tenant-based 

rental assistance program, this will be 

the document committing HOME 

tenant-based rental assistance. If a 

participating jurisdiction is using a 

Subrecipient (or State recipient) to 

provide tenant-based rental assistance, 

then there will be at least two 

commitments, one will be committing 

funds to administer a tenant-based 

rental assistance program that is 

between the participating jurisdiction 

and its Subrecipient (or State recipient); 

the other will be committing funds 

through the rental assistance contract 

between the Subrecipient (or State 

recipient) and the tenant and owner 

receiving the tenant-based rental 

assistance. 

If a participating jurisdiction is using 

a contractor to provide tenant-based 

rental assistance, then there will also be 

at least two commitments, one 

committing the funds to the contractor 

to administer the participating 

jurisdiction’s tenant-based rental 

assistance program; and the other being 

the rental assistance contract between 

the Contractor (as agent of the 

participating jurisdiction) and the 

owner and tenant assisted by the tenantbased rental assistance. 

B. Use of Tenant-Based Rental 

Assistance in Lease Purchases 

One commenter expressed support for 

HUD’s outline in the proposed rule of 

the parameters within which a tenant 

may become a homeowner through the 

lease-purchase process and said that 

easing lease-purchase in the HOME 

program would provide a much-needed 

path toward homeownership for low- to 

moderate-income homebuyers. The 

commenter reasoned that allowing a 

homebuyer-tenant to contribute their 

TBRA toward a down payment will 

facilitate rent-to-own processes for 

HOME-assisted households. According 

to the commenter, if HUD’s proposal 

were finalized, both participating 

jurisdictions and potential homebuyers 

could determine that all or some of the 

tenant’s contribution to rent could be set 

aside for closing costs or a down 

payment and solidify terms through the 

lease-purchase agreement. 

HUD Response: The commenter 

supports changes made to the leasepurchase program but requests the 

ability for TBRA tenants participating in 

a lease-purchase program to have a 

portion of their tenant-based rental 

assistance, and not just the tenant 

contribution towards rent, be used to 

accumulate a downpayment for the unit. 

The current regulation at 

§ 92.209(c)(2)(iv) only allows a portion 

of the tenant’s monthly contribution 

towards rent to be set aside for this 

purpose. The Department did not 

propose a change to this provision and 

does not believe it can do so because the 

result would be that the tenant-based 

rental assistance provided would be 

used as both tenant-based rental 

assistance and homeownership 

assistance. This dual use of HOME 

funds would violate the provisions of 42 

U.S.C. 12742(a)(3) and (b), which do not 

contemplate using tenant-based rental 

assistance for such purpose. Instead, the 

Department only clarified that when all 

or a portion of the homebuyer-tenant’s 

monthly contribution toward rent is set 

aside for closing costs or a 

downpayment, it must be set aside in 

accordance with the lease-purchase 

agreement. 

C. Income Reexaminations and 

§ 92.209(c)(1) 

Several commenters stated that they 

support reducing the frequency of 

income determinations by requiring 

income redetermination only at TBRA 

contract renewal instead of an annual 

determination. Commenters stated that 

reducing the frequency of income 

determinations was prudent and would 

lessen the impact on tenants and reduce 

administrative burden on participating 

jurisdictions. One commenter noted that 

longer recertification periods would 

allow families to build wealth without 

immediately having to pay higher rent 

and utility payments. The commenter 

was grateful HUD was building off its 

Bridging the Wealth Gap plan but 

encouraged the Department to 

implement longer recertification periods 

such as triennial income recertifications 

as proposed in the Bridging the Wealth 

Gap plan. 

One commenter noted that, as written, 

the rule may still require income 

determinations annually because leases 

expire annually. The commenter 

suggested clarifying that income 

reexamination is not required for 

amendments to the rental assistance 

contract during the original term of the 

contract as project costs may change 

during the term. 

HUD Response: The Department 

thanks the commenters for reviewing 

the proposed rule and is moving 

forward with the proposed change. In 

response to the commenters, HUD is 

adding language to § 92.209(e) that 

clarifies when an income reexamination 

is required. While the Department is not 

moving to triennial income 

reexamination for tenant-based rental 

assistance, HUD is revising § 92.209(e) 

to add a new paragraph (3) that defines 

what events constitute an amendment or 

renewal of the rental assistance contract. 

Specifically, a rental assistance contract 

may only be amended for the following 

reasons and within its term if all parties 

consent, for the following reasons: to 

extend the term of the rental assistance 

contract up to 24 months from the 

original date of execution; when a 

tenant changes units within the same 

building or development provided the 

parties to the lease, the family size, and 

number of bedrooms remain the same; 

or the lease term or amount charged 

under the lease has been changed. 

Subject to the availability of HOME 

funds, a rental assistance contract may 

be renewed after the expiration of its 

initial term. 

The Department is also adding 

language in a new paragraph (4) that 

explains when initial and subsequent 

income determinations are required. 

Income determinations will be required 

before a participating jurisdiction enters 

into an initial or new rental assistance 

contract with the family, and at contract 

renewal. Participating jurisdictions will 

not be required to reexamine a family’s 

income if the rental assistance contract 

is amended. The Department believes 

this will address the commenters’ 

concerns by establishing a clear 

framework for reducing income 

reexaminations in tenant-based rental 

assistance. 

D. Increase Alignment With Section 8 

on Income Reexaminations 

Commenters stated that HOME TBRA 

should require income eligibility 

screening only at new admission and 

not require it afterwards, i.e., not during 

the annual certification process, because 

Section 8 requires income eligibility 

screening only upon new admission. 

Commenters also suggested that 

HOME TBRA do not have a lease 


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44 42 U.S.C. 12744. 

45 42 U.S.C. 12742(a)(3)(C). 

renewal requirement similar to Section 

8, where lease renewal is implied. 

HUD Response: The Department 

thanks the commenter for reviewing the 

proposed rule and acknowledges the 

commenter’s recommendation to align 

income eligibility requirements across 

the HOME tenant-based rental 

assistance programs and Section 8 

Housing Choice Voucher programs. Due 

to HOME statutory limitations, HUD 

declines to adopt this recommendation. 

The Act requires income targeting for 

HOME tenant-based rental assistance to 

be based on income at the time of 

occupancy or at the time funds are 

invested, whichever is later.44 The Act 

also limits the term of rental assistance 

contracts to 24 months.45 The combined 

effect of the two provisions is that the 

participating jurisdiction must 

redetermine income each time it invests 

its funds into a new rental assistance 

contract to determine that the family 

meets the income eligibility 

requirements and to determine that the 

funds invested in the rental assistance 

contract still meet the statutory income 

targeting requirements. Rental 

assistance contracts may be renewed if 

a participating jurisdiction has funds 

available and the family still meets the 

income requirements after their income 

is redetermined. 

E. Remove Requirement That a Rental 

Assistance Contract Begin on the First 

Day of the Lease 

One commenter asked HUD to remove 

the requirement in § 92.209(e) that the 

rental assistance contract begin on the 

first day of the term of the lease because 

it imposes a hardship on households 

that receive TBRA in the rental housing 

they currently occupy, but where they 

were unassisted at the time of lease 

execution. The commenter explained 

that HUD allows for the lease term to 

expire during the term of assistance, so 

long as no HOME assistance is provided 

when an active lease is not in place and 

that an existing lease may be amended 

to include the required tenant 

protections after the lease term begins, 

so the lease effective date should be 

immaterial to the HOME assistance start 

date, so long as all other requirements 

are achieved. 

HUD Response: HUD agrees with the 

commenter that requiring the rental 

assistance contract to begin on the first 

day of the lease is problematic for 

families that are already under an 

existing lease. The Department is 

revising § 92.209(e) to state that the term 

of the rental assistance contract must 

begin on the first day of the term of the 

lease or the beginning of the first month 

in which tenant-based rental assistance 

is provided in accordance with the 

rental assistance contract. Permitting the 

rental assistance contract to begin on the 

first month in which the tenant-based 

rental assistance is provided will allow 

participating jurisdictions to assist 

families already residing in a unit, 

provided that the lease conforms to the 

tenant-based rental assistance 

requirements in § 92.209 and includes 

the HOME tenant-based rental 

assistance tenancy addendum required 

in § 92.253. 

F. Support for Tenant Hardship 

Provisions in § 92.209(h) 

Several commenters stated that they 

support the proposed change to the 

TBRA requirements to allow 

participating jurisdictions to establish 

hardship policies that permit an 

exception to the minimum rent 

requirement for families with little or no 

income. 

HUD Response: HUD thanks the 

commenters for their support and is 

moving forward with these changes. 

Specific solicitation of comment #9: 

The Department currently applies only 

the tenant protections contained in the 

current § 92.253(a) and (b) to tenants 

receiving TBRA. The proposed rule 

would apply proposed paragraphs (a)– 

(c) and (d)(2) to tenants receiving TBRA, 

including tenants that only receive 

HOME security deposit assistance. The 

Department is seeking public comment 

on whether the requirements at 

§ 92.253(b) and (d)(2) should be 

required for tenants that receive TBRA. 

If not, what tenant protection 

requirements should apply to tenants 

that receive TBRA? 

A. Comments in Support of a Tenancy 

Addendum for Tenant-Based Rental 

Assistance Recipients 

Several commenters supported 

providing a tenancy addendum for 

recipients of HOME tenant-based rental 

assistance. One commenter stated the 

proposed tenant protections are a 

positive step towards protecting lowincome renters in subsidized units and 

that they hoped to see the protections 

expanded to other HUD programs. 

Another commenter supported the 

expanded tenant protections and stated 

that many of the protections already 

exist in State law and local ordinances. 

Another commenter said that even 

though the commenter is unaware of 

any jurisdictions that use HOME funds 

to provide TBRA, there is no reason 

why TBRA should operate differently 

than the Housing Choice Voucher 

program, which provides tenant 

protections. 

One commenter stated that a 

universal HOME tenancy addendum 

would ensure compliance with Violence 

Against Women Act (VAWA) 

requirements and other Federal tenant 

rights and reduce the burden on 

participating jurisdictions to develop 

their own addenda or review individual 

leases. The commenter cautioned HUD 

must ensure that the universal HOME 

tenancy addendum does not conflict 

with any lease provisions or addenda 

required by other Federal programs, and 

should avoid conflict with applicable 

State or local laws to the maximum 

extent possible. One commenter urged 

HUD to extend the full range of tenant 

protections to those receiving HOME 

TBRA and noted its appreciation for 

extending these protections to persons 

with disabilities. The commenter 

appreciated HUD seeking to minimize 

owner retaliation for reasonable 

accommodation requests but notes that 

HUD enforcement of the regulation is 

required in order to prevent such 

retaliation. 

HUD Response: HUD thanks the 

commenters for their views and agrees 

that tenancy addenda are an effective 

and administratively streamlined way to 

ensure that leases are free from 

prohibited lease terms and provide 

tenants with adequate protections and 

rights. HUD is adopting tenancy 

addenda for rental housing, tenantbased rental assistance, and families 

receiving only security deposit 

assistance. However, in response to 

public comment, HUD is making 

significant changes to the addenda 

requirements in this final rule so that 

the requirements in the addenda reflect 

the extent of HOME involvement in the 

project. 

Specifically, HUD is making even 

greater distinctions between the 

addenda for rental housing in which the 

owner has accepted HOME funding for 

the project and tenant-based rental 

assistance, as well as between ongoing 

tenant-based rental assistance and only 

security deposit assistance. This final 

rule also better aligns HOME tenancy 

provisions with those applicable to 

Housing Choice Vouchers and projectbased vouchers to maintain consistency 

across the programs. 

HUD declines to include VAWA 

protections applicable to HOME projects 

in the HOME-specific tenancy addenda 

established by this rule because the 

Department is undertaking separate 

rulemaking to implement the expanded 

VAWA protections across HUD 

programs. The HOME-specific 

protections in these addenda must be 


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46See 56 FR 65354. 

adjudicated through State and local 

judicial processes. Participating 

jurisdictions are also required to 

monitor and enforce HOME 

requirements. HUD, in its HOME 

program monitoring and oversight role, 

may identify when a participating 

jurisdiction is not enforcing the HOME 

requirements and may require that the 

participating jurisdiction enforce tenant 

protections, as necessary. The 

Department notes that individuals may 

report housing discrimination to HUD’s 

Office of Fair Housing and Equal 

Opportunity (FHEO), including 

complaints involving violations of 

VAWA, the Fair Housing Act, Section 

504 of the Rehabilitation Act, and Title 

VI of the Civil Rights Act. See https:// 

www.hud.gov/fairhousing/

fileacomplaint. However, the 

Department is declining to establish 

grievance procedures on either the 

Departmental level or for participating 

jurisdictions. The HOME program is a 

block grant affordable housing program, 

and it is the responsibility of each 

participating jurisdiction to determine 

the best systems, policies, and 

procedures for monitoring and enforcing 

compliance in accordance with 

§§ 92.253 and 92.504. 

B. Cautious Support of a Tenancy 

Addendum for Tenant-Based Rental 

Assistance Recipients 

One commenter supported HUD’s 

proposal to expand tenant protections 

for households receiving TBRA 

assistance in theory but was concerned 

that doing so may provide a 

disincentive for owners of rental 

housing to participate in the program. 

While the commenter acknowledged the 

benefits of extending tenant protections, 

especially in jurisdictions without many 

protections for tenants, an expansion of 

requirements would likely deter 

available units from being accessed. The 

commenter recommended providing an 

option for participating jurisdictions to 

exempt the new requirements for 

households that receive TBRA security 

deposit assistance only, as well as an 

option for participating jurisdictions to 

exempt 1–4 family and attached rental 

dwellings if it is a deterrent for owners 

in their jurisdiction. 

HUD Response: HUD shares the 

commenter’s concern that HOME lease 

addenda not act as a disincentive to 

private landlords accepting participants 

in HOME TBRA programs, including 

security deposit assistance only 

programs. HUD believes that 

establishing different addenda for 

HOME rental projects, HOME TBRA, 

and HOME security deposit assistance 

that provide different levels of tenant 

protections based on the form of HOME 

assistance being provided will help 

address landlord reluctance to accept 

the tenant protections in the addenda. 

The Department believes that HOME 

TBRA recipients should have 

protections similar to tenants of HOMEassisted rental units. Consequently, the 

TBRA addendum is substantially 

similar to the Rental Housing addendum 

except that it does not include the 

requirements: (1) that an owner relocate 

a tenant if a life-threatening deficiency 

cannot be addressed on the same day it 

is identified; and (2) that allows tenants 

to organize, create tenant associations, 

convene meetings, distribute literature, 

and post information. Because of the 

limited nature of security deposit 

assistance, the new security deposit 

assistance tenancy addendum includes 

the prohibited lease terms in the current 

regulations. The Department chose this 

set of protections because the vast 

majority of the protections have been 

the minimum standard for tenant 

protections in the HOME program since 

1991, when the HOME program’s first 

rule was issued.46

C. Opposition to a Tenancy Addendum 

for Tenant-Based Rental Assistance 

Recipients 

Several commenters stated that 

requiring a tenancy addendum on TBRA 

leases would likely limit the housing 

supply because fewer landlords would 

accept tenants with HOME TBRA, 

especially in places where the expanded 

protections exceed existing law. One of 

the commenters recommended that 

HUD specially reach out to all 

participating jurisdictions to obtain 

input on the impact of these proposed 

changes. 

One commenter stated that the 

additional requirements limit the units 

that are available to tenants for 

landlords that refuse the additional 

protections as part of the lease. The 

commenter explained that where 

demand exceeds supply the additional 

requirements limit the units available 

for rent. Additionally, the commenter 

said that State and local laws already 

provide tenant protections and the 

HOME program should not limit 

tenants’ access to existing available 

units for rent by adding duplicative 

regulations and requirements. Another 

commenter also said the proposed 

changes would risk decreasing program 

use and create difficulties finding 

available units. This commenter said 

LIHTC units have been lost due to 

qualified contract provisions that have 

caused a housing shortage for lowincome communities. 

One commenter stated that the 

proposed tenant protection provisions 

would undermine the operational and 

financial well-being of participating 

rental properties and would interfere 

with existing State and local tenant 

protection laws without any evidence 

supporting the effectiveness of the 

proposed provisions. Another 

commenter stated that the proposed 

tenant protection provisions would 

make it more difficult for local courts to 

interpret lease agreements. 

HUD Response: HUD appreciates the 

feedback and has carefully considered 

the commenters’ concerns that a TBRA 

addendum might create a disincentive 

for private landlords to rent units to 

HOME TBRA recipients. The 

Department understands that there may 

be owners that refuse tenants with 

HOME tenant-based rental assistance 

because of the terms of the HOME 

tenant-based rental assistance tenancy 

addendum; nonetheless, the Department 

has experience with applying tenancy 

addenda in other tenant-based rental 

assistance programs, most notably the 

Housing Choice Voucher program, and 

believes that it must balance the 

disincentive to some owners with the 

overall needs of the tenants being 

assisted with Federal funds. TBRA 

recipients are entitled to tenant 

protections and the Department has 

determined that these tenant protections 

should be similar to those being 

provided to tenants of HOME-assisted 

rental housing units, as described in the 

preamble to this final rule. The 

Department provided notice to the 

public of these protections in the 

proposed rule and specifically solicited 

comment on applying the protections to 

tenant-based rental assistance, just as 

the commenter is saying that the 

Department should have done. After 

examining the comments received, HUD 

is adopting the requirement for a HOME 

tenant-based rental assistance tenancy 

addendum in this final rule. 

Tenant protections under State laws 

vary widely and HUD does not agree 

with commenters that it should defer to 

individual State laws that may not 

always provide sufficient tenant 

protections for families receiving HOME 

tenant-based rental assistance. Many 

State laws do not afford the minimum 

set of tenant protections provided under 

the current HOME regulations. After 

careful consideration of the comments 

received as part of this rulemaking, the 

Department has determined that it 

should not rely upon State laws and 

should promulgate the tenant 

protections provided in § 92.253(c) as a 


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minimum standard of tenant 

protections. The Department does not 

believe that requiring a minimum level 

of tenant protections will undermine the 

operational and financial well-being of 

participating rental properties, as 

owners are free to assess the risks and 

choose whether they are comfortable 

with executing a tenancy addendum 

that includes the tenant protections in 

§ 92.253(c). The tenancy addendum will 

not interfere with existing State and 

local tenant protection laws and tenants 

may exercise any protections that are 

more stringent than HUD requirements. 

The Department also believes that the 

preamble discussion of both the 

proposed and this final rule, the plain 

language of § 92.253(c), and the HOME 

tenant-based rental assistance tenancy 

addendum provide ample materials for 

courts to interpret tenant leases. The 

Department also notes that many 

participating jurisdictions already 

include a tenancy addendum addressing 

prohibited lease terms contained in the 

current HOME regulations, and that 

such practice has made it easier, not 

harder, for tenants to assert their rights 

under their lease. 

D. Opposition to Tenancy Addendum 

for Security Deposit Assistance 

One commenter stated HUD should 

not require a tenancy addendum on 

security deposit-only HOME clients, as 

this scenario typically includes TBRA or 

Housing Choice Voucher or VASH 

vouchers, which already occur and have 

an entity monitoring the landlord-tenant 

relationship for compliance. 

HUD Response: HUD agrees with the 

commenter that it is not appropriate to 

use the HOME tenant-based rental 

assistance tenancy addendum for 

tenants receiving security deposit only 

assistance. Unlike tenancy in a HOMEassisted rental unit or receipt of HOME 

TBRA, security deposit only assistance 

is one-time assistance. This is especially 

true when it is coupled with another 

form of assistance such as a Housing 

Choice Voucher. However, security 

deposit only assistance is subject to the 

prohibited lease terms established in the 

HOME statute and already promulgated 

in the current regulations. 

Consequently, HUD is adopting an 

addendum solely for use in conjunction 

with security deposit only assistance 

that contains only those currently 

prohibited lease terms, as an addendum 

is an effective mechanism for ensuring 

compliance. 

Specific solicitation of comment #10: 

Currently, a rental assistance contract 

can be between a participating 

jurisdiction and either an owner or a 

tenant. The Department is also aware of 

many participating jurisdictions that 

have tri-party rental assistance 

contracts where the owner, the tenant, 

and the participating jurisdiction all 

sign the rental assistance contract. The 

Department is seeking feedback on 

whether a rental assistance contract 

should always be executed by an owner 

so that the participating jurisdiction can 

require that the HOME-assisted tenant’s 

lease contain the HOME tenancy 

addendum, and that the owner follow 

all applicable TBRA requirements. 

To promote robust enforcement, a 

commenter suggested that HUD should 

consider elaborating on the participating 

jurisdiction’s obligations upon receiving 

the lease or revision via final rule or 

accompanying guidance. The 

commenter explained that tenants 

would benefit if the participating 

jurisdiction was obligated to notify them 

of proposed lease revisions and if 

tenants had the right to submit 

comments regarding those revisions. 

The commenter also suggested that HUD 

could also play a role in compliance 

monitoring if HUD performed audits of 

the leases and revisions that are 

submitted. The commenter further 

suggested that HUD should also require 

that leases disclose any other Federal 

housing subsidies that are attached to 

the unit and the property, as well as a 

statement that if a property or unit has 

multiple subsidies, the most restrictive 

tenant protections apply. 

Several commenters stated that the 

rental assistance contract should be 

executed by an owner to ensure that the 

owner is compliant with all applicable 

HOME TBRA requirements, particularly 

given that the regulatory requirements 

apply to the owner of the project. One 

commenter noted that agreements with 

project owners are common practice. 

Another commenter noted that it 

already requires the owner to be party 

to the rental assistance contract and 

agrees that it is necessary to ensure 

tenant protections are enforced. Another 

commenter stated that they have often 

experienced instances where tenants 

sign the agreement but as an owner the 

commenter did not see the agreement 

until after execution, which doesn’t 

allow the owner to know up front what 

is expected of them. 

One commenter stated that a tri-party 

rental assistance contract ensures that 

the owner and tenant have a clear 

understanding of, and agree to, the 

program requirements, however the 

commenter noted that a tri-party 

contract may be a disincentive to smallscale rental owners’ participation in the 

program. Another commenter noted that 

while it believes the rental assistance 

contract should be executed by the 

owner, it does support triparty contracts 

as an option. 

Two commenters stated that HUD 

should permit participating 

jurisdictions to choose whether owners 

should be included on the rental 

assistance contract, as is currently 

permitted in the regulations, although 

one commenter noted that requiring 

owners to be on the contract may result 

in owners electing not to participate in 

the program. The commenter also 

encouraged HUD to survey participating 

jurisdictions to see how many currently 

include owners on the contract and 

whether they support requiring the 

HOME tenancy addendum. 

One commenter stated that the tenant 

protections should be required to be in 

the tenant’s lease in whatever method is 

appropriate. Another commenter said 

that even though the commenter is 

unaware of any jurisdictions that use 

HOME funds to provide TBRA, there is 

no reason why TBRA should operate 

differently than the Housing Choice 

Voucher program, which requires a 

tenancy addendum. 

One commenter stated that the 

proposed changes would risk adding an 

unnecessary layer of oversight and 

would create a link between 

participating jurisdictions and owners 

that would risk property damage 

concerns and tri-party contract disputes. 

The commenter also said that since 

States or subrecipients could also have 

assistance contracts and/or rental 

assistance contracts used as emergency 

solutions, having a requirement to issue 

contracts with owner signatures would 

add additional administrative burden. 

The commenter suggested that HUD 

leave the regulation in its current form. 

One commenter stated that 

participating jurisdictions can always 

require that the HOME-assisted tenant’s 

lease contain the HOME tenancy 

addendum and that the owner follow all 

applicable TBRA requirements either by 

including that requirement in a 

participating jurisdiction/owner 

contract or in a tri-party contract. The 

commenter is not aware of any data 

indicating the proposed change would 

benefit residents and may, in fact, deter 

owners from participating in HOME 

TBRA programs. 

HUD Response: The Department 

appreciates the feedback provided by 

the commenters and has decided to 

require the participating jurisdiction to 

enter a rental assistance contract with 

the owner and the family. The 

Department is revising § 92.209(e) to 

add paragraph (1) to delineate the 

required parties to a rental assistance 

contract. This may take the form of one 

agreement with the owner and a 


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separate agreement with the family, or 

one single tri-party agreement with the 

participating jurisdiction, the owner, 

and the family. The Department 

disagrees that requiring an owner be a 

party to the rental assistance contract 

would create an administrative burden, 

but instead believes the participating 

jurisdiction must have a means of 

enforcing the tenant-based rental 

assistance requirements in § 92.209 with 

both the project owner and the assisted 

family to ensure compliance with all 

applicable requirements in § 92.209, 

including but not limited to tenant 

protections, income determinations, and 

unit inspections. 

In contrast to the comment that 

requiring a rental assistance contract to 

be executed by the owner will lead to 

more contractual disputes, the 

Department believes the final rule 

provides clearer rights for tenants in 

contract disputes, especially those 

related to property damage. By 

eliminating normal wear and tear as 

grounds for an adverse action, and by 

tying charges for property damage to the 

tenant’s intentional or negligent acts, 

the HOME tenant-based rental 

assistance tenancy addendum provides 

significantly greater clarity on 

permissible charges. The Department 

agrees with the commenter who stated 

that the rental assistance contract is the 

best vehicle that the participating 

jurisdiction has to enforce the tenant 

protections contained in the HOME 

tenant-based rental assistance tenancy 

addendum and also believes that this 

will provide greater clarity in the event 

of contractual disputes. 

§ 92.210—Troubled HOME-Assisted 

Rental Housing Projects 

A. General Support 

Some commenters supported the 

additional flexibility for troubled 

HOME-assisted rental projects. A 

commenter stated that they support 

HUD’s efforts to improve the 

effectiveness, specificity, and clarity of 

participating jurisdiction’s authority to 

preserve affordable housing prior to 

foreclosure or similar events. Two 

commenters supported the changes in 

§ 92.210(a) and (c), including allowing 

HUD to consider physical condition and 

financial viability when preserving 

HOME-assisted units at risk of failure or 

foreclosure. One commenter stated that 

this change would be a critical update 

providing clarity on this issue, as past 

interpretations have too narrowly 

focused on the financial viability of the 

property. Commenters stated that they 

support the proposed change to allow 

units to float-up from 50 percent of area 

median income to 80 percent of area 

median income if a project lacks 

sufficient income to cover operating 

expenses. 

HUD Response: HUD appreciates the 

commenter’s feedback on these troubled 

HOME-assisted rental projects 

provisions and has revised this final 

rule based on the comments. 

Specifically, HUD is broadening the 

grounds on which a project may be 

considered financially troubled under 

§ 92.210; under § 92.210(a)(1) of this 

final rule, a project is no longer 

financially viable if any one of three 

conditions exist, including if the 

project’s operating costs exceed its 

operating revenue, considering project 

reserves; if the owner is unable to pay 

for necessary capital repair costs or 

ongoing expenses for the project; or if 

the project reserves are insufficient to be 

able to operate the project. The 

Department believes that broadening 

these grounds will better capture the 

type of projects that may be assisted 

with additional HOME funds. By 

contrast, the Department is moving 

forward with its proposed definition of 

physical viability, redesignated as 

§ 92.210(a)(2), without change. 

B. Request for Clarification on 

‘‘Significant’’ Financial Issues 

Commenters supported the flexibility 

in assisting troubled HOME-assisted 

rental housing projects and 

recommended HUD provide more 

clarity on what constitutes ‘‘significant’’ 

where the rule states ‘‘a HOME-assisted 

rental project is no longer financially 

viable if its operating costs significantly 

exceed its operating revenue.’’ A 

commenter asked HUD to evaluate ‘‘a 

project’s current or future ability to 

maintain affordability’’ and asked that 

HUD detail the expected process and 

timeline when making a request to HUD 

regarding troubled HOME-assisted 

rental housing. The commenter also 

stated that HUD should allow HOME 

funds to be used to restructure debt for 

troubled HOME-assisted projects. 

HUD Response: HUD agrees with 

commenters that the term 

‘‘significantly’’ in § 92.210 is vague and 

undefined. Consequently, in this final 

rule HUD is deleting the word so that 

the flexibilities of § 92.210 will be 

available to projects in which operating 

costs exceed operating revenue. HUD 

notes that in addition to the provisions 

set forth in § 92.210, HUD has the 

authority to waive certain regulations 

and requirements under 24 CFR 5.110 if 

HUD determines that good cause exists. 

The Department understands that 

commenters may not know how to begin 

the process of determining if a project 

is troubled under § 92.210 or requesting 

a waiver under 24 CFR 5.110. To begin 

the process, the participating 

jurisdiction requests technical 

assistance from HUD to conduct a 

financial workout for a troubled project. 

Then, the participating jurisdiction and 

Department engages in a comprehensive 

assessment of the project’s physical and 

financial sustainability, which includes 

discussions with other funders, if 

appropriate, and identification of all 

viable methods for the participating 

jurisdiction to ensure the project will 

comply with all applicable regulatory 

requirements through the period of 

affordability. The process then 

culminates in either a memorandum of 

understanding or a request for a waiver 

of HOME project requirements. In most 

instances, both methods will lead to 

changes in the number or mix of HOMEassisted units, investment of additional 

HOME funds, refinancing of debt, 

recapitalization of operating reserves, or 

rent adjustments. 

C. Support for Considering Physical 

Condition in Troubled HOME Projects 

A commenter supported the flexibility 

to consider financial viability or the 

physical condition of housing when 

preserving HOME-assisted units at risk 

of failure or foreclosure. The commenter 

noted the importance of recognizing that 

physical changes can significantly 

impact a project’s preservation, 

including deferred maintenance due to 

unanticipated financial limitations or 

unforeseen capital needs. The 

commenter stated that this change 

would improve collaboration between 

participating jurisdictions and property 

owners to identify troubled properties 

and preserve them. 

HUD Response: HUD appreciates the 

commenter’s support for the flexibility 

to consider both financial viability and 

the physical condition of housing when 

preserving HOME-assisted rental units 

at risk of failure or foreclosure. HUD 

agrees that acknowledging the impact of 

physical changes, often driven by 

unexpected financial challenges or 

unforeseen capital needs, is crucial to 

preserving these projects. 

HUD agrees that this flexibility will 

enhance collaboration between 

participating jurisdictions and property 

owners, enabling the early identification 

of troubled properties and improving 

preservation efforts. HUD thanks the 

commenters and concurs that strong 

partnerships with participating 

jurisdictions are vital in reducing the 

number of troubled projects in the 

HOME rental portfolio. While projects 

do not deteriorate overnight, early 

identification, thorough analysis, and 


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proactive management are essential for 

ensuring the long-term sustainability of 

HOME-assisted rental projects. 

D. Participating Jurisdictions Should 

Preserve as Many Units as Possible 

One commenter understood that 

unforeseen events can affect projects but 

encouraged HUD to allow participating 

jurisdictions to request additional 

HOME funds to preserve as many units 

as possible or reduce the number of 

HOME-assisted units to ensure the 

safety and health of families. The 

commenter was concerned that 

‘‘deferred maintenance’’ or ‘‘unforeseen 

capital needs’’ can be considered as 

factors that impact the long-term 

affordability or physical viability of 

projects and recommended that in these 

cases, 92.210(c) not apply and that HUD 

do as much as it can to preserve the 

units, including enforcing inspections 

regularly and providing additional 

resources to participating jurisdictions. 

HUD Response: HUD agrees that 

addressing deferred maintenance and 

unforeseen capital needs is critical to 

preserving HOME-assisted rental 

housing for families. However, the 

regulatory framework, including 

§ 92.210, establishes clear requirements 

for when and how units may be assisted 

with additional HOME funds. While 

HUD strives to preserve as many units 

as possible, funding constraints limit 

HUD’s ability to provide additional 

HOME resources for every at-risk 

project. HUD encourages participating 

jurisdictions to leverage other Federal, 

State, and local funding sources 

alongside HOME to ensure 

comprehensive preservation strategies. 

HUD agrees that regular inspections 

are essential for identifying potential 

issues early and will continue to 

emphasize their importance through 

monitoring and technical assistance to 

prevent deferred maintenance and 

protect long-term affordability. HUD 

remains committed to working with 

participating jurisdictions and property 

owners to maintain the viability of 

HOME-assisted projects while ensuring 

the safety and health of residents. 

E. Streamlining the Troubled Housing 

Project Process 

One commenter supported process 

streamlining of troubled HOME-assisted 

rental projects. 

HUD Response: HUD appreciates the 

comment, and acknowledges that 

workouts of troubled projects can be 

difficult and time-consuming due to the 

complexity of the issues and the number 

of stakeholders that may be involved. In 

addition to the changes made in this 

final rule to the financial viability 

provisions, which the Department 

believes may aid in streamlining the 

approval process under § 92.210, HUD 

plans to further outline the process for 

addressing troubled HOME-assisted 

rental projects in guidance. 

§ 92.212—Pre-Award Costs 

Two commenters supported the 

proposed change authorizing pre-award 

costs instead of requiring HUD to issue 

a waiver in each fiscal year in which 

Congressional appropriations are not 

timely. 

HUD Response: HUD thanks the 

commenters for reviewing and is 

moving forward with this change. 

§ 92.214—Prohibited Activities and Fees 

A. Revise § 92.214(a) To Allow for 

Faircloth-to-RAD Transactions 

A commenter opposed the prohibition 

against providing HOME funds to 

support rental units that will receive 

subsidies through the Faircloth-to-RAD 

program. The commenter stated that 

Faircloth-to-RAD units are considered 

assisted under section 9 of the 1937 Act 

which, though HOME cannot fund, the 

ultimate intent for Faircloth-to-RAD 

units is for such assistance to be 

provided through section 8 of the 1937 

Act, and as HOME-assisted rental units 

may also be assisted under section 8. 

HUD Response: The commenter is 

correct. Until the public housing units 

are converted to Section 8 units through 

the Rental Assistance Demonstration, 

they are public housing units under the 

U.S. Housing Act. 

42 U.S.C. 12745(d)(4) & (5) prohibits 

HOME funds from being used to provide 

assistance authorized under section 9 of 

the U.S. Housing Act (42 U.S.C. 1437g) 

or to carry out capital and management 

activities under the Capital Fund. The 

HOME rule at § 92.213 states that 

HOME-assisted housing units may not 

receive Operating Fund or Capital Fund 

assistance under section 9 of the 1937 

Act (42 U.S.C. 1437g) during the HOME 

period of affordability. Because the 

public housing units in a Faircloth-toRAD transaction are being constructed 

as public housing units under section 9 

of the U.S. Housing Act (42 U.S.C. 

1437g), and because the units must 

receive Public Housing Operating and 

Capital Funds in order to convert the 

assistance into a Housing Assistance 

Payments Contract when the units are 

converted, HOME assistance cannot be 

provided to develop the units. After 

conversion to Section 8 project-based 

rental assistance or project-based 

vouchers, HOME funds can be used to 

assist the development if there are any 

remaining expenses. Pursuant to 

§ 92.213(c), HOME funds can also be 

used for non-public housing units if any 

are being constructed on the same site 

as the Faircloth-to-RAD units. 

B. Revise § 92.214(b) To Clarify the Role 

of Participating Jurisdictions in 

Approving Fees 

One commenter suggested HUD 

amend § 92.214(b)(4) to state ‘‘With the 

permission of the participating 

jurisdiction, rental project owners may 

charge. . .’’ The commenter stated this 

language clarifies a participating 

jurisdiction’s responsibilities with 

respect to permissible fees. 

HUD Response: HUD thanks the 

commenter for reviewing. HUD will not 

be moving forward with this change. 

The Department did not propose to limit 

owners from charging reasonable 

application fees, parking fees (where 

customary), or fees for services such as 

transportation (when such services are 

voluntary and the fees are charged for 

the service provided) and these are 

already fees that owners are permitted 

to charge tenants of HOME projects 

under the current regulations. The 

Department also does not see the utility 

in requiring that participating 

jurisdictions regulate the permissible 

fees and is only requiring that 

participating jurisdictions prohibit the 

fees and charges listed in § 92.214(b)(3). 

C. Revise § 92.214(b) To Permit Late 

Fees 

One commenter stated that HUD 

should clarify whether owners may 

charge late fees and insufficient funds 

fees, which are common in the industry. 

The commenter noted HUD has 

informally indicated such fees are not 

meant to be prohibited under the 

current language of § 92.214(b)(1). 

HUD Response: The HOME rule at 

§ 92.214(b)(3)(ii) prohibits ‘‘[f]ees that 

are not customarily charged in rental 

housing (e.g., laundry room access 

fees).’’ Reasonable late fees and returned 

check fees are customarily charged in 

rental housing and would not be 

prohibited by § 92.214(b). 

D. Revise § 92.214(b) To Add Additional 

Prohibited Fees 

Another commenter urged HUD to 

further clarify prohibited activities and 

fees in § 92.214 including ‘‘normal wear 

and tear.’’ The commenter also asked 

HUD to address predatory fees such as 

a trip fee in conjunction with a lock-out 

and requested that HUD require owners 

to have a free rent payment method to 

address the fees often required when 

tenants pay online or with a credit card. 

The commenter stated that any fees 

which are not optional, such as 


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47E.g., https://www.hud.gov/sites/dfiles/PIH/ 

documents/2022-01_Income_Limits.pdf. 

48E.g., https://www.huduser.gov/portal/datasets/ 

il.html#2022. 

49 25 U.S.C. 4103(15) states: ‘‘MEDIAN INCOMEThe term ‘median income’ means, with respect to 

an area that is an Indian area, the greater of—(A) 

the median income for the Indian area, which the 

Secretary shall determine; or (B) the median income 

for the United States.’’ 

25 U.S.C. 4103(14) defines low-income families 

as follows: ‘‘LOW-INCOME FAMILY—The term 

’low-income family’ means a family whose income 

does not exceed 80 percent of the median income 

for the area, as determined by the Secretary with 

adjustments for smaller and larger families, except 

that the Secretary may, for purposes of this 

paragraph, establish income ceilings higher or 

lower than 80 percent of the median for the area 

on the basis of the findings of the Secretary or the 

agency that such variations are necessary because 

of prevailing levels of construction costs or 

unusually high or low family incomes.’’ 

50 42 U.S.C. 12704(10) states that: ‘‘The term 

‘‘low-income families’’ means families whose 

incomes do not exceed 80 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 

ceilings higher or lower than 80 percent 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 fair 

market rents, or unusually high or low family 

incomes.’’ 

mandatory renter’s insurance, should be 

required to be included in the gross rent 

calculation. The commenter also 

questioned whether bulk cable/phone/ 

internet providers are allowable fees. 

HUD Response: The Department 

thanks the commenter for reviewing the 

proposed rule and agrees with the 

commenter’s recommendation that HUD 

clarify that charges for the normal wear 

and tear be prohibited under § 92.214. 

In this final rule, HUD is adding this 

prohibition to § 92.214(b)(3). The 

Department declines to accept the 

commenter’s suggestion to prohibit fees 

for lock outs since owners may incur 

costs where a locksmith is required, or 

duplicate keys must be made. Provided 

such fees are customary and reasonable, 

participating jurisdictions may 

determine that owners of HOMEassisted projects may charge such fees. 

With respect to the comment that 

HUD require owners to have a free rent 

payment method to address the fees 

often required when tenants pay online 

or with a credit card, charging fees 

associated with online payments and 

using credit cards is a normal and 

customary business practice in many 

markets and as such HUD declines to 

adopt the commenter’s suggestion. 

However, participating jurisdictions 

should encourage owners to ensure free 

rent payment methods are available to 

low-income families and may restrict 

the types of fees charged for paying rent 

through the written agreement with the 

rental housing project owner, as per 

§ 92.504(c)(3)(x). 

While the Department understands 

that one commenter believes that any 

fees that are not optional, such as 

mandatory renter’s insurance, should be 

required to be included in the gross rent 

calculation, HUD is declining to adopt 

the commenter’s recommendation. Fees 

are not utility costs and are not included 

in the gross rent determination. 

Mandatory fees may be permissible 

when commercially reasonable. The 

Department is not going to create a 

compliance standard where the owner 

must reduce the rent charged to a tenant 

by the monthly cost of mandatory fees. 

Instead, the Department is providing 

participating jurisdictions discretion to 

restrict fees through the written 

agreement. The Department also notes 

that mandatory renter’s insurance is a 

commercially reasonable practice in the 

rental market. 

Finally, one commenter questioned 

whether bulk cable/phone/internet 

providers are allowable fees. When such 

fees are not customarily charged within 

the participating jurisdiction’s local 

rental market, such fees must be 

prohibited. 

E. Revise § 92.214(b) To Clarify How To 

Determine Reasonable Application Fees 

One commenter questioned what a 

reasonable application fee is, what can 

be used to calculate a reasonable 

application fee. In terms of reasonable 

application fees, the commenter 

provided HUD the example that in their 

State’s LIHTC Program, the owner can 

only charge the actual costs of 

processing an application credit/ 

criminal background and cannot inflate 

application fees. 

HUD Response: The Department 

appreciates the commenter’s question 

concerning reasonable application fees. 

The Department is declining to define 

the amount of a reasonable application 

fee, as commercially reasonable 

application fees may vary based on the 

project’s location, sources of financing, 

and the type of background examination 

selected by the owner. 

§§ 92.216 and 92.217—Income 

Targeting in HOME Rental Housing, 

Tenant-Based Rental Assistance, and 

Homeownership Programs 

A. Align Income Limits Across HOME 

and NAHASDA Programs 

One commenter requested that HUD 

align the definition of area median 

income for the HOME program with the 

definition contained in the Native 

American Housing Assistance and SelfDetermination Act (NAHASDA) to 

facilitate leveraging NAHASDA funds 

with HOME funds and Tribes’ use of 

HOME funds, and to reduce burden 

caused by two different methodologies 

for income for projects that utilize both 

NAHASDA and HOME funds. The 

commenter stated that HUD’s 

interpretation seems to be that the 

median income of an Indian Area is the 

NAHASDA definition, and that this 

should be implemented for instances 

where HOME funding is used in an 

Indian Area. In support, the commenter 

referenced section 214 of the CranstonGonzalez National Affordable Housing 

Act (NAHA) (42 U.S.C. 12744); statutory 

language in NAHASDA at 25 U.S.C. 

4103(14), and the definition of ‘‘median 

income’’ in paragraph (15); the 

definition of ‘‘Indian area’’ in 

NAHASDA,; the definition of ‘‘median 

income for an Indian area’’ in HUD’s 

Indian Housing Block Grant (IHBG) 

regulations that implement NAHASDA; 

published guidance containing median 

incomes for Indian Areas; 47 published 

IHBG area income limits; and the U.S. 

Department of Treasury’s definition of 

area median income for the Emergency 

Rental Assistance Program.48

HUD Response: The Department 

thanks the commenter for their 

recommendation that HUD align area 

median income for the HOME program 

with the NAHASDA. NAHA and 

NAHASDA define low-income families 

differently. NAHASDA permits HUD to 

establish an income floor for lowincome families for NAHASDA 

programs nationwide that is the greater 

of 80 percent of the median income for 

the United States or 80 percent of the 

median income of the Indian area.49 In 

the definition of low-income families, 

NAHA permits the Secretary to establish 

income ceilings higher or lower than 80 

percent of the median for the area on the 

basis of the Secretary’s finding that such 

variations are necessary in accordance 

with 42 U.S.C. 12704(10).50 This 

revision requires that HUD reexamine 

its methodology for calculating income 

limits for the HOME program and make 

findings based on variations relating to 

the prevailing levels of construction 

costs, unusually high or low family 

incomes. The Department would then 

propose a different methodology and 

solicit public input. HUD did not 

propose to change the definition of lowincome families or the way that area 

median income is calculated in the 

HOME program in the proposed rule. 

The Department also did not propose to 

establish a national income floor for 

HOME program as part of the proposed 

rule. The Department believes that such 

significant changes require notice and 


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comment and will not make this change 

in the final rule. 

B. Create a National Income Limit Floor 

One commenter recommended that 

HUD address the failures of its income 

limit calculations in the HOME program 

and beyond, noting that ‘‘state floors’’ 

meant to prevent the effects of 

concentrated poverty do not work in 

places with severely depressed 

economies and high levels of poverty. 

The commenter stated that families in 

such places are not able to qualify for 

assistance under HUD programs despite 

very low incomes with respect to cost of 

living because the median family 

income limits in their communities are 

so low. The commenter said they are 

pursuing a legislative change to create a 

‘‘national floor’’ and that a HUD January 

2024 Notice proposing the idea of a 

‘‘national minimum income limit’’ 

shows that HUD could immediately 

implement changes to address this 

existing inequality. 

HUD Response: The Department 

thanks the commenter for their 

recommendation to address the effects 

of HUD’s methodology for calculating 

the income limits used for determining 

eligibility for HUD programs, and 

particularly the HOME program, on 

individuals and families living in places 

with severely depressed economies and 

high levels of poverty. The HOME 

income limits are calculated using the 

same methodology that HUD uses for 

calculating the income limits for the 

Section 8 program, in accordance with 

section 3(b)(2) of the U.S. Housing Act 

of 1937, as amended. These limits are 

based on HUD estimates of median 

family income, with adjustments based 

on family size using the American 

Community Survey (ACS) and other 

sources. Every year, HUD publishes the 

annual income limits, which are used 

primarily to determine the income 

eligibility of applicants for the HOME 

program. In addition to being used to 

determine eligibility for Federal rental 

housing programs, income limits are 

also used to determine the maximum 

rents allowed for HOME projects. 

HUD acknowledges the commenters’ 

concerns that HUD’s methodology for 

calculating income limits used by the 

HOME Program should be reexamined. 

In a January 10, 2024, Federal Register 

Notice (see FR–6436–N–01), HUD first 

announced a change in the methodology 

for determining the cap on how much 

income limits can go up in a single year 

in any individual Fair Market Rent 

(FMR) area. Since FY2010 HUD has 

limited all annual income limit 

decreases to five percent and all annual 

increases to the greater of five percent 

or twice the change in the national area 

median incomes. For FY–2024, HUD 

added an absolute cap of 10 percent and 

clarified that the national median family 

income is the change in uninflated ACS 

estimates. HUD made this change for 

three reasons: to protect tenants from 

facing a large single-year rent increase 

resulting from higher income limits, to 

address statistical errors resulting in fair 

market rent areas that do not have a 

large sample size, and to create stable 

and predictable income limits. 

However, HUD will not revise how the 

HOME income limits are calculated 

with this final rule, as the change is too 

significant to make without HUD first 

proposing a different methodology and 

soliciting public input. 

§ 92.221—Match Credit 

A commenter requested that HUD 

clarify that the requirements in 

§ 92.221(b) would be applicable only to 

carryover amounts going forward from 

the applicable date of the adoption of 

the rule otherwise participating 

jurisdictions would have to have 

records beyond the current 

recordkeeping period of documentation. 

HUD Response: The Department will 

prospectively require compliance with 

the revised requirements in § 92.221(b), 

which explicitly requires a participating 

jurisdiction to have documentation 

supporting the source, eligibility, and 

value of match contributions that have 

been carried over from previous years at 

the time that they apply the 

contribution toward their match 

obligation. However, HUD notes that 

participating jurisdictions are already 

responsible for complying with the 

§ 92.508(a)(2)(ix), which requires 

records related to carryover match. HUD 

is adopting the proposed rule language 

without change. 

§ 92.250—Maximum Per-Unit Subsidy 

A. Support for Increasing HOME 

Maximum Per Unit Subsidy Limit 

Several commenters supported the 

increase of HOME subsidy limits. Two 

commenters stated that HOME subsidy 

limits should be increased because of 

the increase in the cost of labor and 

materials. 

HUD Response: The Department 

appreciates the commenters’ review of 

the proposed rule and notes that the 

policy HUD is establishing through a 

separate Federal Register publication 

increases the maximum per unit subsidy 

limits from the current levels. 

B. General Support for Revising 

§ 92.250(a) To Establish HOME 

Maximum Subsidy Limits in 

Accordance With Section 212(e) of 

NAHA 

Generally, commenters stated that 

they support the proposal of 

establishing the HOME maximum 

subsidy limits in accordance with 

section 212(e) of NAHA. Several 

commenters stated support for HUD’s 

clarification that the statutory limit in 

Section 212(e) of NAHA is a floor and 

not a cap of the subsidy amount, and for 

revising § 92.250 so that the section 

refers to the statutory requirements in 

order to avoid the need to waive or 

change the HOME regulations to align 

with section 212(e) in the future. Two 

commenters supported HUD’s proposal 

to publish the methodology for 

determining the new maximum per-unit 

subsidy limits through a future notice 

published in the Federal Register and 

on HUD’s website, with the opportunity 

for public comment. Another 

commenter recommended HUD seek 

feedback through a notice and comment 

period before finalizing a new 

methodology to ensure it meets the 

diverse needs of stakeholders. 

HUD Response: The Department 

appreciates the commenters’ feedback 

and is moving forward with the changes 

as proposed. 

C. Support for Using Section 234 Limits 

on an Interim Basis 

Several commenters supported HUD’s 

proposal to adopt the Section 234 limits 

and increase the housing cost 

percentage from 240 percent to 270 

percent in the maximum per-unit 

subsidy methodology. One commenter 

said this would permit more flexibility 

for the commenter’s members and other 

stakeholders looking to maximize their 

usability of HOME funds ahead of 

HUD’s release of the proposed 

methodology. One commenter said the 

resulting increase will be essential for 

communities where land and building 

costs are exceptionally high, and that 

the additional financing might also 

make the creation of smaller-scale 

properties unable to obtain LIHTC 

financially feasible. Another commenter 

stated that until a new methodology is 

finalized, HUD should establish the 

maximum per-unit subsidy limit as 270 

percent of the section 234 limitations, 

educate stakeholders, and consider 

waivers or high-cost percentage 

exceptions. Another commenter noted 

its appreciation that HUD increased the 

Section 234 limitations to 270 percent 

while it designs new limits as this will 

allow more flexibility and affordable 


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51See 42 U.S.C. 12742(e)(1). 

homeownership stakeholders who seek 

to maximize their useability of HOME 

funds ahead of HUD’s release of the 

proposed methodology. Another 

commenter stated that changes to the 

per-unit subsidy limits methodology 

would affect many other aspects of the 

proposed rule and urged HUD to issue 

the notice that will revise the 

methodology as soon as possible and in 

the interim to use the Section 234 

elevator condominium mortgage limits 

as the base but lift the cap for high-cost 

areas to 270 percent. One commenter 

advocated for an increase in the subsidy 

limit to 300 percent to accommodate 

land and construction costs. 

HUD Response: The Department 

appreciates the commenters’ review of 

the proposed rule and agrees that 

increasing the maximum per unit 

subsidy limits to 270 percent of the 

Section 234 elevator condominium 

mortgage limits will help communities 

where land and building costs are 

exceptionally high and may also make 

the creation of smaller-scale properties 

that are unable to obtain LIHTC 

financially feasible. The Department 

believes increasing the limits to 300 

percent is currently unnecessary 

because few HOME-assisted units 

receive HOME subsidies close to the 

limits. However, HUD notes that this 

final rule will permit HUD to reconsider 

the limits based upon changing 

circumstances. 

D. Specific Considerations in Per-Unit 

Methodology 

Several commenters also 

recommended that in developing its 

new methodology HUD consider the 

specific cost implications of 

rehabilitation, rural communities, single 

family housing and multifamily 

properties, fluctuating construction 

costs, as well as operating costs, 

property insurance costs, income limits, 

administrative costs, and impacts to a 

developer’s revenue stream. 

HUD Response: HUD appreciates the 

comments and, as allowed by the Act, 

may consider appropriate variables such 

as the cost of land and construction, 

market area, number of bedrooms, 

eligible activity type (e.g., 

homeownership, rental), and work 

performed (e.g., rehabilitation, new 

construction) when developing a future 

methodology for maximum per unit 

subsidy limits.51

E. Opposition to Using Maximum PerUnit Subsidy in Effect at Underwriting 

One commenter opposed the 

proposed change that the HOME 

subsidy limit must be determined at the 

time of underwriting and recommended 

that the HOME subsidy limit be 

determined at the time of project 

completion. The commenter stated that 

their recommended approach is 

appropriate because: (1) the HOME 

subsidy limits are published once a 

year, giving the participating 

jurisdiction plenty of time to adjust 

subsidy layering, if needed; (2) projects 

may take more than a year to complete 

and, with inflation, the HOME subsidy 

limits can significantly increase, 

allowing participating jurisdictions 

more HOME funds to complete the 

substantial renovations; and (3) while 

the maximum per-unit HOME subsidy 

limit is often not reached, it is the times 

when a particularly substandard home 

is renovated that more HOME funds 

being available allows participating 

jurisdictions to make the necessary 

substantial repairs. 

HUD Response: The Department did 

not propose a change with respect to the 

maximum per-unit subsidy limit 

applicable to a project. The proposed 

language is a clarification. Because a 

HOME participating jurisdiction is 

required to perform a subsidy layering 

analysis before committing HOME funds 

to a project, the maximum per-unit 

subsidy limit in effect at this time is the 

appropriate limit to apply to the project. 

The Department does not agree that the 

HOME subsidy limit should be 

determined at the time of project 

completion and will adopt this language 

as proposed. 

F. Exceeding the Maximum Per-Unit 

Subsidy To Meet Green Building 

Standards in § 92.250(c) 

Commenters overwhelmingly 

supported HUD’s proposal to permit 

participating jurisdictions to provide 

additional subsidy in excess of the 

maximum per-unit subsidy limits at 

§ 92.250(a) for HOME projects that meet 

a green building standard. Several 

commenters indicated that the increased 

subsidy could help to defer upfront 

costs and assist with meeting their 

sustainability and housing goals, and 

they encouraged HUD to include 

mitigation and resilience improvements 

in the permissible standards. However, 

commenters also reminded HUD to 

consider that the application of green 

building standards is different for 

rehabilitation and new construction 

projects. One commenter noted that due 

to project construction timelines, any 

new green building requirements should 

be applicable based on date of 

commitment of HOME funds rather than 

grant year. 

HUD Response: The Department 

thanks commenters for their support of 

HUD’s proposal to permit participating 

jurisdictions to provide additional 

subsidy in excess of the maximum perunit subsidy limits at § 92.250(a) to 

HOME rehabilitation and new 

construction projects that meet a green 

building standard. HUD is moving 

forward the change and in response to 

comments has increased the amount by 

which the maximum per-unit subsidy 

described in § 92.250(a) may be 

exceeded to ten percent for a project 

that meets one of the acceptable green 

building standards enumerated by the 

Department. HUD agrees with the 

commenter that stated that the green 

building requirements are applicable 

based on the date HOME program funds 

are committed to a project. 

G. Opposition to Mandatory Green 

Building Requirements 

Commenters opposed any mandatory 

green building requirements as a 

condition of receiving HOME funds. 

These commenters stated that green 

building standards should be voluntary 

given reductions in HOME 

appropriations and increased costs of 

construction over time. One of these 

commenters also suggested that 

requiring green building could result in 

fewer HOME units produced and 

decreased interest from contractors and 

developers in participating in the 

HOME program. 

HUD Response: HUD thanks the 

commenters and clarifies that it did not 

propose to require green building 

requirements under § 92.251 property 

standards requirements but instead is 

proposing to incentivize building to 

industry-recognized green building 

standards through the use of an 

increased maximum per-unit subsidy. 

H. Additional Green Building Incentives 

and Considerations 

Commenters offered additional policy 

suggestions and shared concerns for 

HUD’s consideration. One commenter 

recommended that the rule allow 

participating jurisdictions to exempt the 

amount of HOME funds spent on green 

and resilient building measures from the 

calculation of the total HOME subsidy 

for the purpose of determining the 

minimum HOME period of affordability 

in accordance with § 92.252(e). Two 

other commenters stated that HUD 

should consider Build America, Buy 

America (BABA) requirements in 

determining any increases in maximum 

per-unit subsidy related to green 

building standards because BABA may 

result in increased costs from sourcing 

green building materials. 


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HUD Response: The Department 

thanks the commenters for reviewing 

the proposed rule. As described 

elsewhere in the preamble, HUD is 

adjusting the periods of affordability to 

reflect increased costs over the last three 

decades and other requirements that 

may increase compliance costs for 

owners. For new construction of rental 

housing, the incremental cost of meeting 

green building standards will have no 

effect on the period of affordability, as 

HUD has retained the 20-year period of 

affordability. The Department does not 

have statutory authority to disregard the 

costs related to green building from the 

determination of per-unit subsidy and 

declines to adopt the change. 

HUD notes that BABA is beyond the 

scope of this rulemaking. Until 

additional guidance is provided about 

how BABA will apply to HOME and 

other HUD programs, HUD cannot 

determine the effect of BABA 

compliance on the green building 

incentive or overall compliance with the 

HOME final rule. 

Specific solicitation of comment #2: 

The Department specifically requests 

public comment from participating 

jurisdictions, developers, and other 

affected members of the public about 

the green building standards that the 

Department should establish in the 

Federal Register. In addition, the 

Department seeks public comment 

about stakeholder experiences regarding 

the percentage increase in the cost of 

constructing or rehabilitating affordable 

housing to a green building standard 

and whether a 5 percent increase in the 

maximum per unit subsidy limit is 

sufficient. Finally, the Department 

requests public comment on whether 

permitting participating jurisdictions to 

exceed the maximum per unit subsidy 

limit by an amount in excess of the 

additional costs of green building 

measures (i.e., to provide additional 

HOME funds to cover a larger portion of 

other HOME-eligible development 

costs),would create a sufficient incentive 

to developers and owners to meet green 

building standards in projects that 

would otherwise not be designed to meet 

those standards. 

A. Requiring a Specific List of 

Qualifying Green Building Standards 

Commenters were divided over 

whether HUD should specify green and 

resilient building standards and which 

standards HUD should permit. Several 

commenters suggested that HUD should 

allow participating jurisdictions a range 

of choices by prescribing a wide variety 

of qualifying standards to account for 

differences in the availability of 

resources, costs of certification, and 

unique State and local needs based on 

population and geographic location. 

Alternatively, two commenters 

recommended against a HUD-prescribed 

list and instead suggested that HUD 

establish a broad definition of green and 

energy efficient measures that would 

qualify as a green building standard to 

allow for maximum flexibility. 

Furthermore, commenters 

recommended that HUD allow the 

increased HOME subsidy if the project 

meets State and local green standards 

and requirements. One commenter 

stated that HUD should review best 

practices that increase the feasibility of 

the developer to adhere to green 

standards while bringing down energy 

costs for the consumer. 

HUD Response: The Department 

thanks commenters for their views 

regarding whether HUD should 

establish a set list of green and resilient 

building standards to publish in the 

Federal Register. HUD has received 

numerous recommendations of green 

building certifications, standards, codes, 

and thresholds that commenters believe 

HUD should incentivize, each with 

differing technical components, 

building requirements, and effectiveness 

criteria. HUD will evaluate the 

standards suggested, publish a 

provisional Federal Register notice for 

effect, and solicit additional public 

comments. 

B. Use of Nationally Recognized 

Certifications To Align With Other 

Federal Programs 

Commenters that support a HUDprescribed list recommended that HUD 

establish green and resilient building 

standards that are consistent with the 

national certifications required by other 

Federal or HUD-assisted programs to 

promote alignment, limit disruption or 

confusion, and ease administrative 

burden, given that these standards are 

well known by many participating 

jurisdictions and their developers. One 

commenter noted that these standards 

are included by States in their qualified 

allocation plans (QAPs) for low-income 

housing tax credits. Another commenter 

suggested that HUD collaborate with 

other Federal agencies such as the 

Department of Energy, Department of 

Health and Human Services, and the 

Environmental Protection Agency to 

create such a list or consider allowing 

the use of other agency’s Green Building 

Standards. The specific Federal 

programs suggested for alignment by 

commenters include the following: 

1. HUD’s Green and Resilient Retrofit 

Program (GRRP), which permits DOE 

Zero Energy Ready Home; Zero Energy 

Ready Multifamily; National Green 

Building Standard—Silver, Gold, or 

Emerald; LEED V4.1; Enterprise Green 

Communities Plus, Greenpoint Gold or 

Platinum; Earthcraft Gold or Platinum; 

Passive House; International Living 

Institute; Well Building Standard; RELi; 

or FORTIFIED Silver or Gold. 

2. The Environmental Protection 

Agency’s Greenhouse Gas Reduction 

Fund program. 

3. The Department of Energy’s Section 

45L Tax Credits for Zero Energy Ready 

Homes, which also includes Energy Star 

requirements. 

HUD Response: The Department 

thanks commenters for recommending a 

large number of green and resilient 

building standards for HUD’s 

consideration. HUD agrees that green 

standards consistent with national 

certifications required by other Federal 

programs have the highest likelihood of 

reducing confusion and administrative 

burden. HUD will evaluate the 

standards suggested, issue a provisional 

Federal Register publication for effect, 

and solicit additional public comments. 

C. Green Building Standards Promoted 

by Commenters 

Irrespective of alignment with other 

HUD or Federal programs, commenters 

recommended that the following 

certifications, standards, codes, or 

thresholds be used to determine 

compliance for the purposes of 

increased HOME subsidy: 

1. CALGreen (California Green 

Building Standards Code—Part 11, Title 

24, California Code of Regulations). 

2. GreenPoint Rated (GPR) Certified or 

75+ points. 

3. International Green Construction 

Code (IgCC), which the commenter 

indicates will allow for coordination 

with the statutory HOME energy 

efficiency requirements for new 

construction projects. A commenter also 

notes that Appendix M of the 2024 IgCC 

provides options for residential 

compliance with the National Green 

Building Standard (ICC 700) and 

Appendix K aligns IgCC requirements 

with core elements of versions 4.0 and 

4.1 of the LEED rating system. 

4. Home Energy Rating System 

(HERS) Index threshold specifically for 

homeownership projects, for example 

requiring a HERS rating of 50 or lower 

to qualify as meeting the green building 

standard. 

5. Earth Advantage. 

6. Energy Rating Index (ERI) 

thresholds, for example requiring that 

homes achieve an ERI of 60 or lower. 

7. ENERGY STAR, and specifically 

ENERGY STAR Multifamily New 

Construction National Program 

Requirements Version 1.1. 


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8. Enterprise Green Communities, and 

specifically Enterprise Green 

Communities Plus. 

9. National Green Building Standard 

(NGBS Green). 

10. Passive House. 

11. US Green Building Council’s 

LEED, and specifically LEED Silver (50+ 

points) or LEED Net Zero. 

12. Zero Energy Ready Homes. 

HUD Response: The Department 

thanks commenters for recommending a 

large number of green and resilient 

building standards for HUD’s 

consideration. Just as in the previous 

responses, HUD will evaluate the 

standards suggested, issue a provisional 

publication in the Federal Register for 

effect, and solicit additional public 

comments. The Department understands 

that the green building standards 

mentioned by commenters may not be 

currently required under or incentivized 

by Federal programs but that they 

should be considered, and HUD will 

perform the necessary examination of 

these standards before it issues its 

Federal Register publication. 

D. Support for Electrification 

Two commenters urged HUD to 

prioritize electrification as an essential 

measure for reducing greenhouse gas 

emissions and improving indoor air 

quality, and therefore, the health and 

safety of the occupants. Both 

commenters suggested that the HOME 

rule should require that new 

construction and substantial 

rehabilitation projects be all electric, 

and that HUD prevent the use of HOME 

funds in new fossil fuel connections. 

However, one commenter suggested that 

an exception may be necessary in cold 

weather climates to allow for fossil fuel 

backup sources. 

HUD Response: The Department 

thanks the commenters for their 

recommendations on improving energy 

efficiency and resident health outcomes 

via the prioritization of electrification. 

However, these recommendations are 

not within the scope of this rulemaking. 

The Department will continue to assess 

ways to further incentivize green 

building in the HOME program. 

E. Five Percent Increase in Maximum 

Per-Unit Subsidy Is Insufficient 

Although several commenters support 

HUD’s proposal to permit an increase in 

the maximum per unit subsidy by five 

percent for meeting a green building 

standard, the majority of commenters 

indicated that five percent is 

insufficient to cover the increased costs 

of constructing or rehabilitating 

affordable housing to a green standard 

including the costs associated with 

obtaining a certification. Two 

commenters asserted that the proposed 

five percent increase is insufficient even 

to cover the increased costs of meeting 

the HOME statutory energy efficiency 

requirements as updated by FR–6271– 

N–03. Meanwhile, other commenters 

indicated that they could not determine 

whether a five percent increase would 

cover increased costs of construction or 

provide any incentive for green building 

without knowing which standards 

would be required to access the benefit. 

One commenter recommended that 

HUD request funding to establish a 

competitive Green Building pilot 

program in conjunction with the HOME 

program to gather data on costs 

associated with various green building 

standards. 

Several commenters also expressed 

concern that the proposed policy to 

permit an increase of the maximum perunit subsidy would be ineffective at any 

level to incentivize green building 

because participating jurisdictions lack 

the additional HOME funds needed to 

provide the benefit. Specifically, 

commenters noted that HOME projects 

are often not awarded the full amount 

of the current maximum per unit 

subsidy, particularly homeownership 

projects. In addition, one commenter 

suggested that providing additional 

funding to HOME projects would be a 

more effective means of incentivizing 

owners to meet green building standards 

rather than allowing participating 

jurisdictions to exceed the maximum 

per-unit subsidy by five percent. 

HUD Response: The Department 

thanks the commenters and agrees that 

the proposed five percent increase in 

the maximum per-unit subsidy is 

insufficient to cover the costs associated 

with meeting nationally recognized 

green building standards. Subsequently, 

the Department is adopting a change in 

this final rule to increase the percentage 

in § 92.250(c) to 10 percent. The 

Department acknowledges that 

ascertaining whether this 10 percent 

increase sufficiently covers associated 

costs is difficult without having 

confirmed green and resilient building 

standards. Moving forward, HUD will 

complete an additional review and 

include standards in a provisional 

notice for effect with public comments. 

The Department will continue to 

reevaluate both green building 

standards and other methods of 

incentivizing green building for the 

HOME program. 

F. Increasing the Maximum Per-Unit 

Subsidy by 5 Percent Is Not Sufficient 

To Incentivize Meeting Stronger Green 

Building Standards 

Of the commenters who supported a 

5 percent increase, several indicated 

that 5 percent would only be sufficient 

to cover the increased costs of meeting 

certain basic standards. These 

commenters indicated that 5 percent is 

not sufficient to cover the higher costs 

of more rigorous green and resilient 

building standards and that the 5 

percent increase would not incentivize 

the type of wraparound measures 

necessary to achieve meaningful energy 

and cost savings. Commenters who 

suggested a greater increase in the 

maximum per unit subsidy limit 

proposed a wide variety of alternatives. 

Commenters stated that the appropriate 

amount would be closer to 10, 15, 20, 

or even 30 percent of the maximum per 

unit subsidy given the wide range of 

costs associated with different green 

building standards and the varying costs 

of acquiring certifications based on 

location. One commenter indicated that 

all residential buildings in California are 

required to meet CALGreen, so the 

additional costs of building to green 

standards are already reflected in the 

costs of residential construction in the 

State. However, this commenter also 

recommends allowing an increase of 20 

percent in the maximum per unit 

subsidy, which in States like California 

where green building compliance is 

required, the additional HOME 

investment will help to mitigate the 

current high cost of construction and 

make assisted projects less reliant on 

other highly competitive funding 

sources. In addition, two commenters 

stated that an increase up to 30 percent 

would support green building by 

covering the increased upfront costs of 

supplies while lowering the rents 

required to be charged at the project. 

HUD Response: The Department 

thanks the commenters for reviewing 

and agrees that the proposed five 

percent increase in the maximum perunit subsidy is insufficient to cover the 

costs associated with meeting green 

building standards. The Department is 

adopting a change to increase the 

percentage in § 92.250(c) to 10 percent. 

The Department understands that many 

commenters recommended the 

maximum per-unit subsidy limits be 

increased by an even higher percentage. 

However, the Department must balance 

the benefits from more sustainable, 

energy-efficient housing against the 

potential that fewer units will be created 

or fewer families will be served. Given 

the level of annual appropriations that 


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the HOME program receives, the 

Department believes it can only move to 

10 percent at this time but will 

reevaluate in the future. 

G. A Higher Maximum Per-Unit Subsidy 

Increase for Rehabilitation Projects 

One commenter noted that meeting 

green building standards for new 

construction is fundamentally different 

than for rehabilitation projects and the 

commenter estimated that an increase of 

25 percent of subsidy would be required 

for rehabilitation projects to achieve a 

green building standard beyond the 

State energy code. However, the 

commenter expressed concerns with 

permitting a significant increase in 

maximum per unit subsidy due to the 

impact on production and instead 

suggested that HUD provide a 10 

percent increase for rehabilitation 

projects in States with ambitious green 

building standards, as determined by 

HUD. The commenter stated that this 

proposal could increase the number of 

HOME-assisted rehabilitation projects in 

areas where green building standards 

are already required. 

HUD Response: The Department 

thanks the commenters for reviewing 

and is adopting a change increasing the 

maximum per-unit subsidy limit 

percentage to 10 percent in § 92.250(c) 

for both new construction and 

rehabilitation projects that meet certain 

green building and resiliency standards. 

The Department understands that many 

commenters had requested increases 

that were significantly higher, 

particularly for rehabilitation projects. 

However, the Department must balance 

the benefits from more energy-efficient 

housing against the potential that fewer 

units will be created or fewer families 

will be served. Given the level of annual 

appropriations that the HOME program 

receives, the Department believes it can 

only move to 10 percent for both new 

construction and rehabilitation project 

at this time but will reevaluate in the 

future. 

H. Use of Actual Construction Costs 

Instead of Set Percentage Increases in 

Maximum Per-Unit Subsidy for Green 

Building 

Rather than permitting a specific 

percentage increase in the maximum per 

unit subsidy limits, several commenters 

supported permitting participating 

jurisdictions to exceed the limits by 

actual additional construction costs of 

green building measures for the project. 

One of these commenters suggested that 

the rule should permit project owners to 

apply for the amount above the 

maximum per unit subsidy needed for 

a rehabilitation project, and that the 

participating jurisdictions should 

provide the largest awards to proposed 

projects with the highest energy and 

cost savings potential, therefore 

prioritizing rehabilitation of the most 

inefficient housing. Other commenters 

recommended that the rule permit a 

participating jurisdiction to determine 

the percentage increase because needs 

and costs vary geographically. 

HUD Response: The Department 

thanks the commenters for their 

recommendation that HUD adopt 

increases in the maximum per-unit 

subsidy limit based on either 

documented construction costs or at a 

participating jurisdiction’s discretion, 

rather than adopting a set percentage 

increase. The Department declines to 

adopt these recommendations, as 

measuring, documenting, and 

implementing these methods would be 

unduly burdensome and complex for all 

parties involved. 

I. Using a Tiered Approach to Maximum 

Per-Unit Subsidy Increases for Different 

Types of Green Building Standards 

Many commenters also suggested that 

HUD implement a tiered approach to 

providing an increased HOME subsidy 

to account for the varying nationally 

recognized standards, with more 

aggressive standards equating to larger 

incentives based on the relative level of 

value-added above-code efficiency in 

terms of both energy savings and energy 

cost savings and resilience in the 

project. One commenter remarked that 

increased subsidy levels designed to 

cover the higher costs of advanced 

standards would be a sufficient 

incentive in projects that would not 

otherwise have been designed to meet 

green building standards. However, the 

commenter also noted that there is not 

always an additional cost to meet green 

building standards, particularly for 

standard level green certifications and 

that the cost differential is likely to 

diminish over time as developers 

become more familiar with green 

building standards, so an increased 

HOME subsidy will eventually become 

a true incentive to build greener 

housing. 

Two commenters suggested that a 

tiered approach be tied to Energy Rating 

Index (ERI) thresholds with the largest 

subsidy available for net zero design 

and/or the installation of solar in 

assisted projects. Other commenters 

suggested that HUD allow a lower 

increase, from 2 to 5 percent for base 

green building certifications such as 

ENERGY STAR and a 10 percent 

increase for buildings that achieve 

higher certifications consistent with the 

recent National Definition of a Zero 

Emissions Building, such as Enterprise 

Green Communities Plus, the 

forthcoming LEED Zero Carbon, 

ENERGY STAR NextGen, and/or the 

Department of Energy’s Zero Energy 

Ready Homes combined with specific 

required criteria or additional 

requirements to make them zero 

emissions. Another commenter 

suggested that to create an incentive, 

HUD should implement a range of 

increased subsidy rather than a set 

percentage using a formula based on 

criteria such as disparities between 

State code and HUD requirements, the 

extent of green building rating systems 

and any subsidies offered at the State or 

local level. The commenter 

recommended that the further ‘‘behind’’ 

a State is in adopting the most recent 

International Energy and Conservation 

Code (IECC) and American Society of 

Heating, Refrigerating and AirConditioning Engineers (ASHRAE) 

codes, the higher the base subsidy 

should be. A different commenter stated 

that HUD should implement an ‘‘up to 

or higher’’ standard, which could be 

provided through a waiver process 

based on taking into account the type of 

activity and technology deployed. 

HUD Response: The Department 

thanks the commenters for the 

recommendations. However, HUD 

believes that establishing a tiered 

approach or ranges based on the green 

building standards individual 

participating jurisdictions use would be 

extremely complicated and potentially 

unworkable. HUD is declining to adopt 

these recommendations at this time but 

will continue to assess ways to pay for 

the increased costs of developing 

affordable housing that meets higher 

standards for green building, climate 

resiliency, and a greater level of energy 

efficiency and may revisit this issue in 

a future rulemaking. 

J. Opposition to Five Percent Increase in 

Maximum Per Unit Subsidy Because of 

Uneven Application and Reduction of 

Overall Units Produced 

Commenters anticipated that 

homeownership projects would be the 

most affected by cost increases related 

to energy efficiency requirements and 

green building standards. Commenters 

agreed that large multifamily rental 

development projects are the most likely 

to benefit from any permitted increase 

in maximum per unit subsidy. However, 

a commenter stated that data they 

analyzed showed that the amount of 

HOME funds awarded even to rental 

projects depends largely on the 

participating jurisdiction’s policies 

rather than on local conditions (e.g., 

high cost areas), and therefore it is not 


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clear that participating jurisdictions will 

provide additional HOME funds based 

on the increased costs of meeting a 

green building standard. Consequently, 

this commenter does not support HUD’s 

proposal because they believe it would 

have an uneven impact nationally, with 

most of the country unable to take 

advantage of the flexibility. In addition, 

the commenter worried that HUD’s 

proposal will result in a decrease in the 

number of assisted projects and limit 

unit production. However, in 

anticipation of this challenge, two other 

commenters suggested that HUD 

provide guidance and tools on how to 

leverage other funding sources and 

maximize available HOME funds to 

allow for more comprehensive energy 

efficiency projects while maintaining 

unit production. 

HUD Response: The Department 

appreciates the comments. HUD notes 

that HOME is a block grant program 

with local choice and flexibility at its 

core. Consequently, the Department 

does not believe that because not all 

participating jurisdictions will exercise 

this or any other flexibility in the 

regulations is a sound reason for not 

offering the flexibility at all. HUD does 

not expect that all participating 

jurisdictions will choose or need to take 

advantage of the increase in the subsidy 

limit. HUD takes seriously the need to 

balance the benefits from more resilient 

and energy-efficient housing with the 

added costs and marginal reduction in 

the total number of HOME-assisted unit. 

Because the regulation does not require 

the use of green building standard and 

instead makes it more feasible to pursue 

this housing that meets the standards, 

HUD is devolving the choice to State 

and local government based upon their 

priorities. The Department is moving 

forward with the 10 percent increase 

and will continue to reevaluate green 

building standards, other methods of 

incentivizing green building, and the 

prospect of requested technical 

assistance once green standards are 

implemented for the HOME program. 

K. Incentivizing Universal Design With 

Increases in the Maximum Per-Unit 

Subsidy 

One commenter suggested that in 

addition to increasing Green Building 

standards, HUD should consider how 

the HOME program can incentivize or 

require increased disability-related 

accessibility standards. For example, the 

commenter suggested that the HOME 

program could adopt the Universal 

Design criteria which is currently in the 

HUD Section 811 Capital Advance 

application. 

HUD Response: The Department 

appreciates the comment and urges 

HOME program participants to create 

projects with Universal Design in units 

and common areas, enhanced 

accessibility features, and more than the 

minimum number of units that meet 

Federal accessibility requirements for 

persons with disabilities. However, the 

commenter’s proposal is outside the 

scope of this regulation as HUD has not 

solicited public comment on suitable 

standards for a regulatory provision or 

the incremental cost of compliance with 

them. Individual projects that require 

HOME investment exceeding the 

maximum per unit subsidy limits due to 

the cost of incorporating universal 

design elements may seek case-specific 

relief from HUD. 

§ 92.251—Property Standards and 

Inspections 

A. General Support for Changes 

One commenter provided general 

support for all the changes to HOME 

property standards to include energy 

efficiency, carbon monoxide detectors, 

incorporate green building standards 

and include NSPIRE changes. 

HUD Response: HUD thanks the 

commenters for reviewing the proposed 

rule and for their support. 

B. Statutory Energy Efficiency 

Requirements in § 92.251(a)—Support 

Commenters supported the proposal 

to codify the statutory HOME energy 

efficiency requirements in the HOME 

regulations. One commenter 

recommended HUD update the 

reference from section 109 of NAHA to 

HUD’s recent minimum energy 

standards determination (FR–6271–N– 

03) to streamline requirements across 

programs and minimize confusion about 

the requirements. 

A commenter agreed with HUD’s 

proposal that the rule should be clear 

that the ASHRAE Standard 90.1–2019 

(for high-rise multifamily) and the 2021 

Energy Conservation Code (for singlefamily and low-rise multifamily) apply 

to all new construction under HOME, 

including alternative compliance 

pathways such as specified green 

building certifications and future HUDdeveloped standards. The commenter 

recommended that HUD go further and 

apply the standards to major 

rehabilitations under HOME, arguing 

that rehabilitated homes can and should 

meet the same standards as new 

construction. Additionally, the 

commenter said that HUD should 

consider setting higher minimum 

standards for HOME new construction 

and major rehabilitation that require 

certifications consistent with the 

Department of Energy’s National 

Definition of a Zero Emissions Building. 

One commenter noted that lowincome households are more likely to 

experience higher utility costs, and that 

energy efficiency means residents do 

not need to choose between paying 

utilities, rent, or putting food on the 

table and responds to climate 

instability. The commenter noted the 

importance of energy standards being 

codified in accordance with section 109 

of NAHA, including any revisions 

adopted by HUD and USDA and 

encouraged the use of HUD funding to 

implement these requirements. 

HUD Response: The Department 

thanks the commenters for their review 

and is adopting the proposed change 

codifying the statutory requirement that 

all HOME-assisted rental and 

homebuyer new construction projects 

meet the energy efficiency standards 

promulgated by HUD in accordance 

with section 109 of NAHA, including 

any revisions adopted by HUD and the 

U.S Department of Agriculture (USDA). 

To maintain consistency in regulations 

and energy efficiency requirements as 

standards are updated over time, the 

Department declines to update the 

reference from section 109 of NAHA to 

the recent minimum energy standards 

determination (FR–6271–N–03). The 

Department also declines to apply these 

standards to rehabilitation projects, or to 

apply new, higher minimum standards 

to new construction or rehabilitation 

projects under the HOME program. The 

priority of this final rule is to maintain 

consistency and advance alignment 

across programs, meaning that the 

HOME program has the same energy 

efficiency standards as the rest of the 

Department. The Department will 

continue to assess ways to further 

produce efficient, healthy, and resilient 

affordable homes, and may revisit this 

issue in a future rulemaking. 

C. HUD Should Engage in Monitoring of 

Energy Efficiency Requirements in 

§ 92.251(a) 

One commenter stated that the energy 

efficiency standards would require 

monitoring to ensure that HUD’s energy 

efficiency goals are being met. The 

commenter stated that HUD could 

ensure the goals are met by tracking 

developer use of inspections and 

assessments. The commenter stated that 

HUD could require these assessments 

since the proposed rule allows for 

reimbursements of environmental 

assessments. 

HUD Response: The Department 

thanks commenters for their 

recommendation that HUD require 


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52On September 2023, HUD delayed the 

compliance date for CPD programs (88 FR 63971) 

and for the HCV and PBV programs (88 FR 66882) 

until October 1, 2024, to allow PHAs, jurisdictions, 

participants, recipients, and HUD grantees 

additional time for implementation. On July 5, 

2024, HUD further extended the compliance date 

for CPD programs and for the HCV and PBV 

programs until October 1, 2025 (89 FR 55645). 

tracking developer use of inspections 

and assessments to ensure that energy 

efficiency goals are being met. 

Requirements at § 92.504 state that 

participating jurisdictions must have 

and follow, among other things, a 

system for monitoring entities to ensure 

that HOME program requirements for 

HOME-assisted units set forth in 24 CFR 

part 92 are met throughout the specified 

period of affordability. As the energy 

efficiency standards under § 92.251 fall 

under that umbrella and are subject to 

monitoring, the Department declines to 

adopt this recommendation that more 

stringent or developer-specific 

monitoring requirements be put into 

effect. 

D. HUD’s Energy Efficiency Standards 

Should Prohibit New Fossil Fuel 

Connections 

One commenter stated that HUD’s 

proposal to have projects meet high 

energy efficiency standards was 

beneficial but could go further by 

further eliminating new fossil fuel 

hookups. 

HUD Response: In a separate 

rulemaking, HUD has developed energy 

efficiency standards in order to comply 

with 42 U.S.C. 12709. Revising those 

energy efficiency standards to prohibit 

new fossil fuel connections is beyond 

the scope of this rulemaking. 

E. Allowing the Use of NSPIRE 

Inspections To Determine Compliance 

With HOME Property Standards in 

§ 92.251(a), (b), and (f)—Support 

Multiple commenters stated that they 

support the proposed alignment in the 

HOME program of permitting the use of 

inspections from other programs or 

sources. 

HUD Response: HUD thanks the 

commenters. HUD is moving forward 

with its proposal to accept inspections 

performed under other HUD programs. 

F. Allowing the Use of NSPIRE 

Inspections To Determine Compliance 

With HOME Property Standards in 

§ 92.251(a), (b), and (f)—Concern About 

Current Properties 

Commenters stated that HUD should 

clarify the specifics of the applicability 

of NSPIRE to various HOME-eligible 

activities. One of these commenters 

noted that it is unclear how NSPIRE 

applies differently among homebuyer 

activity, homeowner rehabilitation 

activity, rental new construction activity 

and rental rehabilitation activity. The 

commenter requested that the final rule 

address the as-applied differences 

between these activities. One 

commenter cautioned that applying new 

physical condition standards such as 

the NSPIRE program to old properties is 

problematic because they were built 

under very different code and standard 

requirements. 

HUD Response: HUD recognizes the 

commenter’s concerns. Under 

§ 92.251(f)(2), if a participating 

jurisdiction is monitoring a project that 

received a HOME commitment before 

January 24, 2015, then the participating 

jurisdiction is required to monitor that 

project under the applicable State or 

local housing quality standards or code 

requirements, and if there are no such 

standard or code requirements, the 

housing must meet the housing quality 

standards in 24 CFR 982.401. For 

projects with commitments after January 

24, 2015, they must meet all applicable 

State or local code requirements and 

ordinances and in the absence of 

existing applicable State or local code 

requirements and ordinances, at a 

minimum, the participating 

jurisdiction’s ongoing property 

standards must provide that the 

property does not contain the specific 

deficiencies established by HUD based 

on the applicable standards in 24 CFR 

5.703 and published in the Federal 

Register for HOME rental housing 

(including manufactured housing) and 

housing occupied by tenants receiving 

HOME tenant-based rental assistance 

(see § 92.251(f)(1)(i)). 

Under the Effective Date section of the 

NSPIRE Final Rule, HUD clarified that 

‘‘[p]articipants and owners subject to 

these regulations are subject to the Code 

of Federal Regulations as it exists on the 

publication date of this rule and are not 

subject to the regulatory changes being 

made by this rule on July 1, 2023, until 

October 1, 2023.’’ HUD has since 

delayed the compliance date for 

implementing NSPIRE inspection 

standards and requirements until 

October 1, 2025,52 giving participating 

jurisdictions more time to update their 

property standards and owners more 

time to bring their properties into 

compliance with the new ongoing 

property standards. HUD will provide 

additional guidance and materials 

aimed at assisting participating 

jurisdictions and owners in complying 

with the requirements, including a 

streamlined list of minimum inspectable 

items that shall be a subset of the larger 

set of standards published in the 

NSPIRE Standards notice at 88 FR 

40832. 

G. Allowing the Use of NSPIRE 

Inspections To Determine Compliance 

With HOME Property Standards in 

§ 92.251(a), (b), and (f)—Compliance 

Concerns 

While one commenter was supportive 

of the changes made to accept 

inspections under other HUD programs, 

they noted that the success of the policy 

will depend upon effective 

implementation and coordination 

among the various entities involved in 

the project and urged HUD to take steps 

to ensure that all entities involved are 

committing to inspection standards that 

prevent issues in units from going 

undetected for extended periods. In 

addition, one commenter requested that 

HUD clarify whether a participating 

jurisdiction must be a party to the 

contract for an inspector conducting the 

inspection in satisfaction of another 

funding source’s requirements. Another 

commenter asked which entity is 

responsible for ensuring that 

inspections are conducted in 

compliance with HOME requirements 

and stated that they wished to avoid 

conflicts between states and local 

jurisdictions. 

HUD Response: HUD acknowledges 

the commenter’s concerns and believes 

that the final rule requirement that a 

participating jurisdiction perform an 

onsite inspection within 12 months after 

project completion coupled with the 

ongoing inspection requirements at 

§ 92.251(f)(3)(i) address the commenter’s 

concern. The participating jurisdiction 

will still be required to determine that 

HOME units meet the property 

standards at the completion of 

rehabilitation. Moreover, once every 

three years, either the participating 

jurisdiction will perform an onsite 

inspection of the units to determine if 

they meet the ongoing property 

standards (§ 92.251(f)(3)(i)(A)) or it may 

accept an inspection conducted on the 

HOME-assisted units within 12 months 

that met the NSPIRE requirements in 24 

CFR part 5, subpart G or an alternative 

inspection standard, which HUD may 

establish through Federal Register 

publication (§ 92.251(f)(3)(i)(B)). To help 

ensure that all entities involved are 

meeting inspection standards, HUD will 

continue to develop training and tools 

aimed at ensuring compliance. 

The participating jurisdiction is not 

required to be a party to the contract of 

an inspector that is inspecting on behalf 

of another program but may enter into 

contracts with inspectors to perform the 

on-site inspection of units under the 

HOME program. The Department is not 


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responsible for monitoring the entity 

that inspects the units under another 

funder’s program but is simply provided 

the option of accepting the inspection 

results if it meets the requirements of 

the final rule in § 92.251. 

H. Allowing the Use of NSPIRE 

Inspections To Determine Compliance 

With HOME Property Standards in 

§ 92.251(a), (b), and (f)—Equivalent 

Standards in Tax Credit Programs 

Two commenters stated that the 

proposal to allow a participating 

jurisdiction to ‘‘[a]ccept a determination 

made under another HUD program 

. . .’’ should be expanded to also 

include rental inspections made for tax 

credit programs. One of these 

commenters stated that tax credit 

programs, while not HUD programs, are 

by far the most frequent and prominent 

other funding source for affordable 

housing. The commenter requested that 

HUD revise the proposed language in 

§ 92.251 to allow participating 

jurisdictions to accept inspections made 

by any other funding source when the 

other funding source’s inspection 

requirements equal or exceed HUD’s 

requirements. One commenter noted 

that the language of the proposed rule 

states that HUD may accept the 

determination of ‘‘another HUD 

program,’’ which could limit HUD’s 

ability to accept the determination of 

programs outside of HUD that engage in 

similar determinations. The commenter 

stated they were especially confused 

because the informational portion of the 

comment session made it seem as 

though HUD ‘‘may accept the 

determination of another funder in 

accordance with [§ ]92.251 every three 

years thereafter.’’ 

HUD Response: The Department 

thanks commenters for their 

recommendation that HUD revise the 

proposed language in § 92.251 to allow 

participating jurisdictions to accept 

inspections made by other funding 

sources when those other funding 

sources’ requirements equal or exceed 

HUD’s own requirements. This 

recommendation would allow 

participating jurisdictions to accept 

rental inspections for tax credit 

programs. The Department is moving 

forward with language allowing for 

participating jurisdictions to use an 

inspection performed under the 

requirements of NSPIRE (24 CFR part 5, 

subpart G) as evidence of compliance 

with the HUD housing standards 

required under § 92.251(b)(1)(viii), and 

is clarifying that inspections for tax 

credit programs such as LIHTC are 

acceptable so long as those inspections 

meet or exceed the NSPIRE standard in 

24 CFR 5.703. The Department 

acknowledges that the language stating 

that HUD may accept the 

determinations made under ‘‘another 

HUD program’’ may be limiting when it 

comes to non-HUD programs that make 

similar determinations. 

I. Allowing the Use of NSPIRE 

Inspections To Determine Compliance 

With HOME Property Standards in 

§ 92.251(f)—Accepting an Inspection 

Within 3 Months 

One commenter suggested that the 

flexibility of accepting physical 

inspections performed by other HUD 

programs using the Housing Quality 

Standards and NSPIRE standards for 

tenant-based rental assistance units 

should operate in a slightly different 

manner. The commenter recommended 

extending the timeframe for when the 

other inspection has occurred from 3 

months to 12 months because requiring 

duplicative inspections annually can 

cause unnecessary delays in getting 

families housed. 

HUD Response: The Department 

understands the commenter’s concern 

but must balance the potential delay in 

receiving assistance with the 

requirement that a tenant receiving 

tenant-based rental assistance live in a 

unit that meets all applicable local or 

State codes and applicable housing 

quality standards. HUD believes 3 

months is a reasonable period of time in 

which an inspection reflects the state of 

the property condition. Any inspections 

before that period may not accurately 

represent the condition of the property 

because too much time will have passed 

in which intervening events may have 

negatively impacted the property 

causing new deficiencies that must be 

corrected before the tenant could 

occupy the unit. HUD also retained the 

language in § 92.251(f)(4)(ii) of the 

proposed rule that stated that ‘‘[a] 

participating jurisdiction may move its 

inspection cycle to align with an 

inspection’’ made under another 

program. This will better enable the 

participating jurisdiction to reduce the 

frequency of inspections during the 

tenancy. 

J. Allowing the Use of NSPIRE 

Inspections To Determine Compliance 

With HOME Property Standards in 

§ 92.251(a), (b), and (f)—Use of Housing 

Quality Standards (HQS) Under 

§ 982.401 

One commenter stated that they 

support HUD’s proposal to accept 

physical inspections performed by other 

HUD programs that were completed 

using Housing Quality Standards, or 

eventually, NSPIRE. Another 

commenter asked whether inspections 

conducted under NSPIRE replace 

inspections conducted under previous 

standards such as the Uniform Physical 

Condition Standards (UPCS) or Housing 

Quality Standards. 

HUD Response: HUD wishes to clarify 

that it is not allowing the use of Housing 

Quality Standards inspections 

performed under 24 CFR 982.401 to be 

used to determine compliance through 

either § 92.251(b)(1)(viii)(A) 

(rehabilitation property standards) or 

§ 92.251(f)(3)(i)(B) (ongoing property 

standards). HOME property standard 

regulations allow inspections conducted 

under 24 CFR part 5, subpart G. This 

provision does not contain Housing 

Quality Standards inspection 

requirements, it contains NSPIRE 

requirements. The Department did not 

propose to apply or allow the 

application of the Housing Quality 

Standards requirements contained in 24 

CFR 982.401 beyond its current 

application to projects with 

commitments before 2015. Please see 

§ 92.251(f)(2). The Department has 

determined that the use of NSPIRE 

standards will result in better housing 

quality and long-term viability of 

HOME-assisted units than Housing 

Quality Standards. In addition, through 

the Economic Growth Regulatory Relief 

and Consumer Protection Act: 

Implementation of National Standards 

for the Physical Inspection of Real 

Estate (NSPIRE) Final Rule published on 

May 11, 2023 (88 FR 30442), the 

Department replaced the Uniform 

Physical Condition Standards 

previously at 24 CFR 5.703 with 

NSPIRE. In accordance with the Federal 

Register Notice titled Economic Growth 

Regulatory Relief and Consumer 

Protection Act: Implementation of 

National Standards for the Physical 

Inspection of Real Estate (NSPIRE); 

Extension of NSPIRE Compliance Date 

for HCV, PBV and Section 8 Moderate 

Rehab and CPD Programs published on 

July 5, 2024 (89 FR 55645), HOME 

participating jurisdictions are not 

permitted to use UPCS inspection 

requirements to determine compliance 

through either § 92.251(b)(1)(viii)(A) 

(rehabilitation property standards) or 

§ 92.251(f)(3)(i)(B) (ongoing property 

standards) for HOME-assisted projects 

with commitments on or after October 1, 

2025. The use of NSPIRE as a unified 

inspection protocol will facilitate 

alignment inspections of HOME-assisted 

units with other housing programs. 


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K. Allowing the Use of NSPIRE 

Inspections To Determine Compliance 

With HOME Property Standards in 

§ 92.251(b) and (f)—Use of NSPIRE 

Results During Rehabilitation and 

Ongoing Inspections 

One commenter supported HUD’s 

proposal to provide administrative relief 

by better aligning HOME inspection 

standards with the standards of other 

funding sources. The commenter 

supported allowing participating 

jurisdictions to accept NSPIRE 

inspections conducted under another 

funding source, in lieu of the final 

completion inspections for 

rehabilitation projects as well as 

ongoing inspections of rental projects 

and housing occupied by tenant-based 

rental assistance tenants because it 

would reduce participating 

jurisdictions’ administrative burden and 

reduce the impact on owners and 

tenants of having multiple project 

inspections due to layered Federal 

funding. 

HUD Response: HUD appreciates the 

commenter’s review and is moving 

forward with language allowing for 

participating jurisdictions to use an 

inspection performed under the 

requirements of NSPIRE (24 CFR part 5, 

subpart G) as evidence of compliance 

with the HUD housing standards 

required under § 92.251(b)(1)(viii). 

L. Elimination of Initial, Progress, and 

Final Inspections in § 92.251(b) 

One commenter believed HUD’s 

proposal allowed participating 

jurisdictions to accept NSPIRE 

inspections of rehabilitation projects 

performed for other funding sources 

instead of final and ongoing periodic 

inspections. The commenter also 

believed that this allowed the use of 

LIHTC inspections. The commenter 

stated that it recommends that HUD still 

provide participating jurisdictions the 

option of performing final and ongoing 

inspections to prevent delays in 

inspection. 

HUD Response: HUD thanks the 

commenter for reviewing the proposed 

rule. However, the commenter 

misunderstands the inspection 

provision in the proposed rule. HUD did 

not propose to eliminate initial, progress 

and final inspections under 

§ 92.251(b)(3). HUD proposed to allow 

the use of another HUD inspection 

conducted under 24 CFR part 5, subpart 

G to be evidence that the property met 

the requirements under 

§ 92.251(b)(1)(viii) once construction 

was completed. The participating 

jurisdiction must still conduct initial 

and ongoing progress inspections, as 

HUD explained in the preamble to the 

proposed rule. See 89 FR 46630. 

M. Inspection to Applicable Housing 

Codes in § 92.251(a), (b), and (f) 

One commenter stated that HUD 

should allow State participating 

jurisdictions to inspect all their HOME 

properties in accordance with either 

local codes or a national standard as 

determined by HUD and that if a State 

participating jurisdiction chooses to use 

the national uniform standard, 

participating jurisdictions should still 

require owners to certify that they meet 

local codes but should not be required 

to inspect the property in accordance 

with the local code. 

HUD Response: Participating 

jurisdictions are required, by statute, to 

provide on-site inspections to determine 

compliance with housing codes and 

other applicable regulations. See 42 

U.S.C. 12756(b). HUD does not believe 

that is has the flexibility to require a 

national uniform property standard 

instead of applicable local and State 

housing codes because the requirement 

to perform on-site property inspections 

to those codes is statutory. 

N. Support for Adding Carbon 

Monoxide Detection Requirements to 

§ 92.251(a), (b) and (f)—General Support 

Many commenters expressed general 

support for requiring the installation of 

carbon monoxide detectors in HOME 

projects. One commenter went further, 

stating that carbon monoxide alarms 

should also be accessible for people 

with hearing loss. 

HUD Response: HUD appreciates 

commenters’ support of the provisions. 

HUD will describe standards for carbon 

monoxide detection through a Federal 

Register publication, as described in 

§ 92.251(a)(3)(vi)(A), (b)(1)(xi)(A), and 

(f)(1)(iv)(A). 

O. Adding Carbon Monoxide Detection 

Requirements to Paragraphs (a), (b), and 

(f)—Concerns 

Many commenters also conveyed 

concerns about imposing strict 

requirements for the installation of 

hard-wired carbon monoxide detectors. 

One commenter requested that the rule 

provide an exception be made for those 

housing units where a gas line or similar 

hazard is not present. Another 

commenter only supports requiring 

hard-wired alarms in HOME-funded 

new construction. One commenter 

supports a requirement for a 10-year 

battery-powered carbon monoxide 

detector in rehabilitation and 

homebuyer acquisition projects and in 

units occupied by tenants receiving 

HOME tenant based rental assistance. 

However, for homebuyer acquisition 

and tenant-based rental assistance 

projects, the commenter requested that 

the installation of a carbon monoxide 

detector be permitted as an eligible 

HOME cost. This commenter expressed 

concern that requiring a seller or 

landlord to pay for the cost of 

installation of carbon monoxide 

detectors may reduce the available 

housing stock for these types of 

activities. Furthermore, this commenter 

and another were not in favor of 

requiring a HOME-assisted homebuyer 

to pay these costs. Other commenters 

also requested that HUD make 

additional HOME funding available for 

the costs of installing carbon monoxide 

detectors. 

Another commenter stated that they 

do not support the proposal because 

carbon monoxide detectors are already 

required by the International Housing 

Code, and they view any additional 

HOME requirements for carbon 

monoxide detectors as overreach. 

HUD Response: HUD recognizes 

commenters’ concerns regarding the 

installation costs of carbon monoxide 

alarms. Through final rule, HUD will be 

establishing carbon monoxide alarm 

requirements through a Federal Register 

publication. HUD believes installing 

carbon monoxide alarms is a reasonable 

cost for homeowners and owners of 

rehabilitated rental units. Finally, HUD 

is unable to make additional funds 

specifically available for the costs of 

installing carbon monoxide detectors 

but notes that installation of carbon 

monoxide alarms is an eligible use of 

HOME funds for new construction and 

rehabilitation projects. 

P. Carbon Monoxide Requirements in 

§ 92.251(a), (b), and (f) Should Align 

With Other HUD Programs 

One commenter emphasized that any 

HOME requirements for carbon 

monoxide detectors should align with 

other HUD programs. 

A different commenter noted that 

some State regulations require a smoke 

alarm in every unit room that also 

contain carbon monoxide detection. 

Consequently, the commenter suggests 

that the rule defer to applicable State 

and local laws for carbon monoxide 

detection standards. 

HUD Response: This final rule seeks 

to align HOME carbon monoxide 

requirements with those of the NSPIRE 

Final Rule and those contained in the 

U.S. Housing Act of 1937 (42 U.S.C. 

1437), thereby promoting consistency 

with other HUD programs. HUD 

declines to defer to State and local 

codes due to the safety benefits of these 

carbon monoxide alarm requirements to 


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occupants of HOME-assisted housing 

and in the interest of aligning HOME 

requirements with other HUD programs. 

Q. Permitting Property Standards 

Compliance Six Months After Title 

Transfer in Homeownership Programs 

Under § 92.251(c)—Support 

Most commenters support the 

proposal to allow homebuyer 

acquisition projects to meet HOME 

property standards within six months 

after the assisted homebuyer purchases 

the unit because such a change would 

expand homebuyers’ purchasing options 

and simplify the pre-purchase period. 

One commenter reasoned that this 

change would provide more choices for 

homebuyers and provide access to bank 

foreclosures, and that this change would 

prove advantageous for buyers because 

of risks for buyers to cover out-of-pocket 

repairs before closing. Furthermore, 

commenters noted that sellers would 

often not consider offers that included 

contingencies regarding property 

standards, which made HOME-assisted 

homebuyers less competitive in the 

private market. In addition, one 

commenter indicated that the proposal 

would align HOME with other funding 

sources before closing. Furthermore, 

commenters noted that sellers would 

often not consider offers that included 

contingencies regarding property 

standards, which made HOME-assisted 

homebuyers less competitive in the 

private market. In addition, one 

commenter indicated that the proposal 

would align HOME with other funding 

sources. 

HUD Response: HUD thanks the 

commenters for their support. HUD is 

adopting the six-month deadline for a 

homebuyer to make necessary repairs so 

that their unit meets applicable property 

standards. However, HUD has also 

adopted language in the final rule 

permitting participating jurisdictions to 

provide the homebuyer a written 

extension of up to an additional six 

months to meet property standards. 

Participating jurisdictions that wish to 

exercise the authority to provide 

extensions, when necessary, must 

establish policies and procedures for 

reviewing and approving a homebuyer’s 

request for an extension of the deadline. 

R. Permitting Property Standards 

Compliance Six Months After Title 

Transfer in Homeownership Programs 

Under § 92.251(c)—Need for Additional 

Time 

Several commenters suggested that 

the proposed six-month timeframe 

would be insufficient time for many 

homebuyers to complete the necessary 

rehabilitation. As reasons for this 

statement, one commenter cited supply 

chain issues, Build America, Buy 

America requirements, contractor 

availability, and green certifications 

requirements. Commenters proposed 

allowing longer periods, such as 9, 12, 

or 18 months after acquisition, to bring 

a property to standard. Allowing for 

reasonable extensions or phased 

rehabilitation plans based on property 

conditions and local market dynamics 

could alleviate some of the pressure on 

participating jurisdictions while 

maintaining housing quality standards. 

HUD Response: HUD agrees with 

commenters’ concerns about potential 

obstacles to homebuyers meeting the 

proposed six-month deadline and is 

revising the proposed language to allow 

participating jurisdictions when 

necessary to provide up to an additional 

six months for homebuyers to meet 

property standards. This revision allows 

participating jurisdictions to exercise 

their judgment regarding a homebuyer 

project’s unique circumstances and 

local market conditions. 

S. Permitting Property Standards 

Compliance Six Months After Title 

Transfer in Homeownership Programs 

Under § 92.251(c)—Opposition 

One commenter stated that they do 

not support the proposed revision due 

to concerns around enforcement and the 

possibility that the participating 

jurisdiction may be required to foreclose 

on the property or allow the homeowner 

to live in substandard conditions. 

Another commenter supportive of the 

proposal expressed similar concerns 

about the difficulty of monitoring the 

six-month deadline to rehabilitate 

housing and meet homebuyer 

acquisition property standards. One 

commenter opposed the proposal, 

recommending instead that the 

requirement should align with a local 

jurisdiction’s certificate of occupancy 

requirements. This commenter agreed 

with the previous commenter that it 

may not be practicable for a 

participating jurisdiction to enforce 

property inspection requirements on a 

homeowner after title transfer. 

HUD Response: HUD thanks the 

commenters for reviewing the proposed 

rule. However, HUD believes that there 

are adequate safeguards in place to 

prevent homebuyers from occupying 

substandard properties. Participating 

jurisdictions are required to conduct 

inspections to ensure that homes 

purchased with HOME assistance 

comply with HOME property standards, 

in accordance with § 92.251(c)(3). In the 

case of projects under this delayed 

compliance date, the participating 

jurisdiction must confirm through 

onsite physical inspection that all 

required work has been completed to 

meet property standards. Regarding the 

concern related to inspecting units after 

title transfer, participating jurisdictions 

will be required to make such 

inspections a condition of the receipt of 

funds in the homebuyer written 

agreement. HUD recognizes that 

permitting homebuyers six months to 

meet property standards will require 

participating jurisdictions to adjust their 

policies and procedures but views this 

as a worthwhile change to expand the 

supply of homes that homebuyers may 

purchase with HOME funds. Regarding 

the risk that a homebuyer may be unable 

to afford the rehabilitation necessary to 

meet property standards, HUD 

emphasizes that participating 

jurisdictions must establish and use 

homebuyer underwriting standards and 

ensure that HOME funds are supporting 

sustainable homeownership 

opportunities, in accordance with 

§ 92.254(f). If a homebuyer is unable to 

fund necessary repairs, the participating 

jurisdiction must either provide HOME 

or other funding for rehabilitation or 

decline to provide HOME funds to the 

homebuyer for the purchase. 

T. Permitting Property Standards 

Compliance Six Months After Title 

Transfer in Homeownership Programs 

Under § 92.251(c)—Defining How 

‘‘Funds are Secured for Rehabilitation’’ 

Several commenters requested 

clarification of the proposed policy. 

Specifically, two commenters requested 

that HUD clarify what evidence a 

homebuyer must provide to demonstrate 

that ‘‘funds are secured for 

rehabilitation.’’ One of these 

commenters suggested that HUD 

consider a letter provided by a mortgage 

lender or a bank statement as evidence 

of sufficient funds. 

HUD Response: In accordance with 

§ 92.254(f), participating jurisdictions 

must establish and use homebuyer 

underwriting guidelines that ensure 

homebuyers will have sufficient savings 

post-purchase or secured financing to 

complete rehabilitation necessary to 

meet HOME property standards. This 

final rule does not prescribe specific 

documentation that a homebuyer must 

provide to the participating jurisdiction, 

as this is for the participating 

jurisdiction to define in its policies and 

procedures. It is in the interest of 

participating jurisdictions to ensure that 

rehabilitation can and will be completed 

because the project will otherwise be 

determined to be ineligible for HOME 

funding. 


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U. Permitting Property Standards 

Compliance Six Months After Title 

Transfer in Homeownership Programs 

Under § 92.251(c)—Clarifying 

Consequences of Non-Compliance 

One commenter requested that the 

Department clarify in the regulation at 

§ 92.251(c) the consequences of failure 

to meet the property standards 

requirements within six months after 

title transfer in a homeownership 

program. 

HUD Response: If the homeownership 

unit does not meet property standards 

within six months, the participating 

jurisdiction may extend the time period 

in which the property must meet the 

participating jurisdiction’s property 

standards to 12 months (see 

§ 92.251(c)(3)(ii)(D)). If the property still 

does not meet the participating 

jurisdiction’s property standards after 

six months (if no extension is given) or 

12 months (if an extension is given), 

then the housing does not meet the 

requirements of 24 CFR part 92 and the 

participating jurisdiction must repay the 

HOME investment. The corrective and 

remedial actions for failure to comply 

with HOME program requirements are 

outlined at § 92.551. HUD declines to 

make the suggested change to further 

clarify the consequences of failing to 

meet the property conditions because it 

is unnecessary. 

V. Permitting Property Standards 

Compliance Six Months After Title 

Transfer in Homeownership Programs 

Under § 92.251(c)—Guidance 

Two commenters requested HUD 

provide guidance on the inspections 

required to ensure that the housing met 

property standards after a HOMEassisted homebuyer purchases the unit 

and completes the required 

rehabilitation. One of these commenters 

requested that HUD provide a sample 

template inspection form for 

jurisdictions that operate downpayment 

assistance programs to standardize 

practices. 

HUD Response: HUD is unable to 

provide a sample inspection form as 

part of this final rule. HUD encourages 

the commenter to review the provisions 

of this final rule and HOME program 

resources on the HUD Exchange. As part 

of the implementation of the NSPIRE 

Final Rule, HUD will provide additional 

guidance and materials aimed at 

assisting participating jurisdictions and 

owners to comply with the 

requirements, including a streamlined 

list of minimum inspectable items that 

shall be a subset of the larger set of 

standards published in the NSPIRE 

Standards notice at 88 FR 40832. 

W. Exempt Manufactured Homes From 

Construction and Safety Standards if 

They Meet HUD National Construction 

and Safety Standards for Manufactured 

Housing 

One commenter requested HUD 

provide for an exemption for HUD Code 

manufactured housing from all 

proposed requirements that deal with 

construction and safety standards. The 

commenter is concerned that HUD’s 

proposal would impose new 

construction requirements on all 

housing structures utilized under the 

HOME program. For manufactured 

homes, the commenter believed this 

would result in conflicts with the 

Manufactured Home Construction and 

Safety Standards (the HUD Code) 

resulting in the inability to utilize 

manufactured housing for projects 

funded by the program. The goals of the 

new construction requirements may 

make sense for other forms of housing 

that are not subject to national 

construction standards administered by 

HUD. However, the commenter believed 

they are not necessary for manufactured 

homes, which as noted, already are 

subject to such standards. 

HUD Response: The Department 

agrees with the commenter that 

construction of manufactured housing 

should meet the requirements contained 

in the HUD manufactured housing 

regulations. Under § 92.251(e), 

‘‘Construction of all manufactured 

housing including manufactured 

housing that replaces an existing 

substandard unit under the definition of 

‘‘reconstruction’’ must meet the 

Manufactured Home Construction and 

Safety Standards codified at 24 CFR part 

3280 . . . .’’ 

X. Use the International Code Council/ 

Modular Building Institute Standards 

for Off-Site Construction 

One commenter encouraged HUD to 

recognize the International Code 

Council/Modular Building Institute 

standards for off-site construction in 

order to facilitate their expanded use 

and encourage efficient design and 

construction that addresses housing 

affordability and availability, 

sustainability, workforce availability, 

and supply chain disruptions. 

HUD Response: The HOME rule at 

§ 92.251(e) requires that construction of 

all manufactured homes meet the 

Manufactured Home Construction and 

Safety Standards codified at 24 CFR part 

3280 and additional requirements. 

Section 92.251(e) also requires that in 

HOME-funded rehabilitation of existing 

manufactured housing the foundation 

and anchoring must meet all applicable 

State and local codes, ordinances, and 

requirements or in the absence of local 

or State codes, the Model Manufactured 

Home Installation Standards at 24 CFR 

part 3285. Manufactured housing that is 

rehabilitated using HOME funds must 

meet the participating jurisdiction’s 

rehabilitation standards requirements, 

as required in § 92.251(b). When 

building components are built off-site 

and then installed on the HOME project 

site as a form of new construction or 

reconstruction but not as a form of 

manufactured housing under the 

Manufactured Home Construction and 

Safety Standards, the new construction 

must meet the requirements in 

§ 92.251(a). 

Y. Revise Financial Oversight 

Requirements in § 92.251(f) 

One commenter is not supportive of 

the financial oversight requirements 

applying to rental projects with 10 or 

more HOME-assisted units. While the 

commenter understands that it can 

always adopt more restrictive 

requirements, the reality is that 

financial oversight is an invaluable tool 

in understanding how properties are 

performing, as well as early indications 

of financial distress and/or properties 

having surplus beyond what was 

originally underwritten. The commenter 

uses financial oversight during annual 

rent increase requests to verify it is 

reasonable for HOME-funded projects 

which more than likely have a blend of 

LIHTC, HOME, Housing Trust Fund 

(HTF), and/or local resources. 

HUD Response: HUD is noting that it 

has not changed the financial oversight 

provisions in § 92.504(d)(2). In the 

proposed rule, HUD reorganized the 

HOME regulations and moved those 

requirements to § 92.251(f). HUD 

understands that many participating 

jurisdictions may wish to exert greater 

financial oversight on HOME-assisted 

projects in their portfolio and 

encourages participating jurisdictions to 

determine and implement the best 

approach for their jurisdictions. At this 

time, the Department is not reducing the 

10-unit threshold for when a 

participating jurisdiction is required to 

conduct financial oversight under 

§ 92.251(f). HUD believes this is 

inconsistent with its efforts to provide 

monitoring flexibilities to small-scale 

housing projects and that it is best left 

to the participating jurisdiction to 

determine how to monitor projects with 

fewer than 10 units. 


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53See 89 FR 75704. 

54See 42 U.S.C. 12721, 42 U.S.C. 12722, and 42 

U.S.C. 12741. 

55See 42 U.S.C. 12721, 42 U.S.C. 12722, and 42 

U.S.C. 12741. 

Z. Energy Efficiency Considerations for 

Manufactured Homes and Off-Site 

Construction 

One commenter also suggested that 

HUD should ensure that energy 

efficiency considerations are addressed 

for off-site built housing like 

manufactured homes. The commenter 

noted that HUD should consider the 

Environmental Protection Agency’s 

EnergyStar v.3 standard or the 

Department of Energy’s Zero Energy 

Ready standard for manufactured homes 

as a minimum for any activities related 

to the purchase of new manufactured 

housing with HOME funds. 

HUD Response: HUD appreciates the 

comment. However, the Department was 

not proposing to change the minimum 

property standards for manufactured 

housing, which are covered by 

§ 92.251(e). Paragraph § 92.251(e) 

continues to require that manufactured 

housing be constructed in accordance 

with the Manufactured Home 

Construction and Safety Standards 

found at 24 CFR part 3280. The 

Department just recently revised its 

Manufactured Home Construction and 

Safety Standards as part of another 

rulemaking and the Department is 

declining to make further revisions to 

those rules or to the HOME rules in 

response to this comment.53

AA. Use of Inspection Performed by 

Third Parties 

Another commenter recommended 

allowing States to accept ongoing 

inspection reports from local 

government inspections that review 

compliance with local codes during 

construction of a HOME-assisted 

project. The commenter believed that 

HUD should only require the final 

inspection be conducted by the State 

participating jurisdiction before 

completing the project in the IDIS, 

instead of requiring frequent State 

participating jurisdiction inspections 

during construction. The commenter 

explained that this would avoid 

unnecessary burden, especially for 

larger States where it can take several 

hours to commute to a project’s 

location. 

Another commenter stated that HUD 

should create a process to accept either 

State or local rental inspections in lieu 

of HUD required inspections. 

HUD Response: HUD declines to 

revise the requirement that participating 

jurisdictions conduct progress 

inspections and notes that HOME 

regulations do not require participating 

jurisdiction staff to conduct the 

inspections. Participating jurisdictions 

may contract with qualified third-party 

inspectors, including contractors for 

other funders or units of government, to 

conduct HOME inspections in 

accordance with the participation 

jurisdiction’s policies and procedures. 

BB. Provide Small-Scale Rental Housing 

Inspection Requirements to All Owners 

One commenter said that the changes 

being proposed to the small-scale 

development compliance requirements, 

such as requiring inspections every 

three years, should be extended to 

larger-scale developments as well. 

HUD Response: HUD declines to 

extend the revisions to compliance 

requirements for small-scale rental 

housing to all rental projects. These 

revised requirements are based on the 

unique considerations of small-scale 

housing and would result in insufficient 

monitoring if applied to larger rental 

projects. HUD also notes that current 

HOME regulations at 

§ 92.504(d)(1)(ii)(A) require inspections 

every three years following the 

inspection within 12 months of project 

completion. 

CC. Reduce Property Standards 

Requirements for Homeowner 

Rehabilitation 

One commenter stated that HOME’s 

Housing Quality Standards, especially 

the requirement to address all health 

and safety hazards, impose significant 

challenges on low-income homeowners 

who cannot afford critical repairs due to 

limited equity or reluctance to 

encumber properties. The commenter 

stated that these issues cause HOME 

applicants to drop out of the process, 

which often means that grantees cannot 

recover the extensive staff time invested 

in considering or processing 

applications. The commenter 

recommended that HUD remove the 

Housing Quality Standards (HQS) 

requirements for single-family 

rehabilitation projects. One commenter 

stated HUD should expand grant 

funding available to cover critical 

repairs, such as roofs, plumbing, and 

electrical systems, which are often 

unaddressed due to limited equity, 

hesitation of homeowners to participate 

in the program, and concerns about 

encumbering their property with debt vs 

income. The commenter noted that HUD 

could expand the range of available 

grants to mirror CDBG programs. 

HUD Response: HOME is an 

affordable housing program with the 

statutory purpose of bringing rental and 

homeownership housing up to standard 

physical condition and imposing 

periods of affordability on the 

housing.54 CDBG is a community 

development program that can fund 

single purpose or emergency 

rehabilitation that does not address all 

deficiencies in a property or impose 

long-term affordability restrictions. 

Unlike the CDBG program, the HOME 

regulations require that the 

rehabilitation meets the participating 

jurisdiction’s rehabilitation standards, 

which are more stringent standards that 

require that the entire housing structure 

is code compliant and meets the HUD 

housing standards contained in 24 CFR 

5.703, as provided for in § 92.251(b). 

HQS do not apply to HOME-assisted 

homeowner rehabilitation projects. For 

HOME-assisted homeowner 

rehabilitation, participating 

jurisdictions must determine the scope 

of repairs needed to bring the 

homeowner’s property up to code as 

well as the form of assistance to 

homeowners, including any loan terms. 

The critical repairs noted by the 

commenter are eligible costs if such 

repairs are necessary to meet 

participating jurisdiction’s 

rehabilitation standards. Salaries, 

wages, and related costs of program 

administration are also eligible costs 

under the HOME program 

(§ 92.206(d)(6)). The Department 

declines to reduce the property 

standards requirements for homeowner 

rehabilitation projects and 

acknowledges that other programs may 

be better suited for more limited-scope 

homeowner rehabilitation projects than 

the HOME program. 

DD. Reduce Property Standards 

Requirements for Homebuyer 

Acquisition 

One commenter requested that HUD 

only require participating jurisdictions 

to ensure that homebuyer housing is 

free of immediate life and safety issues 

rather than imposing extensive property 

standards. The commenter stated that 

this may create a more reasonable 

option for income eligible buyers and 

private sellers instead of financing 

additional rehabilitation costs, which 

may put debt-to-income ratios too high. 

HUD Response: The Department 

declines to reduce the property 

standards requirements for homebuyer 

acquisition projects. The purpose of the 

HOME program is to bring housing into 

compliance with property standards and 

ensure the housing remains affordable 

over time.55 For homeownership, 

adequate property condition is key to 


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the sustainability of a household’s 

homeownership over the period of 

affordability. When a participating 

jurisdiction uses HOME funds for 

downpayment assistance or other 

homebuyer assistance programs, the 

participating jurisdiction is required to 

determine that the housing being 

acquired meets property standards at 

purchase or to ensure that necessary 

rehabilitation is performed soon after 

purchase. HUD encourages participating 

jurisdictions to use HOME funds to 

complete necessary repairs to units 

being acquired by homebuyers with 

HOME funds. However, this final rule 

also reduces a key barrier for private 

sellers by providing the HOME-assisted 

homebuyer 6 months to meet property 

standards. When permitted by a 

participating jurisdiction, this time 

period may be extended to 12 months. 

This should be rare. Meeting property 

standards may require additional 

investment by the participating 

jurisdiction or the homebuyer. The 

participating jurisdiction must work 

with the homebuyer and determine the 

correct amount of homeownership 

assistance based not only on the cost of 

acquisition but also any necessary 

rehabilitation to bring the property into 

compliance with the participating 

jurisdiction’s property standards. 

EE. Align Rehabilitation Standards With 

the Community Development Block 

Grant (CDBG) Program 

One commenter suggested that the 

Department align HOME rehabilitation 

requirements with the rehabilitation 

requirements under the CDBG program. 

HUD Response: The Department 

declines to align HOME rehabilitation 

requirements with CDBG. The CDBG 

program does not require that all 

rehabilitated residential properties meet 

the national Standards for the Condition 

of HUD housing contained in § 5.703. 

The Department chose to align with 

programs that are subject to the 

standards contained in § 5.703 because 

those programs, which include but are 

not limited to the Section 8 projectbased rental assistance and Housing 

Choice Voucher program, are the forms 

of assistance most likely to be combined 

with HOME assistance. The CDBG 

program does not require rehabilitation 

projects to meet these property 

standards or inspection requirements, 

and therefore, the CDBG program does 

not align with other HUD programs 

under NSPIRE inspection protocols. 

Adopting the CDBG rehabilitation 

requirements for HOME-assisted 

rehabilitation would mean the removal 

of property standard and inspection 

requirements from the existing 

regulation. 42 U.S.C. 12722 states that 

one of the purposes of the HOME 

program is ‘‘to expand the supply of 

decent, safe, sanitary, and affordable 

housing, with primary attention to 

rental housing, for very low-income and 

low-income Americans.’’ HUD does not 

believe that is has the flexibility to 

remove rehabilitation property 

standards and inspection requirements 

because the requirement that all HOMEassisted projects be decent, safe, and 

sanitary is statutory. 

Specific solicitation of comment #3: 

The Department specifically seeks 

public comment on the proposal to 

require HOME-assisted units comply 

with NFPA 72, or any successor 

standard, to use hardwired smoke 

alarms or sealed or tamper resistant 

smoke alarms with ten-year non 

rechargeable, nonreplaceable batteries, 

that provide notification for persons 

with hearing loss. The Department is 

particularly interested in public 

comment on the feasibility of these 

requirements in HOME-funded 

homeownership programs that do not 

include rehabilitation or construction of 

housing (e.g., downpayment assistance 

programs). 

A. Support for Smoke Alarms in HOME 

Projects 

Commenters generally expressed 

support for requiring the installation of 

smoke alarms in the interest of 

promoting safety. In addition, only a 

few commenters stated their support for 

the specific proposal to require NFPA 

72 smoke alarms in HOME-assisted 

projects. Of those commenters, one 

indicated support of the proposal for all 

types of HOME-assisted projects (i.e., 

new construction, rehabilitation, 

homeowner or rental acquisition and 

TBRA) and indicated that the minimal 

additional cost is worth the potential 

lifesaving impact. One other commenter 

indicated support for compliance with 

NFPA 72 specifically in homebuyer 

acquisition (i.e., downpayment 

assistance) programs. The third 

commenter reasoned that hard-wire 

smoke detectors would reduce both the 

removal of batteries and the frustration 

of tenants responsible for replacing 

batteries but could not comment on the 

impact of the policy on homebuyer 

acquisition projects because the 

participating jurisdiction does not use 

funds for that purpose. 

HUD Response: HUD thanks the 

commenters for sharing their views. 

HUD is revising the proposed language 

in order to achieve an approach that 

improves safety while addressing 

feasibility concerns that commenters 

raised. This final rule requires that 

HOME-assisted new construction 

projects use hardwired smoke alarms. 

For rehabilitation projects, if the use of 

hardwired smoke alarms places an 

undue financial burden on the owner or 

is infeasible, a participating jurisdiction 

may provide a written exception to an 

owner to allow the owner to install a 

sealed and tamper resistant smoke alarm 

that uses 10-year non-rechargeable, nonreplaceable primary batteries. 

Participating jurisdictions may also 

provide exceptions for projects 

including the acquisition of standard 

housing for homeownership, such as 

downpayment and closing cost 

assistance programs. Finally, a 

participating jurisdiction’s standards 

must require that existing rental housing 

and housing occupied by tenants 

receiving tenant-based rental assistance 

contain smoke alarms in accordance 

with the requirements contained in 24 

CFR 5.703(b) and (d). These standards 

do not require NFPA 72 compliance but 

do require that units occupied by a 

hearing-impaired person contain smoke 

alarms designed for hearing-impaired 

persons. 

B. Concerns Over Requiring Installation 

of NFPA 72 Compliant Smoke Alarms 

Most commenters expressed concerns 

about the specific proposal to require 

the installation of NFPA 72-compliant 

smoke alarms. Their primary concerns 

are costs, availability of such smoke 

alarms, and feasibility in projects that 

do not involve new construction or 

rehabilitation. Specifically, commenters 

were unclear how compliant smoke 

alarms would be paid for in homebuyer 

programs and speculated the proposal 

could increase administrative burden 

and cost in many jurisdictions where 

homeownership assistance programs are 

often oversubscribed and financially 

stretched. Many commenters were also 

concerned that installation would be 

challenging and cost-prohibitive in the 

rehabilitation of older housing. One of 

these commenters stated that adoption 

of the NFPA 72 standard would cause 

their participating jurisdiction to 

discontinue use of HOME funds for 

rehabilitation projects. 

HUD Response: HUD acknowledges 

commenters’ concerns and has revised 

the proposed language to provide 

flexibility for participating jurisdictions. 

For new construction projects and many 

rehabilitation projects, installing 

hardwired smoke alarms is feasible and 

promotes safety and user-friendliness. 

However, installing hardwired alarms 

may be challenging for certain 

rehabilitation projects. This final rule 

allows participating jurisdictions to 

provide written exceptions to allow the 


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56See 24 CFR 92.251(c)(3). 

owner to install a sealed and tamper 

resistant smoke alarm that uses 10-year 

non-rechargeable, non-replaceable 

primary batteries. Likewise, the 

participating jurisdiction may provide 

an exception for homebuyers 

participating in homeownership 

assistance programs. HUD believes 

installing battery-powered smoke alarms 

is a reasonable cost for homeowners and 

owners of rehabilitated rental units. 

Finally, HUD notes that smoke alarms 

are widely available and that their 

installation is an eligible use of HOME 

funds for new construction and 

rehabilitation projects. 

C. Smoke Alarm Requirements Should 

Be Optional 

To address concerns about costs, one 

commenter proposed that smoke alarm 

requirements should be encouraged but 

not required. Other commenters 

suggested that the rule not require 

smoke alarms to be hard-wired. One 

commenter, however, supported hardwired smoke alarms only in HOMEfunded new construction projects. Two 

other commenters agreed that HUD 

should differentiate requirements for 

new construction and rehabilitation 

projects. The first commenter suggested 

that the rule require 10-year batterypowered smoke alarms in rehabilitation, 

homebuyer acquisition, and HOME 

tenant based rental assistance projects. 

However, this commenter’s 

recommendation for homebuyer and 

TBRA projects was contingent on the 

HOME rule allowing the installation of 

alarms as an eligible HOME cost. 

HUD Response: HUD appreciates the 

commenters’ recommendations. This 

final rule requires all HOME-assisted 

units to contain smoke alarms while 

differentiating requirements by project 

type. Hardwired smoke alarms are 

required in new construction projects, 

while participating jurisdictions may 

provide exceptions for rehabilitation 

and homebuyer projects. The 

installation of smoke alarms is not an 

eligible HOME cost for homebuyer and 

tenant-based rental assistance activities. 

As with other property standards 

requirements, homebuyers and owners 

of tenant-based rental assistance units 

must ensure compliance with smoke 

alarm requirements. This final rule 

revises § 92.251(c)(3) to allow a 

homebuyer to bring a home up to the 

participating jurisdiction’s property 

standards within 6 months after 

acquisition, rather than requiring the 

home to meet all property standards at 

the time of purchase. The final rule also 

allows for the participating jurisdiction 

to extend that time up to 12 months 

through an amendment to its written 

agreement with the homebuyer.56

D. Cost Concerns Are Not Eliminated by 

Eliminating Hardwired Smoke Alarms 

Other commenters disagreed that 

eliminating the requirement for hardwired smoke alarms would address cost 

concerns. They stated that compliant 

battery-operated smoke alarms can also 

be significantly more expensive and 

harder to find than more widely 

available models. One commenter 

suggested that 10-year non-rechargeable, 

non-replaceable batteries pose the risk 

of increased replacement costs due to 

uncertainty about future safety codes 

after initial battery life has expired. In 

addition, one commenter indicated that 

these smoke alarms may require training 

for the tenant or homeowner to use this 

system and creates additional expense 

for homeowners and rental housing 

owners to replace and maintain. 

HUD Response: HUD recognizes that 

the smoke alarms required by this rule 

may be more expensive than other 

smoke alarms in some cases and that 

battery-powered alarms will involve 

future replacement costs. However, the 

marginal cost of these smoke alarms is 

not significant in the context of 

rehabilitation or new construction and 

smoke alarms required by this rule are 

widely available in stores and online. 

HUD believes potential additional costs 

are reasonable in order to promote the 

safety of tenants and homeowners. 

Additionally, training for tenants and 

homeowners on using battery-powered 

smoke alarms, if required, may already 

be available online from manufacturers 

and should be minimal in any case. 

E. Consider Availability and Cost of 

NFPA 72 Smoke Alarms 

One commenter urged HUD to assess 

the availability and cost of NFPA 72 

smoke alarms before imposing such a 

requirement on HOME projects. 

Several commenters requested that 

HUD make additional funds available to 

cover the costs of meeting any new 

smoke detector requirements. One 

commenter stated that national 

standards must not disadvantage rural 

places or low-income people, so Federal 

funds should be provided to cover the 

cost of any new Federal standards. 

HUD Response: This final rule allows 

participating jurisdictions to make 

exceptions for rehabilitation and 

homebuyer projects where installing 

hardwired alarms would be infeasible or 

prohibitively costly. HUD notes that 

installation of the smoke alarms 

required by this rule is an eligible 

HOME cost for rehabilitation and new 

construction costs. Very few projects 

receive HOME subsidies at or near the 

maximum per-unit subsidy limit and 

this rule increases those limits. HUD 

does not believe that installation of 

these smoke alarms will be cost 

prohibitive. 

F. Requiring NFPA 72 Smoke Alarms 

Reduces Ability To Use HOME for 

Homeownership Opportunities 

Commenters who expressed concern 

about imposing NFPA 72 requirements 

on homebuyer acquisition projects 

stated that the proposal would reduce 

single family homeownership 

opportunities because it would be 

difficult for HOME-assisted homebuyers 

to negotiate specialized smoke detector 

requests during the purchase and sales 

of existing units on the market with 

private owners. For this reason, one 

commenter noted that such a policy 

would reinforce its decision to decline 

to offer homebuyer assistance 

independently of HOME-assisted new 

construction or rehabilitation projects. 

Another commenter suggested that even 

if the cost of smoke detector installation 

was permitted as an eligible HOME cost, 

low-income homebuyers cannot afford 

to use their downpayment assistance for 

this purpose due to the high cost of 

housing. A third commenter suggested 

that if a household requires a 

specialized smoke detector, it should 

either be requested at the time of 

construction as a reasonable 

accommodation or should be installed 

by the homeowner after purchase. 

However, commenters also expressed 

concerns about requiring the assisted 

family to pay for upgrades after 

purchase, the ability of participating 

jurisdictions to enforce smoke alarm 

requirements after closing, and the 

additional program costs of additional 

post-closing inspections. 

HUD Response: HUD recognizes that 

HOME property standards can 

sometimes make it challenging for 

HOME-assisted homebuyers to find a 

compliant home to purchase. In this 

final rule, HUD has revised the 

requirements at § 92.251(c)(3) in order 

to provide HOME-assisted homebuyers 

6 months to make improvements 

necessary to meet HOME property 

standards, with the ability for 

participating jurisdictions to extend that 

period for up to 12 months from 

purchase. Therefore, homeowners 

selling to HOME-assisted buyers will 

not need to install the smoke alarms 

required by this rule prior to closing. In 

cases where acquired homes do not 

have smoke alarms meeting the 

requirements of this rule, HUD believes 


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it is a reasonable cost for homebuyers to 

install a hardwired alarm or, with 

written exception from the participating 

jurisdiction, a 10-year battery-powered 

smoke alarm. Participating jurisdictions 

will monitor smoke alarm requirements 

as part of its final inspection for overall 

property standard compliance. HUD 

notes that the smoke alarms required by 

this rule present safety benefits for all 

tenants and homeowners, not only for 

persons experiencing hearing loss. 

G. Property Standards Requirements 

Should Only Require That Housing 

Meet State and Local Smoke Alarm 

Requirements 

Several commenters noted that 

current building codes in some States 

and local jurisdictions already require 

compliance with NFPA 72 smoke alarm 

standards for single and multifamily 

buildings. Consequently, a number of 

commenters urged HUD to defer to State 

and local code requirements for smoke 

alarms. Commenters explained that 

State building codes facilitate choice 

and therefore flexibility based on the 

conditions of the project. 

HUD Response: Due to the safety 

benefits of the smoke alarms required by 

this rule, HUD declines to defer to State 

and local codes. This final rule provides 

participating jurisdictions flexibility in 

rehabilitation and homebuyer projects 

and does not require NFPA 72 smoke 

alarms for existing rental and TBRA 

units. 

H. Don’t Use Only the NFPA 72 

Standard 

One commenter advised against solely 

applying NFPA 72 because these 

requirements do not align with the 

Consolidated Appropriations Acts of 

2021 and 2023 which require all public 

housing to meet or exceed the 

requirements of Chapters 9 and 11 of the 

2018 International Fire Code and that 

smoke alarms are installed in Federally 

assisted housing in accordance with the 

International Code Council or NFPA 

and NFPA 72. The commenter urged 

HUD to reference the smoke alarms 

requirements outlined in the 

International Building Code, 

International Residential Code, and 

International Fire Code which the 

commenter stated are industry-leading 

national voluntary consensus standards, 

are widely used by government agencies 

across the nation, and trigger NFPA 72 

smoke alarm installation requirements. 

The commenter stated that 

implementation of the hearing 

impairment requirements will be 

difficult because they are not referenced 

in the international codes and the 

technology is limited in availability. 

The commenter noted that the 

international codes require smoke 

alarms be hardwired with battery 

backup unless it is a first-time install 

and that the allowance to install seal 

tamper resistant non-replaceable 10-year 

battery operated alarms are intended to 

be limited to existing buildings that do 

not currently contain hardwired alarms 

and that it is unclear whether these 

alarms would comply with NFPA 72 for 

hearing impairment. 

HUD Response: HUD thanks the 

commenter for their suggestion. This 

final rule requires that, for new 

construction, rehabilitation, and 

homebuyer projects, smoke alarms be 

installed in accordance with certain 

specific requirements of HUD. In 

addition, meeting the applicable codes 

and standards published by the 

International Code Council or the 

National Fire Protection Association 

ensures compliance 

§ 92.251(a)(3)(vi)(B). Ongoing property 

standards require that a participating 

jurisdiction’s standards require housing 

contain smoke alarms in accordance 

with the requirements contained in 24 

CFR 5.703(b) and (d). All carbon 

monoxide detectors in HOME-assisted 

units must be installed in a manner that 

meets or exceeds the standards that 

HUD will further describe in a 

forthcoming Federal Register 

publication. 

I. Clarification on Smoke Alarms in 

Projects With Floating Units 

Several commenters asked for 

clarification of the proposed policy. One 

commenter asked how the proposal 

would apply (f) in HOME-assisted 

properties with floating HOME units. 

Other commenters asked HUD to clarify 

monitoring and compliance 

requirements, especially after resale for 

homebuyer activities. 

HUD Response: For rental projects 

with floating units, in accordance with 

§ 92.252(j), project owners must ensure 

that units are comparable in terms of 

their features, which includes ensuring 

that units have compliant smoke alarms. 

For homebuyer projects, participating 

jurisdictions will monitor compliance 

with smoke alarm requirements as part 

of final inspections for overall property 

standard compliance. This final rule 

revises § 92.251(c)(3) to allow a 

homebuyer to bring a home to property 

standards within 6 months after closing 

and provides participating jurisdictions 

the ability to extend that to 12 months, 

if necessary. Whether at initial sale or 

resale, the participating jurisdiction 

would therefore inspect the unit once 

the homebuyer has completed necessary 

improvements. 

Specific solicitation of comment #4: 

The Department specifically seeks 

public comment on the proposal to 

require that a participating jurisdiction 

inspect at least 20 percent of the HOME 

assisted units during its ongoing on-site 

inspections of rental housing. 

A. General Support for 20 Percent 

Sample Size 

Many commenters supported the 

proposal to require participating 

jurisdictions to inspect at least 20 

percent of the HOME-assisted units. 

One commenter agreed that the current 

HOME rule requirement that 

participating jurisdictions inspect a 

‘‘statistically valid’’ sample of units is 

challenging for participating 

jurisdictions that lack software 

capabilities to develop such a sample. In 

addition, one commenter in support of 

the proposal also recommended that 

HUD require that each inspection 

include accessible units and evaluate 

the accessibility of common areas. 

HUD Response: HUD thanks the 

commenters for their support. HUD 

notes that accessible units in a project 

are not always HOME units and their 

designation can change during the 

period of affordability. Further, 

requiring each inspection to include 

accessible units may lead to the same, 

limited number of accessible units being 

inspected repeatedly. HUD believes this 

would be burdensome for the tenants of 

accessible HOME units. HUD agrees that 

it is important that common areas 

remain accessible to persons with 

disabilities. While the NSPIRE 

inspection protocol does not specifically 

include an accessibility section, it 

requires inspection of common areas for 

inspection of walkways, ingress and 

egress, and railings. 

B. General Opposition to 20 Percent 

Sample Size 

Many commenters also opposed the 

proposal, their primary concern being 

that an inspection of 20 percent of the 

HOME-assisted units will result in a 

large sample size, particularly in large 

projects, and will place an undue 

burden on residents, project owners, 

property managers, and participating 

jurisdictions. In response, several 

commenters requested that HUD 

provide additional administrative funds 

because the proposal would require 

additional staff time and costs. 

One commenter noted that, for 

properties with a limited number of 

HOME units, it will be difficult to avoid 

inspecting the same units each year. 

Another commenter maintained that 

current requirements are sufficient for 


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57See ‘‘Table 9—Number of Units Sampled 

Under NSPIRE Scoring and Sampling Methodology 

Based on Property Size.’’ https://www.govinfo.gov/ 

content/pkg/FR-2023-07-07/pdf/2023-14362.pdf. 

ensuring properties’ compliance with 

property standards. 

HUD Response: HUD appreciates the 

comments and shares commenters’ 

concerns about burden. HUD is 

providing burden relief in this final rule 

by reducing the minimum required 

sample size to less than 20 percent for 

projects with 136 or more HOMEassisted units. Beginning with 

properties that include between 167 and 

214 HOME-assisted units, the minimum 

inspection sample size table in this final 

rule aligns with the inspection size table 

included in the NSPIRE Final Rule.57

HUD also considered aligning with the 

LIHTC sample size chart but felt it was 

more appropriate to align HOME with 

other HUD programs subject to NSPIRE. 

C. Impose a Lower Percentage of Units 

for Larger Projects and Align With 

LIHTC 

Several commenters proposed 

reducing the sample size for larger 

projects. Two commenters stated that 

the proposed sampling method differs 

from the requirements of other funding 

sources, including LIHTC, and 

recommended that HUD instead align 

the HOME and LIHTC program 

requirements. One of these commenters 

suggested using the LIHTC standard of 

the lesser of 20 percent or an amount on 

a chart included in the LIHTC 

regulation 1.42–5 for larger projects to 

lessen the burden for participating 

jurisdictions. 

HUD Response: HUD thanks the 

commenters for their suggestions. HUD 

agrees that the 20 percent sample size in 

the proposed rule is too large for very 

large projects and is adopting the 

NSPIRE sample size chart for larger 

projects to align with other HUD 

programs. 

D. Require a Bifurcated Sampling 

Standard for Large and Small Projects 

One commenter proposed 20 percent 

of units in projects with 5–50 units and 

10 percent in projects with 50 or more 

units. Similarly, a different commenter 

recommended 15 percent of HOMEassisted units in projects with 20–30 

units, and 10 percent for projects with 

more than 30 HOME assisted units. 

HUD Response: HUD thanks the 

commenters for their suggestions and 

agrees that it should have different 

sample sizes based on whether the 

project has a smaller or larger number 

of units. Although HUD did not adopt 

the commenter’s precise suggestions, 

this final rule does reduce the minimum 

required sample size for larger projects 

as suggested by the commenters. 

E. Reduce Sample Size to 10 Percent 

One commenter suggested that 10 

percent of HOME-assisted units be 

inspected in all HOME projects, 

regardless of the total number of units 

in the project with a minimum of one 

unit per building. 

HUD Response: HUD thanks the 

commenter for the suggestions. HUD 

declines to adopt this approach 

uniformly within the rule because, in 

most cases, a sample size of 10 percent 

of HOME-assisted units would be 

insufficient to ensure the project’s 

compliance with HOME property 

standards. In larger projects, the 

Department has determined that it may 

be appropriate to reduce the percentage 

to 10% or less, and for projects with 

greater than 300 HOME units, the 

sample size is 10% or less. 

F. Reduce Sample Size for Small-Scale 

Rental Housing Projects 

One commenter proposed that 

developers with multiple properties 

containing between one and four HOME 

units should be required to inspect 20 

percent of the HOME-assisted units 

across their portfolio every three years. 

HUD Response: HUD appreciates the 

commenter’s suggestion but declines to 

adopt this change. The HOME statute 

and regulations apply HOME 

requirements individually to each 

HOME-assisted project. While a single 

ownership entity may have multiple 

HOME-assisted projects in its portfolio, 

the physical characteristics, 

management, and occupancy of those 

project may vary significantly. Physical 

deficiencies or a lack of deficiencies in 

one project do not necessarily reflect the 

condition of other properties in the 

portfolio. Therefore, the Department 

believes that each project should be on 

its own on-site inspection cycle and that 

the participating jurisdiction cannot 

sample units across the owner’s 

portfolio to satisfy the individual project 

inspection requirements for that owner. 

G. Confusion Over Sampling Units for 

Unit Inspections in HOME 

Several commenters expressed 

confusion or requested clarification 

about the proposed requirements. One 

commenter stated that the proposed rule 

is unclear about how the sample size 

requirement relates to the requirements 

for timing of HOME onsite inspections. 

The commenter asked whether annual 

inspections that, in sum, surpass 20 

percent of HOME-assisted units over 

three years, but do not in a single year, 

would satisfy the proposed requirement. 

Another commenter stated that they 

thought the 20 percent inspection 

sample size was the existing 

requirement. And a commenter also 

stated that no additional inspections 

should be added to the regulations at all 

because they are administratively 

burdensome. 

A different commenter requested that 

HUD clarify whether both HOME and 

non-HOME units would be required to 

be included in the inspection sample. 

The commenter suggests that inspection 

requirements apply only to HOMEassisted units and that HUD should 

allow inspection of voucher units 

without affordability agreements to 

qualify as inspection and monitoring for 

HOME. In its final rule, we ask HUD to 

mandate agreement disbursement for 

documentation of HOME properties. 

HUD Response: This final rule does 

not change the number or timing of 

required inspections. Participating 

jurisdictions must conduct on-site 

inspections within 12 months after 

project completion and at least once 

every 3 years thereafter during the 

period of affordability. A participating 

jurisdiction may choose to conduct 

ongoing inspections more frequently, 

but each inspection must meet the 

appropriate minimum inspection 

sample size defined in this final rule. 

The inspection must only include 

HOME-assisted units, and HUD is 

unable to allow voucher units that are 

not HOME-assisted to be included in the 

inspection sample, as these units are not 

subject to HOME requirements. 

H. Other Comments Received on the 

Solicitation—Adopting Different 

Property Standards 

One commenter urged HUD to adopt 

the most recent International Property 

Maintenance Code as the basis for onsite inspections of rental homes to 

promote standardization of 

requirements. 

HUD Response: HUD thanks the 

commenter for this suggestion but 

declines to adopt this change. The 

Department has engaged in extensive 

rulemaking on the required standards 

for on-site inspections and is not going 

to substantially change those standards 

at this time. 

I. Other Comments Received on the 

Solicitation—Publish Inspection 

Components 

One commenter asked HUD to 

publish the components that will be 

included in a required inspection. 

HUD Response: HUD encourages the 

commenter to review the provisions of 

this final rule and HOME program 

resources on HUD.gov. As part of the 


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implementation of the NSPIRE Final 

Rule, HUD will provide additional 

guidance and materials aimed at 

assisting participating jurisdictions and 

owners in complying with the 

requirements, including a streamlined 

list of minimum inspectable items that 

shall be a subset of the larger set of 

standards published in the NSPIRE 

Standards notice at 88 FR 40832. 

J. Other Comments Received on the 

Solicitation—Source Documentation in 

Income Determinations During the Sixth 

Year of Affordability 

One commenter also asked whether 

the sixth year of affordability is 

measured by the individual tenant’s 

occupancy date or the date of the project 

completion date and how the six-year 

period of affordability will be affected if 

ownership changes during that period. 

The commenter expressed confusion 

between the current six-year period of 

affordability and the period of 

affordability outlined in HOTMA, so 

they asked HUD to provide occupant 

variance probabilities and to incorporate 

said variances into the final rule. The 

commenter also supported participating 

jurisdictions making the final 

determination of period of affordability 

based on variance probability guidance 

from HUD in the final rule. 

HUD Response: The period of 

affordability in a HOME-assisted rental 

project starts when the project meets the 

definition of project completion (see 

§ 92.2 definitions), and the project is 

placed into service. During the period of 

affordability, the HOME-assisted units 

must be occupied by income eligible 

families and comply with applicable 

rent requirements. To ensure the 

HOME-assisted units qualify as 

affordable housing, the project owner 

must determine the annual income of 

the family using a variety of methods 

permitted under HOME and selected by 

the participating jurisdiction. HUD’s 

rule is that unless a person is qualifying 

under § 92.203(a)(1), (a)(2), or (a)(3), the 

owner must calculate the person’s 

annual income using source 

documentation prior to initial 

occupancy, and then once every six 

years during the period of affordability 

(e.g., the six-year schedule of 

examination for a project with a 20-year 

period of affordability would be to 

perform an income examination with 

source documents in years 1, 6, 12, and 

18). The six-year schedule applies to the 

period of affordability and not to a 

tenant’s occupancy. The requirement to 

redetermine income eligibility using 

source documents every sixth year 

applies only in units where a 

participating jurisdiction permits the 

use of self-certification in accordance 

with § 92.203(b)(1)(ii). The six-year 

schedule and method of determining 

income eligibility under this schedule 

does not change if there is a change in 

ownership; it is based on when the 

project was completed and placed into 

service. When there is a change in 

ownership during the period of 

affordability, the HOME requirements 

continue to apply to the project and the 

income examination cycle remains the 

same. This is the methodology that HUD 

uses to ensure the HOME-assisted units 

remain affordable during the period of 

affordability as established in the table 

in § 92.252(d). 

The Department is also clarifying that 

the six-year schedule in this Final Rule 

is the same as the six-year schedule in 

the HOTMA Final Rule, and that the 

requirements are consistent with one 

another. HUD does not believe it 

necessary to calculate occupant variance 

probabilities (within the six-year period 

of period of affordability) as requested 

by a commenter or to reexamine HUD’s 

methodology for verifying units remain 

affordable and occupied by low-income 

families during the period of 

affordability. 

Specific solicitation of comment #8: 

The Department specifically requests 

public comment from participating 

jurisdictions, developers, and other 

affected members of the public about 

the appropriateness of the length of the 

HUD-required periods of affordability 

for HOME-assisted rental housing. The 

current regulation at 24 CFR 92.252(e) 

establishes periods of 5 years for a perunit HOME investment of under 

$15,000, 10 years for a per-unit 

investment between $15,000 and 

$40,000, and 15 years for a per-unit 

investment of more than $40,000, 15 

years for any unit involving refinancing 

of existing debt, and 20 years for any 

unit involving new construction. Section 

215(a)(1)(E) of NAHA (42 U.S.C. 

12745(a)(1)(E)) requires that the period 

of affordability be for the remaining 

useful life of the HOME-assisted 

property, as determined by HUD, 

without regard to the term of the 

mortgage or to transfer of ownership, or 

for such other period that HUD 

determines is the longest feasible period 

of time consistent with sound economics 

and the purposes of NAHA. Since the 

Department established these periods of 

affordability in 1991, costs have 

increased significantly, LIHTCs have 

become the primary funding mechanism 

for rental housing, and the housing 

affordability crisis in the country has 

worsened significantly. The Department 

seeks input about whether the length of 

the periods of affordability and the 

dollar thresholds and activity thresholds 

that are the basis of the current periods 

of affordability remain appropriate. In 

addition, the Department seeks input 

about any project feasibility challenges 

of the current HOME periods of 

affordability and factors that the HUD 

should consider in contemplating 

changes to the current periods of 

affordability. 

A. General Comments 

HUD received a broad range of 

responses to this solicitation on the 

appropriate periods of affordability to 

impose on HOME-assisted projects. 

Commenters recommended that HUD 

leave the existing regulations intact, 

increase the dollar thresholds for 

existing periods of affordability, 

eliminate the longer period of 

affordability for new construction of 

rental housing, align HOME 

requirements with other housing 

program requirements, establish longer 

periods of affordability, establish 

different periods for homeownership 

activities, or allow participating 

jurisdictions to determine their own 

periods of affordability. 

HUD Response: The Department 

appreciates the many thoughtful 

comments submitted by commenters. 

HUD is guided by the Act, which states 

that HOME-assisted housing must 

‘‘remain affordable for the remaining 

useful life of the property, as 

determined by the Secretary, without 

regard to the term of the mortgage or to 

transfer of ownership, or for such other 

period that the Secretary determines is 

the longest feasible period of time 

consistent with sound economics and 

the purposes of this Act,’’ Therefore, 

HUD carefully balanced commenters 

legitimate concerns about increases in 

land and construction costs in the past 

30 years with the degree to which the 

nation’s affordability crisis has 

deepened and spread during that 

period. HUD also notes that the most 

recent HOME appropriation of $1.25 

billion is less than the $1.5 billion 

appropriated for HOME in Fiscal Year 

1992. Had the HOME appropriation kept 

pace with the rate of general inflation, 

the current appropriation would be 

nearly $3.9 billion. In this final rule, 

HUD has retained the periods of 

affordability of 5, 10, and 15 years based 

on per-unit investment and 20 years for 

new construction of rental housing but 

partially adjusted the thresholds for the 

per-unit investment-based periods to 

reflect cost increases over the past three 

decades. However, these limits are not 

fully adjusted for inflation due to the 

need to address the significantly 

worsened affordability crisis with an 


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appropriation that in real dollar terms is 

less than half what it was in Fiscal Year 

1992. The rule imposes the following 

periods of affordability: (1) 5 years when 

per-unit HOME investment is less than 

$25,000; (2) 10 years when the per-unit 

HOME investment is between $25,000 

and $50,000; (3) 15 years when the perunit HOME investment is more than 

$50,000; and (4) 20 years for all projects 

involving new construction of rental 

housing. 

B. Make No Changes to Period of 

Affordability 

Some commenters stated that the 

current length and amount criteria for 

period of affordability is appropriate 

and can remain as currently written. 

HUD Response: HUD appreciates the 

comments. However, the Department 

believes that it is appropriate to 

partially adjust the dollar ranges for the 

period of affordability to reflect the 226 

percent increase in the Consumer Price 

Index between 1992 and 2024, the 

increase in compliance costs, and the 

current cost of labor and materials. 

C. Adjust Dollar Thresholds To Reflect 

Cost Increases 

Numerous commenters stated that the 

length of the current periods of 

affordability are appropriate but 

recommended that HUD adjust the 

dollar thresholds to reflect the 

significant increase in the cost of land 

and construction since the current 

thresholds were established in 

December 1991. Two commenters who 

supported the length of current periods 

of affordability recommended that HUD 

adjust the existing dollar thresholds to 

reflect the cumulative change in the 

Consumer Price Index (CPI) since that 

time. One of these commenters noted 

that the existing $15,000 threshold 

between the 5-year and 10-year periods 

would be nearly $35,000 if adjusted by 

the CPI. 

Several commenters cited increased 

costs of rehabilitation since 1991 and 

stated that HUD should adopt 

alternative dollar thresholds. 

Commenters recommended thresholds 

of between $20,000, and $125,000 for a 

5-year period of affordability and 

between $50,000 and $250,000 for the 

15-year period of affordability. One 

commenter who supported higher dollar 

thresholds also recommended that HUD 

adopt a 25-year period of affordability 

for new construction. One commenter 

suggested a period of affordability of 20 

years for a HOME investment of less 

than $1,000,000 and 50 years for a 

HOME investment of more than 

$1,000,000. 

HUD Response: The Department 

agrees with commenters that the HOME 

periods of affordability should be 

adjusted to reflect cost increases over 

time and appreciates the various 

suggestions. HUD also declines to adopt 

suggestions that would increase the 

thresholds far beyond the 226 percent 

increase in the Consumer Price Index as 

such increases would reduce the 

affordability achieved through HOME 

subsidies below what was required at 

the inception of the HOME program. 

HUD also notes that some of the 

suggested amounts far exceed the 

maximum HOME subsidy that may be 

provided to a unit. The thresholds 

established in this rule constitute a 66 

percent increase in the five-year period 

of affordability threshold, and a 25 

percent increase in the threshold 

separating the 10-year period of 

affordability and the 15-year period of 

affordability, which HUD believes 

balances the competing needs for 

modernized thresholds and the severity 

of the current shortage of affordable 

housing. HUD also declines to extend 

the period of affordability for new 

construction of rental units to 25 years 

because even newly constructed units 

will require rehabilitation and 

recapitalization before the expiration of 

that period. Extending this period 

would complicate efforts to recapitalize 

housing projects, including efforts to 

further extend periods of affordability 

through additional HOME funds or 

other funding sources. 

D. Eliminate the Longer Period of 

Affordability for New Construction of 

Rental Housing 

A commenter recommended 

eliminating the 20-year requirement for 

new construction projects and applying 

the per-unit subsidy-based periods of 

5-, 10-, or 15-year to all units 

irrespective of the activity undertaken. 

The commenter stated that a gut 

rehabilitation project has a 15-year 

period of affordability and new 

construction has a 20-year period of 

affordability, although there is 

essentially no difference in housing 

quality of these two project types. 

Another commenter advocated 

eliminating the 20-years period of 

affordability for new construction to 

allow for the reinvestment of HOME 

funds after 15 years. 

HUD Response: The Department 

appreciates the comments but declines 

to make this change. HUD believes that 

the longer period of affordability for 

newly constructed rental housing 

faithfully implements the statutory 

requirement that HOME periods of 

affordability reflect the useful life of the 

property or such other period that the 

Secretary determines is the longest 

feasible period of time consistent with 

sound economics and the purposes of 

this Act. The fact that some substantial 

rehabilitation or reconstruction projects 

may be similar in construction and 

useful lifespan to new construction is 

not an adequate justification to reduce 

the period of affordability for HOMEfunded new construction projects. 

E. Align Period of Affordability 

Requirements With Other Programs 

One commenter stated that periods of 

affordability are critical to ensuring that 

the investment of Federal funds has an 

impact on housing availability and 

affordability over time, but also make 

project underwriting at the time of 

funding and ongoing maintenance of the 

financial and physical health of the 

property more challenging. The 

commenter stated that the affordability 

restrictions in HOME are a barrier to 

HOME-assisted rental housing 

development in high-cost areas, given 

the need to layer financing from 

multiple sources. The commenter 

suggested aligning HOME periods of 

affordability with the 15-year credit 

compliance period of the Low-Income 

Housing Tax Credit (LIHTC) to enable 

preservation of existing affordable 

housing through recapitalization. 

Another commenter recommended that 

HUD align the HOME period of 

affordability 30-year LIHTC extended 

use period to allow cities to track period 

of affordability more easily among 

various affordable housing project types. 

One commenter stated HUD should 

align its periods of affordability with the 

minimum 55-year period frequently 

used in affordable housing programs in 

California. 

HUD Response: HUD appreciates the 

comments and recognizes that most 

HOME projects also include one or more 

other Federal, State, local, or private 

funding sources, which means that there 

are multiple restricted use periods 

imposed by other affordable housing 

funding sources to which HOME could 

possibly align. The Department believes 

that the multiplicity of possible options 

is a compelling reason not to align with 

a single other funding source and 

maintain the current periods, which are 

well-understood among affordable 

housing developers. HUD also reads the 

Act to require it to affirmatively 

establish periods of affordability that 

apply to HOME-assisted units rather 

than deferring to one or more other 

funding sources. 


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F. Change Lengths of Periods of 

Affordability 

Several commenters stated that HUD 

should impose longer periods of 

affordability. One commenter supported 

a period of affordability up to 40 years 

and encouraged HUD to consider 

mandatory periods coterminous with 

the compliance requirements of the 

superior funding source as long as they 

exceed 30 years. 

One commenter requested that HUD 

require HOME periods of affordability to 

be the greater of (1) the longest period 

of affordability of any other public 

assistance program supporting the 

assisted housing or (2) 10 years for a 

per-unit HOME investment of under 

$15,000, 15 years for a per-unit 

investment between $15,000 and 

$40,000, 20 years for a per-unit 

investment of more than $40,000 or any 

unit involving refinancing of existing 

debt, and 30 years for any unit involving 

new construction. The commenter also 

recommended that HUD consider 

incentivizing permanent or 99-year 

periods of affordability by increasing the 

maximum per-unit HOME subsidy limit 

in exchange for a commitment to 

permanent affordability. Another 

commenter supported lengthening the 

HOME periods of affordability but urged 

HUD to reduce long-term compliance 

requirements to ease administrative 

burden. 

Other commenters opposed longer 

periods of affordability. One commenter 

said that cash flow challenges are 

already an obstacle to rental housing 

development in rural areas, and 

extending periods of affordability would 

increase the difficulty of cash-flowing 

potential projects in those areas further 

limiting already constrained new unit 

production. The commenter emphasized 

that impact on project viability in rural 

areas should be a prime factor when 

HUD contemplates changes, including 

changes to the periods of affordability. 

Another commenter said that although 

it requires a 30-year or 40-year 

affordability terms on multifamily 

development projects, it does not 

recommend extending the HOME 

periods due to the prohibition on 

investing additional HOME funds in a 

project during the period of 

affordability. The commenter opposed 

extending HOME periods of 

affordability beyond the life of the 

HOME-funded improvements. A 

commenter opposed any extensions to 

the periods, and especially the 15-year 

period applicable when HOME funds 

are used to refinance existing debt, due 

to increased liability and decreased 

flexibility and recommended that the 

period begin when a building is put into 

service not when it is entered into IDIS. 

One commenter stated that the period 

of affordability is too long based on the 

funding provided and recommended 

that HOME allow participating 

jurisdictions to set the period of 

affordability. The commenter noted that 

this change would provide flexibility in 

various housing markets, where needs 

can vary significantly. 

HUD Response: HUD thanks the 

commenters for reviewing the proposed 

rule and making suggestions. However, 

for reasons explained above, HUD is 

declining to lengthen, to align to other 

programs, or to devolve decisionmaking on HOME periods of 

affordability. As required by the Act, 

HUD has considered both what is the 

longest period of affordability consistent 

with sound economics and the purposes 

for which the HOME program was 

established in making the 

determinations reflected in this rule. 

HUD believes that a participating 

jurisdiction’s use of HOME funds to 

refinance an owner’s existing debt as 

part of a HOME transaction should be 

entered into only after careful 

consideration and a finding that it is an 

absolute necessity to enable a project to 

proceed. The period of affordability 

selected by HUD ensures that the 

investment of taxpayer funds to pay off 

an owner’s existing debt results in a 

tangible benefit. 

G. Require Different Periods of 

Affordability Based on Different 

Considerations 

One commenter recommended 

different periods of affordability for 

rental and homeowner activities. The 

commenter stated that a longer period of 

affordability is a deterrent for single 

family homeowner programs. The 

commenter also urged HUD to 

investigate ways to update the periods 

of affordability to take into account 

scenario planning for varying annual 

appropriations, how long tenants stay in 

a HOME unit, and the average cost of 

repairs and how long repairs last. 

HUD Response: The Department 

thanks the commenter for reviewing the 

proposed rule. HUD declines to 

establish different periods of 

affordability for homebuyer and rental 

housing. The longest period of 

affordability applicable to homebuyer 

housing is 15 years for a total 

investment of more than $50,000 in a 

homebuyer development project or 

direct subsidy to a homebuyer of 

$50,000 to facilitate the purchase of a 

property. The Department does not 

believe that these periods are 

unreasonable given the public subsidy 

being provided. HUD has taken the size 

of recent HOME appropriations, the 

useful life of construction or 

rehabilitation, and the costs of these 

activities into account in finalizing this 

rule. 

§ 92.252—Qualification as Affordable 

Housing: Rental Housing 

A. Support for Changes to Rent and 

Utility Allowances 

Commenters supported proposed 

changes that resulted in more flexible 

policies with respect to rent and utility 

allowances. Other commenters worded 

their support differently and stated that 

they supported the proposed alignment 

of the HOME program with the rent 

limits from other programs involved in 

a project. 

HUD Response: The Department 

thanks the commenters for reviewing 

the proposed rule and providing 

comments on the proposals related to 

HOME rental housing. The Department 

is moving forward with changes to the 

rent and utility allowance requirements, 

as described in this preamble. 

B. Changes to Marketing Provisions in 

Introductory Provision 

One commenter supported the 

elimination of the requirement for 

participating jurisdictions to submit 

marketing plans to HUD for HOMEassisted units not being leased up 

within 6 months of project completion. 

The commenter explained that it, as a 

participating jurisdiction, works with 

owners and managers to ensure lease up 

is timely but would not be the best 

equipped party to create a marketing 

plan. 

HUD Response: The Department 

thanks the commenter for their support. 

HUD is moving forward with the 

proposed change. 

C. Support for Not Applying Rent Limits 

to Payments Under Federal or State 

Rental Assistance or Subsidy Programs 

in § 92.252(a) 

Commenters stated that they 

supported the proposal to permit 

housing developers to allow an owner of 

a HOME-assisted unit to charge the 

permissible Housing Choice Voucher 

(HCV), project-based voucher, or 

project-based rental assistance rent 

instead of the maximum HOME rent 

because it would increase the financial 

viability of developments. 

One commenter stated that housing 

developed for persons at or below 30 

percent area median income often 

includes eight or more government 

funding sources, each with separate 

inspection and reporting requirements. 


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58See 24 CFR 92.252(a)(1)(A). 

The commenter stated that the proposed 

HOME program alignment will reduce 

redundancy and increase efficiency. 

Commenters stated that they support 

allowing the public housing authority 

(PHA) rent reasonableness study to 

serve as the upper limit for rents in a 

property when an outside subsidy such 

as Section 8 is used. Another 

commenter expressed support for 

aligning § 92.252(a) requirements with 

HERA rules, and LIHTC rules allowing 

the owner to receive the rent 

determined by a PHA in accordance 

with proposed § 982.507(c)(3) or another 

Federal or State rental assistance or 

subsidy program. A commenter noted 

that the change would align with what 

has been allowed in LIHTC properties 

for decades and improve cash flow at 

properties that have had limited options 

previously, but that it would be 

important to ensure adequate funding 

was provided. Another commenter 

explained this would ease 

administrative burden and reduce 

confusion related to overlapping 

requirements. 

Several commenters supported only 

applying the rent limits to the amounts 

paid by the tenants in HOME projects. 

One commenter also supported the 

removal of rent subsidy from the rent 

calculation. 

HUD Response: The Department 

thanks the commenters for reviewing 

and is moving forward with the 

proposed language. In addition, in 

response to the commenters, the 

Department also considered further 

streamlining of the rent limit provisions. 

The Department has determined that it 

is permissible to revise the High HOME 

rent limits to exclude the tenant 

payment when a tenant is participating 

in a program where the tenant pays no 

more than 30 percent of their monthly 

adjusted income or 10 percent of their 

monthly income towards rent.58 This 

allows Section 8 voucher holders to pay 

the total tenant payment in accordance 

with Section 8 requirements and 

permits the HOME rental housing 

project owner the ability to accept the 

rent from both the rental assistance 

provider and the tenant without 

limitation. This provision will also 

increase alignment when combining 

multiple sources of funding. 

D. Opposition to Changes in Rent Limits 

One commenter sought clarification 

on the HOME rent limits and stated that 

it would not support rent limits being 

only applied to the tenant portion of 

rent. The commenter wished for the rent 

limits to apply to the overall amount 

received by the owner. 

HUD Response: The Department 

declines to make the changes 

recommended by the commenter. HERA 

is statutory and it is the Department’s 

legal interpretation that the rent limits 

under the Act do not apply to either the 

tenant contribution or the rental 

assistance or subsidy provided to a 

person or unit under the Section 8 

rental assistance programs. The 

Department lacks discretion to apply the 

rent limits to the overall amount 

received by the owner, as this is 

contrary to law and the intent of 

Congress. 

E. Request To Further Revise HOME 

Rent Requirements in § 92.252(a) 

Another commenter supported the 

proposed change as it considerably 

simplifies compliance for voucher 

holders. The commenter recommended 

that the changes should remove the 

‘‘project-based’’ language and the 

requirement that the ‘‘very low-income 

family pays as a contribution toward 

rent not more than 30 percent of the 

family’s adjusted income’’ from 

§ 92.252(b)(2)(ii) because the PHA or 

subsidy provider should be determining 

what the household must contribute to 

rent under their program. 

HUD Response: The Department is 

revising the language of § 92.252(a) in 

response to public comments. The 

Department has expanded the provision 

to state 30 percent of the family’s 

monthly adjusted income or 10 percent 

of the family’s monthly income, to align 

with the Section 8 regulations on total 

tenant payment. The Department has 

added this language to both the High 

and Low HOME rent provisions and 

will allow tenants to pay the amount 

determined under the Section 8 program 

when a voucher holder is also living in 

a HOME-assisted unit. 

F. Permit an Owner To Receive Rent 

Determined by a Local Government 

Rental Assistance or Subsidy Program in 

§ 92.252(a) 

Commenters stated that HUD should 

permit an owner to receive rent 

determined by a local government rental 

assistance or subsidy program in 

addition to the allowance of receipt of 

rent determined by a PHA or another 

Federal or State rental assistance or 

subsidy program. The commenter 

recommended HUD amend the 

proposed language in § 92.252(a) from 

‘‘rent limits do not apply to any 

payment provided under a Federal or 

State rental assistance or subsidy 

program . . .’’ to ‘‘rent limits do not 

apply to any payment provided under a 

Federal, State, or local government 

rental assistance or subsidy program.’’ 

HUD Response: The Department 

considered the commenter’s request, 

examined the Act in light of the passage 

of HERA, and has determined that 

Congress did not intend to apply the 

rent limits to families that were paying, 

as a contribution towards rent, no more 

than 30 percent of their monthly 

adjusted income or 10 percent of their 

monthly income in another program. 

The Department has revised § 92.252(a) 

accordingly. The Department also 

expanded the language in § 92.252(a) to 

cover local rental assistance programs, 

as requested by the commenter. This 

fully addresses the commenter’s 

concerns and allows owners to accept 

the rent contribution of a family under 

Section 8 and similar rental assistance 

programs. 

G. Change Low HOME Rent 

Requirements in § 92.252(a) To Be 

Based on Gross Income 

Commenters also proposed amending 

the language of § 92.252(a)(2)(ii) to say, 

‘‘[T]he rent contribution of the family is 

not more than 30 percent of the family’s 

gross income,’’ similar to recent 

HOTMA changes implemented for 

rental assistance programs, in order to 

align more closely with the intent to 

streamline housing programs and 

assistance. 

HUD Response: HUD thanks the 

commenters for reviewing the proposed 

rule. 42 U.S.C. 12745(a)(1)(B) requires 

that ‘‘not less than 20 percent of the 

units (i) occupied by very low-income 

families who pay as a contribution 

toward rent (excluding any Federal or 

State rental subsidy provided on behalf 

of the family) not more than 30 percent 

of the family’s monthly adjusted income 

as determined by the Secretary . . .’’ 

HUD lacks the discretion to change the 

requirement from the statutory 30 

percent of ‘‘monthly adjusted income’’ 

to 30 percent of ‘‘gross income’’ that the 

commenter has recommended. 

H. Allow Owners To Collect Full 

Contract Rent When the Tenant Rental 

Contribution of a Family That Received 

Section 8 Rental Assistance in a HOME 

Unit Earns More Than 65 Percent of 

Area Median Income in § 92.252(a) 

A commenter supported the 

alignment of project- and tenant-based 

subsidized rents and Low and High 

HOME units in § 92.252 but stated that 

High HOME rent units still face an issue 

when tenants paying their share of the 

rent under the subsidy program have a 

tenant rent that exceeds the otherwise 

applicable HOME limit. The commenter 

urged HUD to allow the collection of the 


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full subsidy for all HOME units that are 

currently allowed for Low HOME rent 

units where families are paying 30 

percent of adjusted income as required 

by a rental assistance program. The 

commenter suggested addressing this 

issue by adding the same clause to the 

definition of High HOME rent limits as 

exists for Low HOME by adding a new 

§ 92.252 (b)(1)(iii) which would say 

‘‘[t]he rent contribution of the family is 

not more than 30 percent of the family’s 

adjusted income.’’ The commenter 

stated that PBRA policy allows families 

to decide if they want to keep the 

security of their subsidy or let it go in 

favor of lower rents applicable to 

another program and stated that this 

could also apply to HOME. 

One commenter expressed support for 

the change to allow owners to charge 

rents that exceed the HOME rent limits 

for units occupied by tenants with 

tenant-based vouchers (in alignment 

with changes made to the Section 8 

programs and HERA), but was 

concerned about how this will impact 

underwriting financial feasibility at the 

time of application and possible 

unintended consequences. 

Another commenter stated that HUD 

should align HOME rent limits with the 

Section 8 programs for PBVs. The 

commenter stated that they support this 

approach because, from an underwriting 

perspective, it is important to not oversubsidize units, and it is easier to 

underwrite higher rents when they are 

guaranteed PBVs. 

A commenter stated that, as long as 

the unit is receiving at least one dollar 

in subsidy, the HOME program should 

not impose any restrictions on gross rent 

or the tenant portion of rent for 

households receiving PBVs, housing 

choice vouchers (HCV), or Veterans 

Affairs Supporting Housing (VASH) 

vouchers. The commenter stated that 

this approach aligns with the LIHTC 

program requirements. 

A commenter stated that for projects 

that have both PBVs and HOME funds, 

it will be more difficult for PJs to 

regulate the HOME rent limit being 

applied to the tenant portion of the rent. 

HUD Response: The Department 

considered the commenter’s request, 

examined the Act and HERA, and has 

determined that Congress did not intend 

to apply the HOME rent limits to 

families that were paying, as a 

contribution towards rent, no more than 

30 percent of their monthly adjusted 

income or 10 percent of their monthly 

income. The Department has revised 

§ 92.252(a) accordingly. This fully 

addresses the comment and allows for 

owners to accept the rent contribution 

of a family under Section 8, including 

HUD VASH and similar rental 

assistance programs. 

I. Underwrite to HOME Rent Limits in 

§ 92.252(a) for Units Without ProjectBased Rental Assistance 

One commenter recommended that 

HUD specifically state in the final rule 

that the HOME rent limits must be used 

for units without project-based rental 

assistance (i.e., units that may have 

tenants with vouchers, but it is not 

certain at the time of underwriting). If 

higher rents are assumed for those units, 

rental income may be artificially 

inflated; however, after initial 

occupancy, the commenter believes it 

would be appropriate to allow owners to 

charge the allowable rents under the 

tenant based rental assistance program 

to generate additional income and help 

ensure the project is sustainable for the 

long term. 

HUD Response: The Department 

thanks the commenter for the feedback 

and agrees with the commenter that 

unless a project has been awarded a 

HAP contract and is assured continued 

provision of project-based rental 

assistance or project-based vouchers, 

HOME units should be underwritten 

using the High and Low HOME Rents. 

It would not be consistent with the 

regulation at § 92.250(b) to assume that 

HOME units will be occupied by people 

who have Housing Choice Vouchers 

because there would be no basis for the 

assumptions around the operating 

income for the project. However, the 

Department declines to codify this 

requirement, as each project is different 

and there are a variety of other funding 

sources that may be layered together in 

a HOME project, some with their own 

rents that must be factored into 

underwriting. 

J. Allowing Owners To Accept the Full 

Section 8 Contract Rent in § 92.252(a) 

May Change Owner Behavior 

One commenter expressed concern 

that allowing owners to charge rents 

that exceed the HOME rents for units 

occupied by tenants with vouchers 

might inadvertently incentivize owners 

to rent only to tenants with vouchers. 

The commenter notes that many more 

households need rental assistance than 

receive the assistance; however, HOME 

units are more affordable than market 

rate housing, and eligible tenants should 

be able to access the units without 

barriers. The commenter expressed 

concern that the unintended incentive 

for owners to rent only to tenants with 

vouchers could have fair housing 

implications. 

HUD Response: The Department 

appreciates the commenters concern but 

would like to note that the Act expressly 

permits project owners to accept tenants 

with Section 8 vouchers. Specifically, 

section 12745(a)(1)(D) of the Act states 

that ‘‘Housing that is for rental shall 

qualify as affordable housing under this 

subchapter only if the housing . . . (D) 

is not refused for leasing to a holder of 

a voucher or certificate of eligibility 

under section 1437f of this title because 

of the status of the prospective tenant as 

a holder of such voucher or certificate 

of eligibility . . .’’ This statutory 

requirement is reflected in § 92.253 

which also requires project owners to 

have and follow written tenant selection 

policies and procedures and provide for 

the selection of tenants from a written 

waiting list in the chronological order of 

their application, insofar as is 

practicable. Given the statutory and 

regulatory requirements for tenant 

selection, the Department believes it is 

Congress’s intent to incentivize owners 

in the HOME program to include 

tenants with Section 8 vouchers or 

rental assistance in their projects and to 

allow the owners to accept the total 

tenant payment and the contract rent for 

the family’s unit. To that end, the 

Department has expanded the 

prohibition against source of income 

discrimination to also include State and 

local rental assistance programs, as the 

Department believes it is consistent 

with the purposes of the Act to allow 

holders of such forms of assistance the 

ability to use their assistance to live in 

HOME units. 

K. Support for Utility Allowance 

Changes to § 92.252(b) 

One commenter expressed support for 

the proposed language in § 92.252(b) 

that would allow use of the HUD Utility 

Schedule Model (HUSM), public 

housing authority utility allowance, or 

other method approved by HUD, 

reasoning that HUD should allow more 

options because: there are difficulties in 

getting detailed utility data in rural 

areas; more options would be consistent 

with other HUD program requirements; 

and, if options remain limited, Indian 

Tribes and Indian Housing Authorities 

may operate rental assistance programs 

with their own conflicting rules. The 

commenter explained that the public 

housing authority utility allowance 

would be easier to administer for lessexperienced project owners with small 

projects and portfolios. The commenter 

also encouraged HUD to allow HUSM as 

an option for all HOME-assisted rental 

units rather than just units with 

specified rental assistance programs. 

Furthermore, the commenter requested 

that both telephone and internet be 


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listed as exclusions from utilities and 

services in § 92.252(b). 

Another commenter supported the 

proposed exceptions for HOME projects 

with Section 8 Project Based Voucher 

(PBV) and HUD–VASH but noted that 

utility allowances determined by local 

public housing authorities are almost 

always either significantly higher or 

lower than other models, which ends up 

being inequitable for tenants or unfair 

for owners. 

HUD Response: The Department 

thanks the commenters for reviewing 

and is moving forward with the 

proposed language in § 92.252(b) 

allowing participating jurisdictions to 

use the HUD Utility Schedule Model, 

the utility allowance established by the 

applicable local PHA, or other method 

approved by HUD for its maximum 

monthly utility allowances. This change 

will make all three options available for 

all HOME-assisted rental units. The 

Department is listing broadband as an 

exclusion from utilities and services in 

§ 92.252(b) to help clarify utilities 

covered by the utility allowance. 

The Department has noted the 

commenter’s concern about inequities 

in utility allowances determined by 

public housing authorities but has seen 

no data demonstrating that price 

differences as drastic or prevalent as 

described exist. Furthermore, if a 

participating jurisdiction finds the 

utility allowance determined by its local 

PHA unsuitable, it is now able to choose 

a more suitable model (the HUD Utility 

Schedule Model or another method 

approved by HUD) for its project. 

L. Support for Utility Allowance 

Changes in § 92.252(b)—Alignment 

With PHA Utility Schedule 

One commenter supported the use of 

the PHA utility allowance in all HOMEassisted rental projects because a 

standardized utility allowance allows 

for better compliance monitoring. In 

addition, the commenter stated that, to 

make compliance significantly easier, a 

participating jurisdiction should still be 

able to establish the effective date of the 

utility allowance to align with revisions 

to the HOME rents. 

HUD Response: The Department 

thanks the commenter for their review 

and notes that the final rule does not 

prescribe a timeline for annual updates 

to rents and utility allowances. 

M. Confusion Over Utility Allowances 

in § 92.252(b) 

One commenter recommended that 

HUD create a pathway for compliance 

for rental subsidy programs that include 

the household’s contribution to utilities 

as part of their rental contribution and 

that HUD move the language at 

§ 92.252(b)(2)(ii) out of paragraph (b) so 

that rent can go up to the maximum 

allowed under the Federal or State 

rental subsidy. 

HUD Response: In the rental subsidy 

programs that the commenter describes, 

the subsidy provider pays the owner 

directly on behalf of the renting 

household or tenant. Under the HOME 

regulations § 92.252, utility allowances 

are provided for tenant-paid utilities in 

HOME-assisted rental units. The 

Department declines to change the 

existing language, as the situation 

outlined by the commenter does not 

apply to HOME. 

N. Support for 60-Day Notice 

Requirement Before Imposing Rent 

Increases in § 92.252(e) 

One commenter supported the 

increase in the minimum number of 

days required from 30 to 60 for a rent 

increase. 

HUD Response: HUD thanks the 

commenter for their support of the 

proposed period for rent increases. HUD 

is adopting propose rule language to 

ensure that tenants of HOME-assisted 

rental units have adequate notice of rent 

increases proposed by the owner and 

approved the participating jurisdiction. 

O. Revise § 92.252(g)(2) To Use Different 

Terminology 

One commenter suggested that the 

proposed regulatory text at 

§ 92.252(g)(2) be revised to list ‘‘rental’’ 

rather than ‘‘multifamily’’. 

HUD Response: HUD agrees with the 

commenter and is making the change. 

P. Rent Restrictions in § 92.252(h) 

One commenter stated that the 

proposed § 92.252(h)(2)(i) should allow 

tenants of HOME-assisted projects with 

multiple sources of funding to pay the 

rent amount required under any of the 

programs’ requirements, not just LIHTC. 

HUD Response: The Department 

agrees with the commenter and has 

expanded the owner’s ability to accept 

the rent and total tenant payment for 

other programs that are often combined 

with HOME assistance in HOME rental 

housing projects, including programs 

that require tenants to pay no more than 

30 percent of their monthly adjusted 

income or 10 percent of their monthly 

income. The Department also codified 

provisions on LIHTC rents that are 

contained in 42 U.S.C. 12745(a)(1)(B) of 

the Act. The Department also expanded 

the amount of rent that an owner may 

receive for over-income tenants by also 

allowing the owner to accept the 

subsidy provided under a program that 

provides Federal, State, or local rental 

assistance or subsidy (see 

§ 92.252(h)(iii)). This should adequately 

address the commenter’s concerns. 

Specific solicitation of comment #6: 

Rather than permitting all HOMEassisted projects to use the local PHA’s 

utility allowance, should HUD limit the 

use of the PHA utility allowance to only 

HOME-assisted projects which also 

receive PBV or HUD–VASH PBV 

assistance? 

A. Comments in Support of Allowing a 

Participating Jurisdiction To Use a Local 

PHA Utility Allowance 

Commenters predominantly 

supported permitting all HOME-assisted 

projects to use the local public housing 

authority’s utility allowance, noting that 

the change would make the process 

simpler, more effective, provide greater 

flexibility to participating jurisdictions 

and developers, and align HUD’s 

process and operations with programs 

like HTF and LIHTC. 

HUD Response: The Department 

thanks commenters for reviewing and is 

adopting language permitting 

participating jurisdictions to use the 

HUD Utility Schedule Model, the utility 

allowance established by a local PHA, 

or other methods approved by HUD for 

their maximum monthly allowances. 

B. Comments in Support of Allowing a 

Participating Jurisdiction To Use a Local 

PHA Utility Allowance With Changes 

In expressing their support, many 

commenters included addendums or 

clarifications they suggested be made to 

this proposed policy. One commenter 

advised HUD to clarify that using the 

housing authority-established utility 

allowance is not a requirement for all 

units, and that a participating 

jurisdiction may work with the property 

owner to determine whether the public 

housing authority or a property-specific 

utility allowance is more appropriate. 

This commenter, as well as another 

otherwise-supportive commenter, 

advocated for the use of alternative 

energy models to provide flexibility for 

projects with different energy use 

profiles, with the public housing 

authority’s utility allowance serving as 

the baseline option to reduce soft costs 

and provide clear alignment with other 

funding programs. 

HUD Response: The Department 

thanks the commenters for reviewing 

and is moving forward with the 

proposed language in § 92.252(b) 

allowing participating jurisdictions to 

use the HUD Utility Schedule Model, 

the utility allowance established by the 

local PHA, or other method approved by 

HUD for their maximum monthly utility 

allowances. Which of the three methods 


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is selected is at the participating 

jurisdictions’ discretion. Participating 

jurisdictions that wish to utilize 

alternative energy models (or any other 

utility allowance method that is not the 

HUD Utility Schedule Model or the 

utility allowance established by a local 

PHA) may submit a request to HUD for 

review. 

C. Requests for Clarification of Utility 

Allowance Requirements 

One commenter recommended that 

HUD clarify the utility rates for 

communities not served by a local 

public housing authority. Commenters 

noted that grantees are confused when 

State agencies require different utility 

allowances than local participating 

jurisdictions and recommended that 

HUD allow participating jurisdictions to 

coordinate program funding. 

Another commenter recommended 

HUD clarify which utility allowance 

should be used where more than one 

housing authority has PBVs in a 

development layered with HOME units. 

In the absence of PBVs, the commenter 

stated that the participating jurisdiction 

needs to have authority to determine the 

most applicable housing authority 

utility allowance. If HUD does not leave 

this decision to participating 

jurisdictions, the commenter suggested 

that HUD adopt a rule stating that the 

applicable public housing authority 

utility allowance is the smallest unit of 

government. The commenter also 

recommended that HUD allow 

participating jurisdictions to establish 

rules in areas without applicable 

housing authorities preventing 

developments from using a housing 

authority’s utility allowance. 

HUD Response: The Department 

thanks commenters for their review and 

is adopting the proposed language in 

§ 92.252(b) allowing participating 

jurisdictions to use the HUD Utility 

Schedule Model, the utility allowance 

established by the applicable local PHA, 

or other method approved by HUD for 

their maximum monthly utility 

allowances. HUD does not recommend 

or require any one of the three available 

options over any other—this is left up 

to the participating jurisdictions’ 

discretion. If a utility model from a 

statewide entity that is funding a project 

is available, the participating 

jurisdiction may submit a request to 

HUD for use of that model in its project. 

Usually, there is at least one public 

housing authority serving a specific 

jurisdiction, whether it be a state, 

regional, county, or city public housing 

authority. The Department believes that 

the applicable local public housing 

authority will typically be the one that 

administers the project-based voucher 

assistance to the property, if the project 

contains project-based voucher units, or 

the public housing authority that the 

participating jurisdiction determines is 

most representative of the community 

where the project is located. 

D. Request for Technical Assistance on 

Utility Allowance Requirements 

One commenter supported the 

inclusion of public housing authority 

utility allowance but stated that HUD 

should provide technical assistance to 

ensure allowances are updated in a 

timely manner. 

HUD Response: The Department 

provides technical assistance to public 

housing authorities and participating 

jurisdictions in a variety of areas, 

including utility allowances. The 

Department will examine further ways 

to ensure that utility allowances are 

updated in accordance with the 

applicable program regulations, 

including through additional guidance 

and engagement with participating 

jurisdictions and public housing 

authorities. 

E. Align Utility Allowances With State 

LIHTC Requirements 

One commenter supported mirroring 

State agency requirements for utility 

allowance use on LIHTC properties. 

HUD Response: The Department is 

adopting the proposed language in 

§ 92.252(b) allowing participating 

jurisdictions to use the HUD Utility 

Schedule Model, the utility allowance 

established by the local PHA, or other 

method approved by HUD for their 

maximum monthly utility allowances. 

Which of the three methods the 

participating jurisdiction uses is up to 

the participating jurisdictions’ 

discretion. State LIHTC requirements do 

not fall under HUD’s purview. If a 

participating jurisdiction wishes to use 

a utility model from a statewide entity 

for its HOME project, the participating 

jurisdiction may submit a request to 

HUD for use of that model. 

F. Opposition or Conflicted Beliefs on 

Applying PHA Utility Allowance 

Two commenters did not support 

permitting all HOME-assisted projects to 

use the local housing authority’s utility 

allowance. The first commenter stated 

that using utility information specific to 

a property is in the best interests of all 

parties and suggested that HUD use 

gathered data to ensure that tenants will 

not be harmed with higher rents caused 

by less accurate utility allowances (in 

the case that the local housing 

authority’s utility allowance be 

permitted for all HOME-assisted 

projects). The second commenter 

supported no change to the current 

method, as HUD has generally 

expressed flexibility on the rule in the 

past, which the commenter found 

helpful when other funding sources 

have different utility allowances. 

One commenter was conflicted about 

whether aligning HOME-assisted units 

with PBVs and/or HUD–VASH 

Vouchers should apply universally to 

all HOME-assisted units, explaining that 

while public housing authority rates 

could be more cost- and time-effective 

for nonprofits, they are often higher 

than those found with individual 

analysis by a developer using the HUSM 

at the time of application. 

HUD Response: The Department 

appreciates the recommendations made 

by the commenters but believes that 

allowing participating jurisdictions to 

use the HUSM, the utility allowance 

established by the local PHA, or other 

method approved by HUD for their 

maximum monthly utility allowances 

provides participating jurisdictions with 

far more flexibility than was permitted 

prior to this change. With the ability to 

choose one of the three options 

presented, participating jurisdictions 

will be able to select a method that they 

have determined to be in the best 

interests of all parties, whether that is in 

regard to accuracy, time-, or costeffectiveness. If the Department does not 

include the local public housing 

authority’s utility allowance as one of 

the options, then each time that HOME 

assistance is combined with projectbased vouchers or project-based VASH 

units, the Department will have to 

waive the utility allowance regulations 

in § 92.252. This misalignment between 

HUD programs delays the provision of 

HOME assistance and projects, requires 

the Department to waive the regulation, 

and causes some owners and developers 

not to combine the two forms of 

assistance in the same project. 

Specific solicitation of comment #5: 

The Department specifically requests 

public comment from participating 

jurisdictions and program participants 

regarding the challenges they have 

encountered in using HOME funds to 

assist small-scale housing, as defined in 

this proposed rule. The Department also 

requests public comment regarding the 

costs and benefits of the changes that 

HUD is proposing for small-scale 

housing in requirements for the 

frequency of income determinations and 

inspections and the use of alternative 

waiting lists. 

A. Support for Small-Scale Changes 

Several commenters supported the 

changes to monitoring compliance in 


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small-scale housing projects. One 

commenter supported the lowering of 

barriers for small-scale rental properties 

through the proposed changes to 

§§ 92.2, 92.251, 92.252, and 92.253. The 

commenter emphasized their belief that 

rural areas, as well as areas with limited 

buildable land, would greatly benefit 

from the same lowering of barriers, due 

to a dearth of CRA-driven investment, 

and economic challenges to new rental 

unit development in these communities. 

One commenter believed that smallscale housing provides a tremendous 

investment opportunity for production 

and preservation of affordable housing. 

Another commenter supported HUD’s 

proposed changes and believes the 

benefits of reducing the burden for 

owners of small-scale housing outweigh 

the possible public benefit loss of 

reduced compliance requirements. 

HUD Response: HUD thanks the 

commenters for their review of the 

HOME rule. HUD is moving forward 

with the small-scale flexibilities it 

proposed. 

B. Support for Small-Scale Housing 

Inspection Requirements 

Several commenters supported a 

three-year property inspection for smallscale HOME-assisted projects. One 

commenter supported inspecting smallscale housing every three years instead 

of using a risk-based schedule for smallscale housing inspections. One 

commenter supported the proposal to 

allow participating jurisdictions to 

adopt customized inspection schedule 

for small-scale housing where health 

and safety deficiencies have been 

identified and corrected. 

One commenter stated that the 

streamlined inspection procedures for 

small-scale rental projects would not 

likely assist emerging developers, but 

would assist existing affordable housing 

developers acquire, rehabilitate, or build 

new small-scale units. 

HUD Response: HUD appreciates the 

commenter’s review of the proposed 

rule. HUD is adopting the proposed rule 

language related to the frequency of 

physical inspections. HUD believes the 

flexibilities provided to small-scale 

housing owners will help all owners of 

small-scale housing projects, whether 

they be emerging developers, 

homebuyers that purchase multi-unit 

structures and rent them as HOME 

rental housing units, or developers that 

have significant experience in the 

program already. 

C. Objections to Small-Scale Housing 

Inspection Requirements 

One commenter objected to HUD’s 

changes to property inspection 

requirements for small-scale rental 

housing. The commenter explained that 

small-scale projects already struggled to 

maintain compliance with physical 

condition requirements, that this was 

exacerbated by the pandemic and the 

shortage of qualified property managers 

in their State. The commenter believed 

that reducing the frequency of 

inspections will lead to the rapid 

deterioration of units and to ongoing 

compliance challenges. 

HUD Response: The Department 

appreciates the commenter’s concern 

about inspections of physical condition 

for small-scale rental projects. The 

HOME program is a block grant program 

that permits participating jurisdictions 

to determine how best to design and 

administer their affordable housing 

programs, as long as they comply with 

the minimum requirements established 

in the HOME regulations. As a 

participating jurisdiction, the 

commenter has the flexibility to adopt 

inspections procedures for small-scale 

rental projects and other rental projects 

that are more frequent than required in 

the regulations. HUD is adopting the 

alternative inspection protocol for 

small-scale projects to help facilitate the 

use of HOME for small-scale rental 

housing. As a reminder, participating 

jurisdictions must also comply with all 

applicable Federal fair housing and civil 

rights requirements in the 

administration of their affordable 

housing programs in addition to the 

HOME regulations. 

D. Support for Small-Scale Rental 

Housing Waiting List Requirements 

Several commenters supported the 

proposed changes to tenant selection 

procedures in small-scale rental 

housing. Commenters specifically 

supported permitting participating 

jurisdictions to establish policies to 

identify tenants when vacancies occur 

in small-scale housing. One commenter 

believed that HUD’s proposed update 

allowing participating jurisdictions to 

create alternative waiting list 

procedures would empower 

participating jurisdictions to create and 

enact policies aligned with their 

respective programs and more 

responsive to owner and tenant needs. 

One commenter stated that they support 

HUD’s proposed changes to the 

alternative waiting list requirements 

because they would reduce the length of 

turnover of units from one renter to the 

next. 

HUD Response: HUD thanks the 

commenters for reviewing the rule and 

is adopting the alternative waiting list 

provision with a revision described 

below. 

E. HUD Approval of Waiting List 

Requirements 

One commenter stated the 

requirement to get pre-written HUD 

approval of alternative procedures for a 

written waiting list for small-scale 

housing would hamper small-scale 

housing. The commenter recommended 

that HUD publish in a manner viewable 

by all participating jurisdictions and a 

list of previously approved alternative 

tenant selection procedures, as well as 

grant participating jurisdictions 

presumptive approval if they implement 

one of the previously approved methods 

for small-scale housing. Another 

commenter similarly requested 

clarification or examples of acceptable 

alternatives to written tenant waitlists. 

HUD Response: HUD thanks the 

commenter for reviewing the proposed 

rule. To reduce burden, the Department 

is removing the requirement that it 

approve a participating jurisdiction’s 

alternative written waiting list and will 

provide further guidance on required 

and recommended elements of such 

plans. Such plans, among other 

obligations, must be nondiscriminatory 

and all tenant selection plans and 

waiting list procedures must comply 

with Federal fair housing and civil 

rights requirements. Participating 

jurisdictions’ alternative waiting lists 

will be subject to compliance 

monitoring rather than prior approval. 

F. Support for Reducing Income 

Examination Requirements 

Several commenters supported 

permitting streamlined or less frequent 

procedures for small-scale rental 

housing projects (one to four total units) 

for reexamination of annual income. 

One commenter supported the changes 

HUD made to reduce the burden but 

believed that HUD should make income 

recertifications more flexible. 

HUD Response: HUD believes that it 

is being as flexible as it can be with 

income recertifications. By moving to a 

triennial income recertification process 

for small-scale rental housing, the 

Department is balancing the need to 

examine income for families whose 

rents are income-dependent with the 

need to provide administrative relief to 

participating jurisdictions administering 

small-scale projects across their 

jurisdictions. HUD has provided 

additional flexibilities to expand safe 

harbors in income examinations and 

believes that the combination of these 

flexibilities is sufficient to address the 

commenters concerns. HUD will 

continue to review income examination 

policies in the future as the Department 

seeks to balance the need for accurate 


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59See 42 U.S.C. 12756(c). 

family income data with the burden of 

income reexamination placed on 

tenants, owners, and participating 

jurisdictions. 

G. Eliminate Income Reexaminations in 

Small-Scale Rental Housing Projects 

One commenter suggested conducting 

income determinations only upon unit 

turnover to reduce administrative 

burden and impact on tenants. The 

commenter also suggested requiring that 

100 percent of beneficiary households 

have incomes at or below 60 percent of 

area median income at initial lease up, 

which is what the City of Madison and 

State of Wisconsin require, to address 

concerns regarding benefitting 

households over 80 percent of area 

median income. 

HUD Response: The HOME statute at 

42 U.S.C. 12756(b) and 42 U.S.C. 

12745(a) require that participating 

jurisdictions monitor owners for 

compliance with HOME requirements, 

including income examination 

requirements, and that rents be 

determined based upon income 

examinations. The commenter is 

proposing that tenants never be 

reexamined for income, similar to 

HOME’s homeownership activities. This 

is not consistent with the HOME statute. 

42 U.S.C. 12756(c) permits the Secretary 

to ‘‘provide for such streamlined 

procedures for achieving the purposes 

of this section’’ for small-scale or 

scattered site projects. The Department 

has determined that eliminating income 

reexamination requirements for tenants 

in small-scale rental housing is 

inconsistent with the HOME statute, 

which requires income reexaminations 

for all tenants in rental housing. Rents 

for over-income tenants have an 

income-based component and to ignore 

those requirements completely would 

not be achieving the purposes of the 

monitoring provisions of the Act. 

H. Small-Scale Housing Projects Present 

Monitoring and Oversight Challenges 

One commenter was critical of the 

small-scale and scattered site housing 

models. The commenter said that the 

new rules would make it challenging to 

produce small-scale and scattered site 

housing. The commenter believed that 

enforcing the period of affordability and 

monitoring requirements on these 

owners causes additional administrative 

burden to participating jurisdictions. 

The commenter also thought that this 

was encouraging an inefficient use of 

scare program resources. The 

commenter encouraged HUD to review 

financial and commercial viability of 

the scattered site approach for housing 

fulfillment, given these concerns. 

Two commenters stated they were 

concerned about the small-scale housing 

inspections and monitoring because 

small-scale housing providers often 

have less oversight experience or ability. 

One of these commenters stated that this 

lack of experience may unintentionally 

decrease the frequency and quality of 

inspections. 

HUD Response: HUD thanks the 

commenters for reviewing the proposed 

rule. One commenter mistakenly 

believes that the small-scale housing 

requirements are new requirements 

imposed on participating jurisdictions. 

This is incorrect. The commenter also 

states that enforcing the period of 

affordability and monitoring small-scale 

projects are too burdensome for 

participating jurisdictions. Small-scale 

housing has heretofore been subject to 

all HOME rental housing requirements; 

this final rule reduces this burden to 

make it easier to use HOME for these 

projects. The Department is adding 

these monitoring flexibilities for smallscale housing projects to better 

implement the Act, which authorized 

the Department to provide streamlined 

procedures for achieving the purposes 

of the Act as the Secretary determines 

to be appropriate.59 The Department 

believes that the drafters of the Act 

intended for small-scale housing 

projects, including scattered site 

projects, to be funded under HOME, and 

that it is best left to participating 

jurisdictions on whether to fund these 

types of projects. 

Other commenters who expressed 

concerns about the adequacy of 

monitoring and inspections under this 

proposal mistakenly assume that 

owners, not participating jurisdictions 

conduct physical inspections and 

monitoring. HUD is not changing the 

requirement that the participating 

jurisdiction engage in onsite monitoring 

and review of small-scale projects, it is 

just changing how this monitoring is 

performed to reduce the burden on 

participating jurisdictions and owners. 

HUD believes that this final rule 

appropriately balances burden 

reduction and compliance for smallscale housing projects. 

I. Opposition to Changes to Small-Scale 

Housing 

One commenter believed that the 

small-scale changes were not helpful. 

The commenter was not supportive of 

using HOME funds for small-scale rental 

housing projects, believed that CDBG 

funding was more attractive because it 

entailed fewer requirements, and 

believed that owners of small-scale 

rental housing had no interest in 

complying with HOME requirements. In 

the commenter’s experience, when the 

commenter did provide CDBG funds to 

owners of small-scale housing projects, 

it was difficult to obtain required 

documentation, including tenant rents, 

ethnicity, and income. The commenter 

also believed that the small-scale 

housing project requirements did not 

streamline requirements for the 

development small-scale housing but 

only improved how the ongoing 

requirements are monitored. 

Another commenter expressed 

concerns about enabling increased 

owner-occupied HOME-assisted rental 

unit creation, as the commenter’s 

experience is that low-income 

homebuyers who are immediately made 

the owners of HOME-assisted rental 

units have a very high failure rate when 

it comes to compliance with HUD 

regulations. The commenter said that 

the administrative burden on such 

homeowners would still be too high 

even despite the lowering of barriers in 

this proposed rule and the commenter 

does not support a system that sets its 

neighbors up to fail. Further, the 

commenter said that a newly 

rehabilitated or constructed duplex or 

triplex would better serve their 

communities as either individual 

homeownership units or as properly 

administered affordable rental units. 

HUD Response: HUD thanks the 

commenters for reviewing the proposed 

rule. The Department understands that 

developing and managing small-scale 

housing can be challenging. Despite 

these challenges, such housing can play 

an important role in meeting a 

community’s affordable housing needs. 

HUD notes that NAHA provides it with 

authority to establish streamlined 

requirements with ongoing oversight 

and compliance of small-scale and 

scattered site projects, not with respect 

to the development of that housing. 

HUD recognizes that not all 

communities will decide to pursue 

small-scale housing due to the 

challenges and priorities cited by the 

commenters. However, the Department 

believes that burden relief is beneficial 

to participating jurisdictions that wish 

to pursue that strategy and that such 

revisions are in furtherance of the Act. 

J. Small-Scale Housing Project 

Flexibilities Are Insufficient or Not 

Helpful 

One commenter supported HUD’s 

changes but noted that leading 

challenges of applying HOME towards 

small-scale housing include high costs 

in providing gap financing in rural areas 

and a lack of training. The commenter 


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encouraged HUD to create policies that 

are responsive to State and local 

conditions and empower participating 

jurisdictions to use HOME funds for 

targeted developments accordingly. The 

commenter noted that the use of 

property management firms may assist 

in managing small-scale rental housing. 

Another commenter said that the 

reduction or streamlining of regulatory 

requirements such as inspections and 

wait lists would make it more attractive 

to use HOME funding, but compliance 

would still remain more onerous than 

the commenter’s city-funded program. 

The commenter explained that their city 

offers a rental rehabilitation loan 

program for properties with seven or 

fewer units where landlords are 

required only to preserve 50 percent of 

units for occupants earning at or less 

than 60 percent of area median income 

through a 10-year loan term; but that 

HOME’s compliance requirements make 

it undesirable to utilize HOME for such 

programs. 

Another commenter urged HUD to 

consider how private market financing 

conflicts with HOME requirements, 

especially for condominium 

development which have early pre-sale 

requirements from Fannie Mae and 

Freddie Mac that conflict with HOME’s 

requirement to recheck income after six 

months. 

HUD Response: HUD thanks the 

commenters for reviewing the proposed 

rule. As stated above, the Department 

understands that developing and 

managing small-scale housing can be 

challenging, as can oversight by 

participating jurisdictions and other 

funders. HUD did not propose these 

streamlining measures for small-scale 

rental housing because it believed that 

every jurisdiction would or should 

adopt this activity with its HOME funds. 

Rather, HUD’s intent is to make smallscale housing easier to manage and 

oversee for owners and participating 

jurisdictions that choose to undertake it 

with HOME funds. With respect to the 

comments regarding conflicts between 

HOME requirements and Fannie Mae 

and Freddie Mac pre-sale programs, 

HUD notes that while a small-scale 

housing project can have a 

homeownership unit, the rest of the 

units in the project must be for rental. 

Therefore, the condominium purchase 

rules being described are likely not 

applicable. In any event, the Department 

has given exhaustive explanation earlier 

in this preamble about why it is 

declining to extend the amount of time 

that an income determination is valid 

when purchasing housing with HOME 

homeownership assistance. 

K. Accessibility Requirements Are a 

Barrier to Small-Scale Housing Projects 

One commenter stated that the 

Uniform Federal Accessibility 

Standards (UFAS) requirements for 

small-scale housing have made it 

virtually impossible to fund small 

rehabilitation developments. The 

commenter supported more waivers or 

modified requirements for small 

rehabilitation developments. 

HUD Response: The Department 

thanks the commenter for reviewing the 

proposed rule. Section 504 of the 

Rehabilitation Act of 1973 (Section 504), 

and HUD’s implementing Section 504 

regulation at 24 CFR part 8 prohibit 

recipients from discriminating on the 

basis of disability. By definition, smallscale housing projects are single family 

housing consisting of no more than four 

units or scattered-site projects 

consisting of no more than four units. 

These projects do not meet the 

definition of multifamily housing 

subject to the requirements that a 

percentage of newly constructed or 

rehabilitated units be accessible to 

individuals with mobility impairments 

and an additional percentage of units be 

accessible to individuals with vision 

and hearing impairments in compliance 

with HUD’s accessibility standards, (i.e., 

UFAS or HUD’s Deeming Notice). 

A recipient must provide for 

reasonable accommodations that may be 

necessary for individuals with 

disabilities. A recipient’s obligations 

under Section 504 cannot be waived. 

Such requirements ensure that 

individuals with disabilities are able to 

participate in, and are not denied the 

benefits of, such programs or activities. 

As a reminder, recipients may also be 

subject to additional accessibility 

requirements under the Fair Housing 

Act, and title II of the Americans with 

Disabilities Act (ADA). 

L. Request To Reduce Environmental 

Review Requirements for Small-Scale 

Housing Projects—HUD Should Change 

Environmental Review Requirements for 

Small-Scale Projects 

One commenter suggested that, to 

lower the cost of the production of 

affordable housing and encourage more 

supply while still protecting the 

environment, HUD should change its 

regulations governing the three project/ 

activity types in this paragraph. They 

are currently governed under 24 CFR 

58.35(a) but should be governed under 

24 CFR 58.35(b). The commenter stated 

that this change would still ensure that 

reasonable impacts were examined 

before project commencement, while 

lowering the burdens and costs to reentering dilapidated housing stock back 

onto the market. The commenter also 

supported retaining limited historic 

preservation protections, explaining that 

such limited protections would reduce 

the delays incumbent in current historic 

preservation compliance, while 

retaining State Historic Preservation 

Officer notification. The commenter 

suggested that flexibility for waiting 

periods to run concurrently with 

participating jurisdictions and HUD 

review should be explored. 

The commenter stated that to lower 

the cost of the production of affordable 

housing and encourage more supply 

while still protecting the environment, 

HUD should expand the scale of 

projects that can qualify as categorically 

excluded. The commenter reasoned that 

increasing the current categorical 

exclusion to individual actions on 

between 5 and 15 scattered site dwelling 

units or housing units will lower costs, 

burdens, and speed the delivery of 

units, while still examining all 

environmental impacts. 

Lastly, the commenter recommended 

that HUD should use this existing 

authority to include HOME funds 

deployed for small (one-four unit) 

residential projects via nonprofit 

affordable housing developers as an 

exception criterion35. The commenter 

explained that this would allow the 

nonprofits to work with their local 

governments, who act as the responsible 

entity, for speedier resolutions of all 

existing environmental review 

processes. 

HUD Response: HUD appreciates the 

commenter’s suggestions related to 

streamlining the environmental review 

procedures at 24 CFR part 58. However, 

the authority granted to HUD at 42 

U.S.C. § 12756 to establish streamlined 

procedures for small-scale and scattered 

site housing extends only to monitoring 

of such housing after project 

completion. The commenter’s 

suggestions relate to project 

development rather than ongoing 

compliance and thus are outside the 

scope of this rulemaking. Moreover, the 

Department did not propose making any 

revisions to environmental review 

requirements for HOME projects in the 

proposed rule and believes that such 

changes are also beyond the scope of 

this rulemaking. 

M. Other Comments in Solicitation— 

Create New Eligible Activity for 

Inspections 

One commenter stated that 

participating jurisdictions stated that 

the need to regularly inspect all units in 

small-scale housing every three years is 

a major expense. The commenter 


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recommended that HUD allow 

participating jurisdictions to create an 

IDIS activity called ‘‘HOME 

Inspections’’ that would enable 

inspection costs to be charged to that 

activity and not count the on-site 

inspection expenses as a part of HOME 

administration. The commenter 

recommended that the planning and 

preparation for the HOME inspections 

be counted as an administrative cost 

while the actual site inspection costs 

would be counted as activity delivery 

expenses. 

HUD Response: The Department 

appreciates the comment. However, the 

HOME statute The Act does not permit 

HUD to establish new activities in IDIS 

for the types of ongoing administrative 

costs described by the commenter. See 

42 U.S.C. 12742. During the HOME 

period of affordability, the participating 

jurisdiction may charge the cost of 

periodic inspections to HOME 

administration in accordance with 

§ 92.207, or the participating 

jurisdiction may charge a reasonable 

monitoring fee to the project owner in 

accordance with § 92.214(b)(1)(i). 

N. Other Comments in Solicitation— 

Opposition to Financial Oversight 

Requirements 

One commenter believed that the 

current financial oversight requirements 

are inadequate and that not performing 

financial oversight on small-scale rental 

housing ignores an invaluable tool in 

understanding how properties are 

performing. The commenter believed 

that such oversight detects signs of 

financial distress or over subsidization 

and assists in the rent setting process 

and other processes involved in LIHTC, 

HOME, HTF, and local resources. 

HUD Response: Though it does apply 

to small-scale housing, the 10-unit 

threshold for performing financial 

oversight that the commenter is 

objecting to is not a small-scale housing 

flexibility. This is a provision within 

§ 92.504(d)(2) that is being moved to 

§ 92.251(f). Please see HUD’s response 

above on financial oversight for the 

HOME program for why HUD is 

declining to reduce the 10-unit 

threshold. 

§ 92.253—Tenant Protections and 

Selection 

A. General Comments on Requiring a 

Tenancy Addendum in § 92.253(a) 

Commenters supported the tenant 

addendum changes. One commenter 

stated that outlining the required 

elements of the HOME lease addendum 

in the affirmative is much more effective 

and provides clarity for all parties. 

Some commenters expressed broad 

support for the proposed expansion of 

tenant rights and protections provisions. 

Another commenter supported HUD’s 

proposed changes to § 92.253(a)–(b) and 

the proposed addition of paragraph (c), 

which the commenter stated would 

simplify TBRA and improve TBRA for 

tenants, landlords, and participating 

jurisdictions. 

Another commenter strongly 

supported the proposed requirement of 

a HOME lease addendum. The 

commenter suggested that HUD should 

consider providing additional means of 

enforcement. For example, the 

commenter suggested that tenants 

should have the right to access a 

grievance procedure, which would 

permit tenants to request an information 

conference with the owner when their 

rights are violated. The commenter 

further suggested that tenants should be 

able to appeal the owner’s decision to 

the participating jurisdiction, and they 

should also have an explicit avenue to 

bring a complaint to HUD. 

One commenter requested that HUD 

develop a HOME addendum template 

that contains all of the HOME program 

requirements in a single addendum. 

Another commenter supported the 

tenancy addendum requirement but 

stated that it should not be a 

requirement until there is a HUD HOME 

tenancy addendum that can be used on 

all rental housing projects. 

One commenter generally opposed 

the proposed tenant protections to the 

HOME program. The commenter 

explained that apartment owners and 

managers already are subject to a myriad 

of tenant protection and fair housing 

statutes, regulations, administrative 

policies, and case law from all levels of 

government. The commenter further 

explained that this existing framework 

provides balanced protections for both 

tenants and landlords. Specifically, the 

commenter points out that the proposed 

mandatory HOME lease addendum 

would impose a set of one-size-fits-all 

tenant protections for HOME-assisted 

rental housing and HOME tenant-based 

rental assistance (TBRA) recipients. 

One commenter preferred that lease 

addendum and protections be left to 

State landlord-tenant law but did not 

strongly oppose the use of a Federal 

addendum for purposes of consistency 

and reducing participating jurisdiction 

burden. Another commenter stated that 

HUD should not engage in tenant 

protection rulemaking because State and 

local regulations are sufficient. 

One commenter stated that tenant 

protections will increase a tenant’s 

ability to locate and sustain units that 

are affordable and that tenant 

protections should be included in a 

tenant’s lease agreement. However, that 

commenter was also concerned that 

since the HOME funds they used made 

up a small percentage of the total cost 

of the project and resulted in a limited 

number of HOME-assisted units (usually 

5–10), a HOME-specific lease addendum 

would be impractical to implement. 

One commenter supported the 

proposal (under § 92.253(a)) to require 

owners to attach VAWA and HOME 

addenda to the lease, as this would help 

ensure that owners, tenants, and 

eviction court judges clearly understand 

tenant rights and owner obligations. 

However, this commenter suggested 

simplifying the addendum by drafting 

an addendum that cites to HOME 

regulations for additional detail. 

HUD Response: HUD appreciates the 

comments and is moving forward with 

requiring a HOME tenancy addendum 

for rental housing, tenant-based rental 

assistance, and security deposit 

assistance only. The Act states that the 

lease between a tenant and owner of 

HOME-assisted rental housing and 

HOME tenant-based rental assistance 

‘‘shall contain such terms and 

conditions as the Secretary shall 

determine to be appropriate.’’ (42 U.S.C. 

12755(a)). HUD has determined that 

Congress intended that HUD use the 

terms and conditions of the lease to 

provide tenant protections in the HOME 

program. Instead of requiring a standard 

form lease or prohibiting terms 

contained in an owner’s lease, HUD 

believes that creating HOME tenancy 

addenda for rental housing, tenantbased rental assistance, and security 

deposit assistance is the best way to 

enforce reasonable tenant protections in 

a consistent manner while reducing 

participating jurisdiction burden. 

HUD’s HOME tenancy addenda will 

include the tenant protections listed in 

the HOME regulations. HUD maintains 

that the tenant protections it is 

including in the HOME tenancy 

addenda represent a minimum standard 

that is based in a thorough analysis of 

Federal, State, and local laws. Before 

proposing these protections, HUD 

examined State and local landlordtenant laws and protections and the 

requirements of other Federal programs 

that serve the same tenants and are 

frequently combined with the HOME 

program (such as the Section 8 

programs). Through this analysis and 

comment from the public, HUD is 

confident that the inclusion of the 

tenant protections contained in the 

HOME tenancy addenda are consistent 

with the intent of the drafters of the Act. 

The Department understands some 

commenters’ desire to formalize a 


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grievance process and an appeal right to 

HUD. However, the Act does not require 

participating jurisdictions to establish a 

grievance process or for HUD to 

establish a right to appeal to the 

Department. Participating jurisdictions 

must determine their own systems for 

assessing risk and methods for enforcing 

compliance with the requirements of 24 

CFR part 92. 

The Department also recognizes that 

some commenters have significant 

concerns about the one-size-fits-all 

nature of tenancy addenda and the 

potential for adding new HOME tenant 

protections to other Federal, State, and 

local requirements. The Department did 

its best to address the commenters’ 

concerns by aligning certain tenant 

protection provisions with other Federal 

programs (most notably the Section 8 

programs) and tailoring each tenancy 

addendum to the type of HOME 

program (i.e., rental housing, tenantbased rental assistance, security deposit 

assistance only). 

In response to commenters that stated 

that the Department should not require 

tenant protections for HOME because 

the HOME funding may only be a small 

portion of the overall financing or fund 

only a few housing units, the 

Department understands the concerns, 

but this does not diminish the need to 

guarantee tenants of HOME rental 

housing projects a baseline level of 

tenant protections, as intended under 

the Act. Some participating jurisdictions 

provide HOME funds to projects that 

require only a small amount of funding 

to move forward. Others provide much 

more significant amount of funding and 

fund much larger HOME projects. 

Tenants should receive the same 

protections regardless of the decisions 

made by the participating jurisdiction 

on how much funding to provide to a 

particular rental housing project. The 

Act did not specify that tenant 

protections were to be based upon the 

level of HOME funds and the 

Department is declining to draw such 

distinctions or only require a reduced 

set of protections for HOME simply 

because some participating jurisdictions 

may use HOME funds to fund fewer 

units in larger rental projects. 

The Department considered one 

commenter’s request that the HOME 

tenancy addenda should cite to the 

appropriate regulations and be as simple 

as possible. However, the Department 

intends to create tenancy addenda that 

do not require a tenant or owner to look 

up HUD regulations in order to know 

what they are agreeing to and shall 

provide a standalone tenancy 

addendum for HOME rental housing, 

tenant-based rental assistance, and 

security deposit assistance only. 

B. Requiring a Tenancy Addendum 

Under § 92.253(a) Violates the Rights of 

Housing Project Owners 

Commenters said that the rule 

infringes on property rights by 

circumventing the established legal 

process for eviction, denying housing 

providers due process rights, and 

creating an imbalance in tenantlandlord relations by making 

nonpayment of rent a protected class. 

Commenters also called on HUD to be 

fair and not overreach. 

HUD Response: The Act states that 

the lease between a tenant and owner of 

HOME-assisted rental housing and 

HOME tenant-based rental assistance 

‘‘shall contain such terms and 

conditions as the Secretary shall 

determine to be appropriate.’’ (42 U.S.C. 

12755(a)). HUD has determined that this 

is a Congressional delegation of 

authority to the Secretary and provides 

the Secretary with the discretion to 

determine the appropriate lease terms 

for tenants living in HOME-assisted 

rental units. Owners accept HOME 

assistance in the development of their 

rental housing projects with the 

knowledge that they do so subject to 

Federal laws and regulations. This 

includes the prohibited lease terms and 

the current termination of tenancy and 

refusal to renew provisions that are 

currently listed in § 92.253. HUD is 

updating these protections but will not, 

and does not have legal authority to, 

circumvent State or local eviction 

processes, alter any due process rights 

of owners under State or local law, or 

define any new protected classes. 

In recognition of the concerns that the 

commenter raises, the Department is 

requiring that the new and revised 

tenant protections only apply 

prospectively (See § 92.3). This will 

allow owners of HOME rental housing 

to knowingly agree to the new tenant 

protections before accepting the HOME 

funds for a project. This will allow the 

same for owners entering into a rental 

assistance contract with participating 

jurisdictions. The Department believes 

that this meaningfully addresses any 

legal concerns that the commenter had, 

even though the Department disagrees 

with the assertion that imposing such 

protections upon existing owners would 

violate their rights. 

C. Requirement To Provide the 

Participating Jurisdiction With a Copy 

of the Lease in § 92.253(a) 

One commenter stated that the 

components in the rule related to lease 

contents are generally reasonable, but 

that the requirement that the owner 

provide the participating jurisdiction 

with a copy of the written lease before 

it is executed and once revised is 

unclear and potentially troublesome. 

The commenter recommended that HUD 

reconsider this requirement because it 

could be burdensome and lack an 

understandable review process. The 

commenter noted that if HUD proceeded 

with the requirements, to avoid 

significant confusion and delays, HUD 

should clarify that a participating 

jurisdiction would not be required to 

review or approve individual leases and 

that a model lease would be sufficient. 

HUD Response: HUD is adding the 

requirement to § 92.253(a) that owners 

must provide the participating 

jurisdiction with a copy of the written 

lease to allow the participating 

jurisdiction to verify that the lease 

complies with the requirements in 

§ 92.253, including that it includes the 

applicable HOME tenancy addendum. 

This should not be disruptive for 

participating jurisdictions or owners. 

HUD is not changing its requirement 

that each lease comply with the 

requirements in § 92.253 (See § 92.252 

(rental housing) and § 92.209 (TBRA)). 

Section 92.504(a) already requires 

participating jurisdictions to have and 

follow written policies, procedures, and 

systems, including a system for 

assessing risk of activities and projects 

and a system for monitoring entities 

consistent with 24 CFR part 92 to ensure 

that the HOME requirements are met, 

including lease requirements. Also 

unchanged, § 92.508(a)(3)(ix) requires 

the participating jurisdiction to 

maintain records demonstrating that 

each lease complies with HUD 

requirements. A participating 

jurisdiction is therefore already required 

to determine that each lease complies 

with HOME requirements and maintain 

project records proving that the leases 

are compliant. HUD is adding the 

requirement that the owner provide the 

participating jurisdiction with the lease 

in advance to allow a participating 

jurisdiction to review under their 

procedures before any potential 

noncompliant leases are executed. 

D. Methods of Communication in 

§ 92.253(a) 

Commenters expressed strong support 

for the requirements to provide essential 

information to tenants, including those 

in proposed § 92.253(a) regarding (1) 

accessible means to contact owners, 

managers, and participating 

jurisdictions; (2) accessible notice 

specifying the grounds for any adverse 

action; and (3) that owners provide 30 

days advance notice of an impending 


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sale or foreclosure of the property. A 

commenter explained that these are 

important for maintaining decent, safe, 

and sanitary conditions in assisted 

housing; allowing tenants to clear 

misunderstandings and giving them 

information needed to challenge adverse 

actions and avoid unjust outcomes; and 

allowing tenants to prepare for possible 

disruptions. However, the commenter 

stated that without an enforcement 

mechanism, the requirements will be 

meaningless and the burden for 

enforcement will fall on individual 

tenants. The commenter suggested that 

for (1) and (2), HUD should require 

participating jurisdictions to develop 

and publish an enforcement 

mechanism. For (3), the commenter 

suggested that HUD’s rulemaking 

should specify that no adverse action 

shall become effective unless such 

notice has been provided. Another 

commenter supported the HOME lease 

addendum but suggested that HUD 

simplify the addendum to make it more 

user friendly. 

One commenter recommended 

deleting the requirement in 

§ 92.253(a)(2) that leases include the 

participating jurisdiction’s contact 

information to avoid tenants calling 

participating jurisdictions. If HUD keeps 

the requirement the commenter 

recommended moving it to a new 

§ 92.253(b)(8) so that contact 

information would be included in the 

HOME tenancy addendum. Another 

commenter supported the requirement 

for tenant leases to contain more than 

one method to communicate directly 

with the owner or property manager but 

stated that as a participating 

jurisdiction, it does not feel that review 

prior to lease execution or revision is 

necessary. Additionally, owners must 

ensure effective communication with 

persons with disabilities, including, for 

example those with hearing, visual, 

speech, or disabilities consistent with 

Section 504 and the ADA, as applicable. 

HUD Response: The Department is 

moving forward with the changes and 

will require that contact information be 

provided in the lease. The Department 

is not embedding this requirement in 

the tenancy addenda regulations in 

§ 92.253(b)–(d) but will include an area 

in the HOME rental housing tenancy 

addendum and the HOME tenant-based 

rental assistance tenancy addendum for 

this information to be added. By 

building this information into the 

addendum, it should reduce the need to 

create an enforcement mechanism. 

However, there are other enforcement 

mechanisms in § 92.504. The 

Department is committed to ensuring 

that the tenancy addenda are userfriendly. The Department also 

recognizes the commenter’s concern 

that no adverse action should occur for 

a tenant until the notice in the proposed 

rule’s paragraph (a)(3) had been 

provided. The Department would like to 

clarify that the proposed rule paragraph 

(a)(3) was the requirement that a VAWA 

addendum be added and not the 

requirement that notice be provided of 

VAWA protections. The notice the 

commenter is describing is required 

under § 92.359(c) and is unchanged by 

this rulemaking. 

The Department has noted the 

concerns of participating jurisdictions 

and owners who do not believe that it 

is appropriate to provide contact 

information but strongly disagrees. 

When tenants have clear ways to 

communicate with the participating 

jurisdiction that is monitoring the 

HOME rental housing owner or that is 

assisting them with tenant-based rental 

assistance, it empowers them to be able 

to assert their rights or protections, and 

better enables participating jurisdictions 

to learn about potential compliance 

problems. 

E. General Support for Changes to 

HOME Tenancy Addendum Physical 

Condition Requirements in § 92.253(b) 

Description of Tenancy Addendum 

Contents 

One commenter supported HUD’s 

proposed changes requiring owners to 

provide tenants with the expected 

timeframe for maintenance and/or 

repair work, prohibiting owners from 

charging tenants for normal wear and 

tear, and requiring owners to prompt 

relocate tenants to decent, safe, and 

sanitary housing, or to suitable lodging 

when there is a life-threatening 

deficiency that can’t be repaired the 

same day—at no cost to the tenant. 

HUD Response: The Department 

thanks the commenter for their support 

of the proposed changes. The 

Department agrees and believes that 

these changes will promote a better, 

safer environment for tenants and will 

enable them to live in units that meet 

property standards. Tenants must not be 

exposed to life-threatening deficiencies. 

Where such deficiencies are present, 

they should be corrected by owners 

expeditiously and with as few 

disruptions to the family as possible. 

Requiring owners to provide alternative 

suitable units until such repairs are 

made is a strong incentive to repair lifethreatening deficiencies quickly and 

comprehensively to avoid future 

disruption and expense. 

Notwithstanding the foregoing, the 

Department believes this requirement is 

only acceptable where the participating 

jurisdiction has provided the owner 

with HOME assistance in the 

acquisition or development of the 

project and therefore is not applying the 

requirement to owners whose units are 

occupied by tenants with tenant-based 

rental assistance. This is because the 

requirement could have the potential to 

chill participation from private 

landlords whose only assistance is the 

rental assistance received from the 

participating jurisdiction on behalf of 

the tenant. 

F. Unit Maintenance and Repair in 

§ 92.253(b) Description of Tenancy 

Addendum Contents 

One commenter suggested that HUD 

should require that the owner ‘‘provide 

expected time frames for maintaining or 

repairing units’’ in writing in 

§ 92.253(b)(1)(ii)(A). The commenter 

explained that this encourages 

transparency between the owner and 

tenant and provides the tenant with the 

information needed to hold owners 

accountable in case of delayed 

maintenance. 

HUD Response: The Department 

thanks the commenter for reviewing the 

proposed rule. HUD agrees with the 

commenter that the owner must provide 

written notice to a tenant of the 

expected timeframes for maintaining or 

repairing a HOME-assisted unit. HUD is 

revising § 92.253(b)(1)(A) to incorporate 

this change. HUD is also adding similar 

language to the HOME tenant-based 

rental assistance tenancy addendum in 

§ 92.253(c)(1)(A). 

G. Unit Damage and Charges in 

§ 92.253(b) Description of Tenancy 

Addendum Contents 

One commenter recommended, for 

HUD’s proposed regulatory text in 

§ 92.253(b)(1)(ii)(C), that HUD provide 

text enabling a tenant to bring a 

challenge to the participating 

jurisdiction regarding any charges the 

tenant believes are unwarranted and 

requested sub-regulatory guidance 

regarding such proceedings. 

HUD Response: The Department 

appreciates the comment but is moving 

forward without the commenter’s 

proposed change. A participating 

jurisdiction is not responsible for 

litigating disputes between tenants and 

owners for charges a tenant may feel are 

unwarranted. However, the 

participating jurisdiction is required to 

monitor and enforce the requirements of 

24 CFR part 92, including the tenant 

protections requirements. The 

Department defers to participating 

jurisdictions in determining the best 

method for enforcing the tenant 

protections requirements. While some 


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participating jurisdictions may establish 

or use existing grievance procedures, 

there may be others that take a more 

targeted or risk-based monitoring and 

enforcement approach. 

H. Temporarily Moving Tenants Due to 

Emergencies on the Property in 

§ 92.253(b) Description of Tenancy 

Addendum Contents 

One commenter supported HUD’s 

proposal in § 92.253(b)(1)(iii) to require 

owners to temporarily relocate tenants, 

at the owner’s expense, in the situations 

involving a life-threatening emergency 

because this clarifies owners’ existing 

duty to provide decent, safe, and 

sanitary housing for tenants. The 

commenter expressed concern that 

‘‘life’’ was too high a bar to achieve 

HUD’s purpose for the change stated in 

the preamble of the proposed rule, ‘‘to 

prevent HOME tenants from remaining 

in housing that poses a threat to their 

physical safety and from being subjected 

to additional costs as a result of physical 

housing conditions outside their 

control.’’ The commenter explained that 

many housing conditions pose serious 

but not life-threatening threats to 

occupants’ physical safety, including 

mold, infestation, and lead-based paint. 

The commenter also noted that 

occupants remaining in the home 

during remediation of emergencies or 

adverse conditions may not be safe. The 

commenter suggested extending the 

relocation requirement to cover all 

conditions and repair activities that 

‘‘pose a threat to the health and safety 

of the tenant household.’’ Another 

commenter stated that the requirement 

that owners temporarily relocate tenants 

at the owner’s expense should apply to 

all conditions that pose an immediate 

threat to the health and safety of the 

tenant household. 

One commenter recommended that 

HUD should modify the standard at 

which an owner must relocate a tenant 

in § 92.253(b)(1)(iii) to reflect more 

commonly used standards. Specifically, 

HUD should require that an owner 

relocate the tenant when ‘‘maintenance 

or repairs are necessary to ensure the 

habitability of the housing unit’’—rather 

than when the unit’s physical condition 

creates ‘‘a life-threatening deficiency.’’ 

HUD Response: HUD thanks the 

commenters for reviewing the proposed 

rule but disagrees that HUD should 

adopt a different standard for relocating 

tenants in the case of physical 

deficiencies in the unit. The proposed 

language in § 92.253(b)(1)(iii) seeks to 

prevent HOME tenants from remaining 

in units that pose a threat to their 

physical safety if a life-threatening 

deficiency cannot be corrected on the 

day the deficiency is identified. This 

provides a strong incentive to fix 

immediate, life-threatening problems 

with the unit. Requiring project owners 

to relocate tenants for health and safety 

deficiencies that are severe but not lifethreatening, especially when those 

deficiencies could be corrected in a 

reasonable time frame without posing a 

life-threatening risk to the tenant, may 

impose too significant of a financial 

burden on project owners or deter 

participation in the HOME program. 

HUD is moving forward with its 

proposed change. Participating 

jurisdictions are always capable of 

requiring more stringent requirements 

through their written agreements, but 

the Department believes that the 

minimum requirement must prevent 

families from living in units with lifethreatening deficiencies. 

I. Owner Requests for Access to Unit 

Under § 92.253(b) Description of 

Tenancy Addendum Contents 

One commenter supported the new 

tenant protections except for the notice 

to enter requirement which it believed 

should be 24 hours, not 2 days. The 

commenter stated that 2 days’ notice to 

enter is longer than what many States 

and HUD programs require and that it 

may be too long in non-emergency 

situations where time is still of the 

essence. One commenter suggested that 

HUD should strengthen the written 

statement requirement in 

§ 92.253(b)(2)(iii)(A) by requiring the 

written statement to include the date 

and time, as well as the purpose of the 

owner’s entry. The commenter further 

suggested that HUD should require that 

the owner deliver the written statement 

to the tenant, not simply the ‘‘dwelling 

unit,’’ to ensure that the tenant actually 

received the statement. The commenter 

stated that it would also encourage 

accountability and transparency on the 

owner’s behalf. 

One commenter supported HUD’s 

proposed changes requiring at least two 

days’ notice before entering a tenant’s 

unit for normal business, but anytime 

without advanced notice if there is a 

reasonable belief that there is an 

emergency. 

One commenter suggested that for 

emergency entries in 

§ 92.253(b)(2)(iii)(B), HUD should 

require that the owner provide the 

tenant with a notice similar to the notice 

required in § 92.253(b)(2)(iii)(C). 

HUD Response: The Department 

thanks the commenters for reviewing 

the proposed rule. HUD disagrees with 

commenters that feel that providing the 

owner providing the tenant with 2 days’ 

notice prior to entry is too long. This is 

a commercially reasonable time period 

in much of the country and a best 

practice in many jurisdictions already. 

The Department also believes that 2 

days’ notice provides tenants with 

ample time to arrange to be present for 

the repairs and make other 

arrangements, such as childcare. In nonemergency situations, owners should be 

able to appropriately plan to notify a 

tenant 48 hours before repairs or 

maintenance. 

HUD is requiring owners to provide 

the tenant a written statement 

specifying the date, time, and purpose 

of entry when the tenant is not present 

in the unit but declines to require this 

notice under all circumstances. This 

notice is not always necessary, 

especially if the original notice was 

already delivered and the tenant is 

present in the unit when the owner or 

their agent enters the unit to perform the 

repairs. The Department does agree that 

a project owner that enters a unit in the 

case of emergency should provide the 

tenant with a written notice of entry 

upon entering the unit. HUD is revising 

§ 92.253(b)(2)(iii)(C) to require an owner 

to provide the tenant a written 

statement specifying the date, time, and 

purpose of entry after entering the unit 

in the case of emergency. HUD is also 

adding similar language to the HOME 

tenant-based rental assistance tenancy 

addendum in § 92.253(c)(2)(iii)(2). 

HUD disagrees that an owner should 

be required to serve notice directly to 

the tenant instead of to the unit. 

Requiring an owner to locate a tenant to 

serve notice of entry to the unit is not 

customary and could cause undue 

delays to project owners attempting to 

perform emergency repairs. 

J. Reasonable Use of Common Areas in 

§ 92.253(b) Description of Tenancy 

Addendum Contents 

One commenter supported HUD’s 

proposal to require HOME-assisted 

tenants to have reasonable access to, 

and use of, common areas and to 

prohibit having separate elevators or 

amenities that are only available to nonassisted tenants, which furthers HUD’s 

commitment to fair housing and equity. 

HUD Response: The Department 

thanks the commenter for reviewing the 

proposed rule and is moving forward 

with the proposed change. 

K. Right To Organize in § 92.253(b) 

Description of Tenancy Addendum 

Contents 

Commenters supported HUD’s 

proposal in § 92.253(b)(2)(v) to 

explicitly state that tenants have the 

right to organize, create tenant 

associations, convene meetings, and 


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conduct other similar actions. Two 

commenters suggested HUD issue 

guidance mirroring the details of 24 CFR 

part 245 for clarity and consistency. One 

of those commenters urged HUD to 

explicitly state that the rights are further 

elaborated in sub-regulatory guidance. 

One commenter recommended 

elaborating on the tenant’s protected 

organizing activities in § 92.253(b)(2)(v). 

In addition to the rights under the 

proposed rule, the commenter suggested 

that tenants should have the right to 

provide building access to outside 

tenant organizers, conduct door-to-door 

surveys of tenants’ interest in 

establishing a tenant organization and/ 

or offer information about tenant 

organizations, and distribute leaflets in 

lobby areas, other common areas, or 

under tenants’ doors. 

HUD Response: The Department 

believes that the final rule’s right to 

organize language sufficiently protects 

tenants and declines to implement 24 

CFR part 245 for HOME tenants. The 24 

CFR part 245 protections apply to only 

a few programs and were not part of 

HUD’s proposed rule. The Department 

does not believe it is appropriate to add 

these requirements and the level of 

detail in 24 CFR part 245 into the 

tenancy addenda for either HOME rental 

housing or tenant-based rental 

assistance. The Department will 

consider providing additional guidance 

and best practices based on the lessons 

learned from implementing 24 CFR part 

245 requirements in the future but will 

not revise the regulation to refer to 

outside guidance. 

L. Notice of Adverse Action in 

§ 92.253(b) Description of Tenancy 

Addendum Contents 

One commenter supported the 

proposed requirement for owners to 

provide written notice to tenants for any 

adverse actions. Another commenter 

recommended that the notice required 

prior to an owner carrying out an 

adverse action in § 92.253(b)(3)(i) 

specify that the notice be two-weeks 

advanced notice. The commenter also 

recommended that the final rule provide 

for a tenant’s ability to bring to the 

participating jurisdiction a challenge of 

any adverse action the tenant believes is 

unwarranted and requested subregulatory guidance for such 

proceedings. 

HUD Response: The Department 

appreciates the comments. HUD agrees 

that a tenant should be notified in 

writing of an adverse action prior to the 

adverse action taking effect. 

Consequently, HUD is revising 

§ 92.253(b)(3)(i) to state that before an 

owner may take an adverse action 

against a tenant, the tenant must be 

notified in writing. HUD is also adding 

similar language to the HOME tenantbased rental assistance tenancy 

addendum in § 92.253(c)(3)(i). 

The Department disagrees with the 

commenter that two weeks’ notice 

should be required prior to any adverse 

action. This time period is too long, 

especially when the adverse action is 

one that may require more immediate 

correction. HUD also disagrees that the 

participating jurisdiction must have a 

formal process for adjudicating any 

tenant challenges to an owner’s adverse 

action. NAHA does not require a 

grievance progress for participating 

jurisdictions to settle disputes between 

tenants and owners. Participating 

jurisdictions must determine what is 

best for monitoring and enforcing 

compliance with the new tenant 

protections requirements. Some may 

wish to establish grievance procedures, 

while others may choose to perform 

risk-based monitoring or take other 

preventative measures to address 

landlord-tenant disputes in their HOME 

programs. 

M. Take Into Account Income and 

Medical Expenses Before Imposing 

Adverse Actions in Paragraph 

Description of Tenancy Addendum 

Contents 

A commenter suggested that for 

tenants whose income and medical 

expenses were high, the expenses 

(including rent, fines, or damage) 

should be prorated based on benefit 

income, taking into account medical 

spend downs. The commenter believed 

that this would reduce the number of 

people that would have to choose 

between paying housing expenses or 

paying healthcare expenses. 

HUD Response: The Department 

thanks the commenter for reviewing the 

proposed rule. Requiring project owners 

to request and review a tenant’s medical 

expenses to determine a prorated fine or 

other damage prior to taking an adverse 

action would be unduly burdensome for 

project owners and may conflict with 

other statutes such as the Health 

Insurance Portability and 

Accountability Act (Pub. L. 104–191). 

The Act also does not permit HUD to 

impose this type of requirement, as it 

was never contemplated. For families 

receiving tenant-based rental assistance, 

families living in Low HOME rent units 

where their rental payment is based 

upon 30 percent of their adjusted 

income, or families receiving rental 

assistance or living in a subsidized 

rental unit under another program that 

calculates adjusted income, the adjusted 

income calculation will consider health 

and medical expenses as a deduction 

from annual income (see 24 CFR 

92.203(f)). Moreover, participating 

jurisdictions that administer a tenantbased rental assistance program may 

also wish to establish hardship policies 

as now permitted in § 92.209(h)(2). A 

TBRA family receiving a hardship 

would be provided an exception to the 

requirement that the family contribute a 

minimum amount of rent which would 

alleviate some of the financial burden 

on the family. As a reminder, 

participating jurisdictions must also 

provide reasonable accommodations 

that may be necessary for individuals 

with disabilities in accordance with 

Section 504, the Fair Housing Act, and 

the ADA, as applicable. 

N. Notice of Intent To Sell Property or 

Foreclosure of Property in Description 

of Tenancy Addendum Contents 

One commenter supported the 

proposed requirement for owners to 

provide written notice to tenants within 

5 business days of any change in 

ownership (including foreclosure) and 

at least 30 days’ notice before a sale or 

foreclosure. One commenter also 

supported the delivery of a 5-day notice 

for ownership or management company 

change. 

Commenters asked HUD to amend 

§ 92.253(b)(3)(ii) to require an owner to 

provide a 60-day notice of intent to sell 

property or foreclosure of property. The 

commenters stated that 60 days’ notice 

was appropriate given the burdens of 

finding new housing and moving. 

HUD Response: The Department 

thanks the commenters for reviewing 

the proposed rule. HUD agrees with the 

commenter that tenants should be 

notified of a change in the property 

management company and is revising 

§ 92.253(b)(3)(ii) and § 92.253(c)(3)(ii) to 

require the property owner to notify 

tenants within 5 days of any change to 

the property management company 

managing the property. Property 

management staff are often the face of 

the owner and have the most 

communication with tenants. Adding a 

requirement that tenants be notified if 

the management company changes is 

prudent to prevent disruption to 

families and ensures clear lines of 

communication between tenants and an 

owner’s representatives at all times. 

HUD is moving forward with the 

proposed change to require 30 days’ 

notice prior to an impending sale or 

foreclosure of the property. 

The Department believes that 60 days’ 

notice may be too long and may not 

always be reasonable or possible. The 

Department would note that when there 

is a change in ownership in HOME 


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rental housing during the period of 

affordability that is not due to 

foreclosure, the owner takes the 

property subject to all the requirements 

of 24 CFR part 92. Therefore, the change 

in ownership may not always result in 

an immediate move from the property or 

disruption to tenants. The Department 

understands the concern may be greater 

for tenant-based rental assistance and is 

noting that HUD’s requirement is a 

minimum standard, and participating 

jurisdictions can always require more 

advance notice of a potential sale or 

foreclosure in rental assistance contracts 

or written agreements with owners of 

rental housing projects, especially if 

those participating jurisdictions wish to 

exercise any rights to preserve the 

affordability of the rental housing 

project. 

O. Act or Failure To Act in Description 

of Tenancy Addendum Contents 

A commenter suggested that HUD add 

clarifying language to § 92.253(b)(4)(iii) 

specifying that the liability for action or 

failure to act is only in connection with 

the lease. The commenter suggested 

revisions to HUD’s proposed language, 

‘‘(iii) The tenant may hold the owner or 

the owner’s agents legally responsible 

for any action or failure to act in 

connection with the lease, whether 

intentional or negligent.’’ 

HUD Response: The Department 

considered the commenter’s 

recommendation but disagrees with the 

commenter. The prohibited lease term 

upon which this is based was one that 

prohibited excusing an owner from 

responsibility and was written to apply 

to owners broadly. It prohibited the 

tenant from agreeing not to hold owners 

responsible for any action or failure to 

act. The Department understands that 

not every adverse action that an owner 

can take against a tenant or household 

relates to the lease. For instance, 

retaliatory acts may not be acts that are 

entirely born from or related to the 

lease; they may be personal in nature. 

Narrowing potential liability to only 

matters pertaining to the lease could 

create a gap in protections that could be 

exploited by unscrupulous owners who 

could claim that the negative actions 

were related to personal matters and not 

the lease. 

P. Retaliation and Unreasonable 

Interference With the Tenant’s Comfort, 

Safety, or Enjoyment of the Tenant’s 

Housing Unit in § 92.253(b) Description 

of Tenancy Addendum Contents 

One commenter supported the 

addition of anti-retaliation provisions in 

§ 92.253. Another commenter supported 

the addition of specific language to the 

regulations prohibiting owners from 

retaliating against tenants who exercise 

their rights, by decreasing services, 

interfering with a tenant’s right to 

privacy, and/or harassing households or 

their guests. 

One commenter supported the nonexhaustive list of tenants’ rights 

protected by a right against retaliation in 

§ 92.253(b)(5). However, the commenter 

stated that, as currently written, the 

prohibition against retaliation provision 

is ineffective. The commenter said that 

the actions described in the prohibition 

against retaliation are independently 

prohibited as unjust interference, 

regardless of retaliatory motive. The 

commenter also stated that the rule fails 

to specify consequences for retaliation. 

The commenter suggested that HUD 

adopt a mechanism similar to that used 

by States and municipalities to 

discourage retaliation, and state in 

regulation that (1) no termination or 

non-renewal of a lease or alteration of a 

term or condition of the lease is valid if 

taken in retaliation for the exercise of a 

legal right by the tenant or member of 

the tenant’s household, and (2) any such 

adverse action taken within a specified 

period of time (the commenter 

suggested 12 months) of the exercise of 

a legal right will be presumed to have 

been taken in retaliation unless the 

owner proves that the action was taken 

solely for a non-retaliatory purpose. 

Another commenter expressed a similar 

objection to the protection against 

retaliation in § 92.253(b)(5), stating that 

it is ineffective as currently written and 

should specify consequences for 

violations. 

One commenter suggested that HUD 

should revise § 92.253(b)(5) to more 

clearly convey that subsection (i) 

includes examples of owner interference 

or retaliation and that subsection (ii) 

includes examples of tenant rights. To 

better reflect commonly used terms, the 

commenter recommended that HUD 

should replace ‘‘comfort, safety, or 

enjoyment’’ with ‘‘right to peaceful 

enjoyment.’’ 

One commenter recommended adding 

‘‘refusal to renew a tenant lease 

agreement’’ and ‘‘increase rental amount 

in renewal or otherwise initiate a 

termination of tenancy’’ as protections 

against retaliation in 92.253(b)(5)(i), 

either by addition or explicit reference 

to 92.253(d)(1)(i)–(v). 

HUD Response: The Department 

thanks the commenters for reviewing 

the proposed rule and is making several 

revisions to the HOME rental housing 

tenancy addendum retaliation and 

unreasonable interference regulations in 

§ 92.253(b)(5), and similar provisions in 

the tenant-based rental assistance 

tenancy addendum provisions in 

§ 92.253(c)(5). The Department agrees 

with the commenter that § 92.243(b)(5) 

and § 92.253(c)(5) should differentiate 

between unreasonable interference and 

retaliation by the owner. Consequently, 

HUD is revising the section headings to 

include unreasonable interference as its 

own standalone prohibition and 

reorganizing the sections to clarify that 

the consequences for retaliation are that 

the owner is in breach of the tenant 

lease, is violating the requirements in 24 

CFR part 92, and is in violation of the 

written agreement with the participating 

jurisdiction (in the case of rental 

housing) or the rental assistance 

contract (in the case of tenant-based 

rental assistance). 

The Department considered changes 

to shift burden or create presumptions 

that certain actions were interference or 

retaliation based upon the time in 

which they occurred in relation to the 

protected acts that the Department had 

initially linked to the retaliation 

provisions. The Department also 

considered stating that refusal to renew 

or termination of tenancy would not be 

effective if it was to retaliate or interfere 

with a tenant. However, after the 

Department specified consequences 

relating to the written agreement, and 

made examples of rights that a tenant 

could take free from retaliation or 

interference into explicit rights in the 

tenancy addendum, the Department 

believed these further revisions would 

be unnecessary and add undue 

complexity to the regulation. The 

Department will consider guidance on 

how to determine that an action is 

retaliation in response to a protected act 

by a tenant or household member in the 

future. 

The Department also agrees with the 

commenter that recommended that both 

‘‘refusal to renew a tenant lease 

agreement’’ and ‘‘increase rental amount 

in renewal or otherwise initiate a 

termination of tenancy’’ should be 

examples of retaliation or unreasonable 

interference. Section 92.253(b)(5)(iii)(A) 

states that ‘‘[r]ecovery of, or attempt to 

recover, possession of the housing unit 

in a manner that is not in accordance 

with paragraph (b)(10) of this section’’ is 

an action evidencing retaliation or 

unreasonable interference. HUD is also 

adding similar language to the HOME 

tenant-based rental assistance tenancy 

addendum in § 92.253(c)(5)(iii)(A). 

Paragraphs § 92.253(b)(10) and 

§ 92.253(c)(10) provide both the 

termination of tenancy and refusal to 

renew lease provisions. The Department 

has also revised § 92.253(b)(5)(iii)(B) 

and § 92.253(c)(5)(iii)(B) to state that 

‘‘[d]ecreasing services to the housing 


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unit (e.g., trash removal, maintenance) 

or increasing the obligations of a tenant 

(e.g., new or increased monetary 

obligations, etc.) in a manner that is not 

in accordance with the requirements of 

this part’’ is an example of retaliation or 

unreasonable interference. Increasing 

monetary obligations in retaliation or in 

an attempt to unreasonably interfere 

with a tenant is now explicitly 

prohibited by the tenant protections in 

§ 92.253(b)(5)(iii)(B) and 

§ 92.253(c)(5)(iii)(B) in addition to the 

rent setting provisions in § 92.252. 

Q. Other Recommend Provisions in 

§ 92.253(b) Description of Tenancy 

Addendum Contents 

One commenter stated that the HOME 

tenancy addendum should provide 

notice to the tenant that there are 

income restrictions for occupancy and 

the tenant is required to re-certify and 

document changes in their household 

income. The commenter stated that the 

regulations allow a lease to state that the 

rent may change if the household 

income exceeds the income limit at the 

time of re-certification. 

HUD Response: The Department 

understands the desire to enforce 

income requirements as part of the 

tenant lease. This is inappropriate as a 

required term of the lease addendum. It 

is up to the participating jurisdiction to 

determine how best to obtain the 

necessary income information to 

determine income for HOME rental 

housing projects and tenants with 

tenant-based rental assistance. The 

Department provides participating 

jurisdictions with a variety of options 

for calculating income, including the 

use of safe harbors, and gives 

participating jurisdictions the discretion 

to allow owners to accept selfcertification of tenant income in years 

2–5, 7–11, and 13–17 of a rental housing 

project’s period of affordability. As 

such, the Department is declining to add 

these terms as an explicit part of the 

lease. 

R. Security Deposit Requirements 

Should Be in the Tenancy Addendum 

One commenter suggested that HUD 

should include the security deposit 

protections in the HOME tenancy 

addendum. 

HUD Response: HUD agrees with the 

commenter that security deposit 

provisions are a material term of the 

lease, as described earlier in Section III 

of this preamble, and agrees that these 

provisions are best contained and 

enforced through the lease. The 

Department is revising § 92.253(b) and 

(c) to add security deposit provisions as 

part of the terms of the HOME rental 

housing tenancy addendum and the 

HOME tenant-based rental assistance 

tenancy addendum. 

S. Security Deposit Limit—Two Month’s 

Rent 

One commenter supported the 

proposed changes to the HOME rule 

requiring security deposits to be no 

greater than two months’ rent and 

refundable. One commenter supported 

imposing a maximum on security 

deposits but stated that two months of 

rent is an insurmountable barrier to 

tenancy and suggested HUD limit 

security deposits to no more than 1 

month’s rent. The commenter stated that 

if HUD does not change the limit, it 

should require the option of paying any 

amount over one month’s rent monthly 

installments. Another commenter also 

recommended that HUD should limit 

security deposits to the equivalent of 

one-month’s rent, not two months’ rent. 

This commenter asserted that of the 

States that have enacted limits on 

security deposit amounts, the majority 

have opted for a one-month limit over 

a two-month limit. The commenter 

provided citations for 14 States that had 

enacted one-month security deposit 

limits and three States that had enacted 

one and one half-month security deposit 

limits. 

HUD Response: HUD understands the 

commenter’s concern that paying a 

security deposit of two months’ rent is 

not always affordable for HOME tenants, 

even when that rent is set at the Low 

HOME Rent Limits. However, HUD also 

recognizes that a two-month security 

deposit is a commercially reasonable 

request that is consistent with most 

State laws. The Department also 

understands that there are different 

ways to reduce that type of barrier, such 

as by allowing the security deposit to be 

paid in installments. HOME is a block 

grant program. Participating 

jurisdictions and owners must 

underwrite and determine the level of 

risk they wish to expose themselves to 

when determining the amount they 

wish to charge for a security deposit. 

Moreover, participating jurisdictions 

and owners also must determine what is 

commercially reasonable for affordable 

housing in their markets. In many of 

those markets, this necessitates charging 

a security deposit equal to two months’ 

rent or requiring the security deposit to 

be paid all at once. 

HUD also recognizes that a number of 

States have different, more stringent 

security deposit requirements that 

require that the security deposit be less 

than the maximum security proposed in 

§ 92.253(c). A lease for a HOME tenant 

must comply with State and local 

landlord-tenant law, and where State 

landlord-tenant laws are more 

restrictive than HUD requirements, then 

the owner must follow the more 

restrictive requirements. Therefore, in 

those States or localities where 

landlord-tenant law requires the 

security deposit be less than two 

month’s rent, the owner may only 

charge the maximum amount allowable 

under the applicable law. 

T. Use of Surety Bonds and Security 

Deposit Insurance 

Many commenters supported HUD’s 

proposal to prohibit the use of surety 

bonds and security deposit insurance. 

The commenters supported HUD’s 

reasoning that these tools disadvantage 

tenants without any material benefit for 

landlords. One commenter noted that 

surety bonds can be costly to both 

tenants and housing providers. Another 

commenter believed the use of surety 

bonds or security deposit insurance in 

lieu of security deposits don’t meet the 

intent of the National Affordable 

Housing Act (NAHA) and aren’t treated 

as security deposits under-State statutes. 

Other commenters opposed the 

proposed rule’s prohibition of surety 

bonds or security deposit insurance in 

lieu of a security deposit. One 

commenter believed it would be costprohibitive for potential renters of 

HOME-assisted rental housing. The 

commenter explained that the use of a 

surety bond or security deposit 

insurance can be a more affordable 

option for low-income renters who may 

not be able to pay up to the allowable 

two-months’ rent in advance as security 

deposit. 

Another commenter asked HUD to 

remove the prohibition in § 92.209(j)(6) 

on surety bonds or security deposit 

insurance and similar instruments in 

lieu of or in addition to a security 

deposit because it may deter landlords 

from renting to TBRA tenants. The 

commenter also pointed to the 

possibility that a TBRA tenant could 

receive assistance in a unit they already 

occupy and for which a security bond 

was already purchased. The commenter 

recommended that HUD only prohibit 

the use of HOME funds for surety bonds 

or security deposit insurance as an 

ineligible fee as proposed in 

§ 92.214(a)(10). Another commenter also 

stated that a property owner should not 

be allowed to require a tenant to pay for 

security deposit insurance but that the 

regulations should not prohibit property 

owners from informing the tenant about 

the availability of third-party insurance 

coverage. 

HUD Response: As HUD explained in 

the preamble to the proposed rule, HUD 


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60 89 FR 46266. 

61 42 U.S.C. 12742(a)(3)(E). 

determined as a matter of law that 

surety bonds and security deposit 

insurance are not security deposits 

within the meaning of NAHA nor are 

they treated as security deposits under 

State statutes.’’ 60 The drafters of NAHA 

contemplated that renters would pay 

security deposits and authorized 

security deposit assistance as part of the 

tenant-based rental assistance 

program.61

The Department recognizes that 

commenters are requesting flexibility to 

accept these instruments, which are 

generally insurance instruments, in lieu 

of security deposits and not just as a 

substitute form of security deposit. To 

that end, some commenters described 

allowing the owner to waive the 

security deposit requirement entirely in 

exchange for a surety bond or security 

deposit insurance. Beyond the legal 

barriers the Department identified, the 

Department also believes that at each 

phase of the process, surety bonds and 

security deposit insurance can pose a 

risk to both tenants and owners. Tenants 

must pay a nonrefundable fee or 

premium and are still liable under State 

landlord-tenant law and the lease 

contract for damages that are not 

covered by the issuer. The owner must 

submit a claim through a claims process 

and there is a risk of nonpayment or 

delayed payment that is significantly 

higher than if the owner itself held the 

security deposit in a bank account. 

Finally, the payment by the issuer of the 

surety bond or security deposit 

insurance is reliant upon the sufficiency 

of the overall fund itself. If the fund’s 

underwriting standards or fund 

management are insufficient to enable 

the issuer to pay claims on the 

instruments it issued, then the owner 

will still be required to press their claim 

against the tenant. 

While the Department strenuously 

objects to the use of these instruments 

in the HOME program, it also recognizes 

the commenter’s concern that there may 

be some tenants that are already in a 

lease and are seeking to obtain tenantbased rental assistance. The Department 

believes that these instances will be rare 

but has added language to the HOME 

tenant-based rental assistance tenancy 

addendum provisions to hold landlords 

and tenants harmless if the tenant is 

already leasing the unit from the owner 

at the time that the HOME tenant-based 

rental assistance is provided. The 

Department is doing this because it does 

not wish to create unnecessary barriers 

to obtaining tenant-based rental 

assistance, especially when a tenant has 

already fulfilled whatever security 

deposit requirements the owner had set 

forth under the lease, before the 

participating jurisdiction provided the 

tenant-based rental assistance. 

As a result of the above, the 

Department will be moving forward 

with language barring the use of surety 

bonds and security deposit insurance in 

§ 92.253(b)(9) and (c)(9). The 

Department considered tenants that 

would be receiving tenant-based rental 

assistance after the beginning of their 

lease and has revised § 92.253(c)(9) to 

address the commenter’s concerns. 

U. Charges Against Security Deposit 

One commenter supported the 

proposed changes to the HOME rule 

requiring that if charges are made 

against the tenant’s security deposit, 

owners must list all items charged and 

their cost, and promptly refund the 

security deposit to the tenant at moveout, less any documented charges made. 

Another commenter recommended 

that HUD’s final rule should enable a 

tenant to bring to a participating 

jurisdiction a challenge to any damage 

claims made by an owner and/or 

amounts charged against a tenant’s 

security deposit refund. The commenter 

suggested that a tenant could use this 

challenge process if an owner does not 

refund all or a portion of a security 

deposit within two weeks. The 

commenter noted that sub-regulatory 

guidance regarding any such 

proceedings would be helpful. 

HUD Response: The Department is 

maintaining its proposed language on 

charges against the security deposit and 

embedding the language in both the 

HOME rental housing tenancy 

addendum (§ 92.253(b)(9)) and HOME 

tenant-based rental assistance tenancy 

addendum (§ 92.253(c)(9)). The 

Department believes that requiring 

owners to list all items charged against 

the security deposit and the amount of 

each item is a minimum standard that 

should be required of all owners 

assisted by HOME or whose units are 

occupied by tenants with HOME 

assistance. 

The Department understands the 

desire to require participating 

jurisdictions to decide disputes between 

owners and tenants, especially when the 

participating jurisdiction has an 

agreement with the owner. However, it 

is up to the participating jurisdiction to 

determine how best to enforce 

compliance with the tenant protections 

provisions and the provisions of the 

lease addenda. While many 

participating jurisdictions may wish to 

inject themselves in disputes such as 

those over property damage and 

returning security deposits, there will be 

many other participating jurisdictions 

that only respond when the tenant 

alleges a violation of the HOME 

requirements and will leave more 

commonplace landlord-tenant disputes 

to the courts. The Department defers to 

participating jurisdictions to choose 

what is best for their jurisdictions but 

reminds them that they must 

demonstrate that they monitored and 

enforced the tenant protection 

requirements. 

V. Direct Threats to Health and Safety 

Should Constitute Good Cause 

Regardless of Whether a Criminal 

Violation Has Occurred 

One commenter emphasized that the 

proposed changes do not address 

situations where eviction is necessary 

due to violence or other lease violations 

that may endanger other residents or the 

integrity of the property—situations that 

the commenter stated the housing 

provider should have the ability to take 

appropriate legal action against. 

HUD Response: The Department 

agrees with the commenter that there 

are explicit grounds for termination of 

tenancy or refusal to renew under the 

Act when a tenant poses a direct threat 

to the safety of the tenants or employees 

of the housing, or an imminent and 

serious threat to the property. The 

Department is adding these grounds to 

the termination of tenancy provisions at 

§ 92.253(b)(10)(i)(B)(1) and 

§ 92.253(c)(10)(i)(B)(1) in this final rule. 

W. Nonpayment of Rent as Grounds for 

Termination or Refusal To Renew 

One commenter questioned whether 

nonpayment of rent qualified as a 

‘‘serious violation of the lease.’’ The 

commenter believed that because the 

Department further specified the 

grounds for termination of tenancy or 

refusal to renew, the omission of 

nonpayment of rent as a ground for 

eviction could be interpreted as HUD 

stating that it is not grounds to take 

those actions. The commenter was 

certain it was not HUD’s intention to 

exclude nonpayment of rent as grounds 

for termination or refusal to renew but 

believed that one could interpret the 

new regulations to exclude this as 

grounds due to its omission. 

HUD Response: The Department is 

not changing its position that 

nonpayment of rent is a violation of the 

lease and that violation of this term of 

the lease is grounds to terminate a 

tenancy or refusal to renew. The 

Department disagrees with the 

commenter that any silence or 

omissions in the regulation would allow 

a determination that nonpayment of rent 


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62See 88 FR 9625, which states: 

There is no HOME statutory requirement to limit 

a family’s assets or to remove a family from the 

HOME program if the family’s net family assets 

exceed a threshold. HUD solicited public comment 

on whether HUD should impose asset limitations in 

the proposed rule to align with other programs. 

However, after due consideration and examination 

of the Cranston-Gonzalez National Affordable 

Housing Act (42 U.S.C. 12701 et seq.), HUD has 

determined that it will not impose asset limitations 

through this rulemaking. Section 225(b) of the 

Cranston-Gonzalez National Affordable Housing 

Act (42 U.S.C. 12755(b)), which provides tenant 

protections in the HOME program, states in relevant 

part that ‘‘[a]n owner shall not terminate the 

tenancy or refuse to renew the lease of a tenant of 

rental housing assisted under this subchapter 

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.’’ HUD has never interpreted holding a 

certain level or type of assets as sufficient good 

cause for an owner to terminate a tenancy under the 

HOME statute and declines to do so in this 

rulemaking. 

is not grounds for termination or refusal 

to renew under the HOME regulations. 

The Department declines to further 

explain each type of lease violation that 

could be considered by an owner. If 

HUD were exhaustive in its explanation 

of each type of lease violation that an 

owner could consider, HUD may 

inadvertently omit grounds for 

termination and make the very mistake 

that the commenter is describing in 

their comment. 

X. Increase in Income or Assets Is Not 

‘‘Other Good Cause’’ 

One commenter supported HUD’s 

proposed changes that clarify ‘‘other 

good cause’’ may not include a tenant’s 

assets or the type of income or assets. 

One commenter objected to the 

proposed change. The commenter stated 

that this was an example of a conflict 

with the Section 8 program. The 

commenter noted that if a PHA 

terminates the Housing Assistance 

Payment for a tenant who becomes overincome, in accordance with existing 

HUD regulations, ‘‘the lease 

automatically terminates’’. However, 

neither being over-income nor the 

termination of a rental assistance 

contract are allowable reasons for the 

termination of a tenancy under the 

proposed regulations for a HOMEassisted unit. The commenter 

questioned whether HUD defines 

‘‘governmental entity’’ as including 

PHAs, and whether a PHA termination 

represents ‘‘an order from a 

governmental entity.’’ The commenter 

requested clarity on how to apply the 

requirements where a PHA terminates 

assistance because the tenant is overincome or over the asset limitation in 24 

CFR 5.618. 

HUD Response: The Department 

thanks the commenter for reviewing the 

proposed rule and supporting the 

proposed change. Continuing to live in 

a HOME rental housing unit when there 

has been an increase in income is 

statutorily protected for tenants of 

HOME rental housing (see 42 U.S.C. 

12745(a)(3)). The Act does not permit an 

increase in assets or assets of a certain 

type or amount to be considered good 

cause, even though this is good cause in 

other programs, most notably certain 

programs under the U.S. Housing Act of 

1937 (42 U.S.C. 1437 et seq.) such as the 

Housing Choice Voucher program. The 

Department does not have discretion to 

permit termination or refusals to renew 

for these reasons and is clarifying this 

so that owners continue to comply with 

HOME requirements when assistance is 

combined with programs that do 

consider an increase in income or assets 

to be good cause for termination or 

refusal to renew. To that end, the 

Department is clarifying for the 

commenters that termination of tenancy 

due to the amount, form, or type of 

income or assets is a violation of the Act 

and current HOME regulations. The 

Department clarified this for the amount 

and type of assets in the preamble to the 

HOTMA final rule and is now further 

clarifying for over income tenants as 

well.62

Y. Other Good Cause Should Include 

Unreasonably Denying Access to the 

Owner To Make Repairs 

One commenter supported HUD’s 

proposed changes that clarify ‘‘other 

good cause’’ may include when a tenant 

unreasonably refuses to provide the 

owner access to the unit for repairs. 

HUD Response: The Department 

thanks the commenter for reviewing the 

proposed rule and supporting the 

proposed change. Owners must be able 

to reasonably access and repair units. 

All HOME-assisted rental housing units 

and units occupied by tenants with 

tenant-based rental assistance must 

meet applicable property standards. 

Requiring tenants to allow owners 

reasonable access to properly maintain 

the units in accordance with applicable 

property standards is prudent and 

protects tenants and owners alike. 

Z. Other Good Cause Requirements— 

Material Lease Violations, Nuisance, 

and Nondiscrimination Requirements 

One commenter suggested that in 

§ 92.253(d)(1)(i) HUD should amend the 

rule by adding ‘‘material’’ to clarify that 

good cause exists for serious or repeated 

violations of the material terms of the 

lease. 

Alternatively, the commenter 

suggested HUD put landlords on notice 

that nuisance ordinances may violate 

Federal civil rights law and 

recommended the following potential 

language: Other good cause may include 

when a tenant creates a documented 

nuisance under applicable State or local 

law or when a tenant unreasonably 

refuses to provide the owner access to 

the unit to allow the owner to repair the 

unit, but only when termination or 

refusal to renew a tenancy would be 

consistent with Federal civil rights law, 

such as the Fair Housing Act. 

One commenter supported HUD’s 

proposed changes that clarify ‘‘other 

good cause’’ may include a tenant 

creating a documented nuisance under 

applicable State or local law. Some 

commenters expressed concern with the 

language at § 92.253(d)(1)(i)(B) and 

asked HUD to remove it as a basis for 

good cause, stating that it is their 

experience that alleged nuisances are 

often disability related. 

Commenters recommended that HUD 

not use the term ‘‘nuisance’’ in 

§ 92.253(d)(1)(i)(B) and (C) because 

States and local governments have laws 

that target residents responsible for 

alleged nuisance activity, including 

calls to emergency services or noise 

disturbances related to domestic 

violence, with penalties such as fines 

and evictions. One commenter stated 

that these policies stand in opposition 

to HUD’s efforts to protect tenants 

against unjustified evictions, and that 

HUD should instead establish a ‘‘good 

cause’’ for eviction that requires an 

actual, substantial, and imminent threat 

to the health and safety of, and right to 

peaceful enjoyment of the premises by, 

others. 

HUD Response: The Department 

agrees with the comment regarding 

addition of ‘‘material’’ and is adding 

‘‘material’’ in § 92.253(b)(10) and 

§ 92.253(c)(10) of this final rule to 

characterize the types of lease violations 

that constitute good cause to terminate 

a tenancy or refuse to renew a tenancy 

of a tenant in HOME rental housing or 

assisted with HOME tenant-based rental 

assistance. Inconsequential or minor 

lease violations that are easily curable or 

whose conditions no longer exist should 

not be the basis for a termination or 

refusal to renew. 

The Department has removed from 

this final rule the use of nuisance as 

grounds for termination of tenancy or 

refusal to renew. The Department agrees 

that this ground has been the subject of 

significant fair housing and civil rights 

abuses and has led to the denial of 

necessary housing for survivors of 

domestic violence, dating violence, 

sexual assault, or stalking. The 

Department does not wish to perpetuate 

this cycle of discrimination through the 


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63 89 FR 46639. 

use of this terminology as an explicit 

ground for termination or refusal to 

renew. 

The Department already required that 

all terminations or refusals to renew are 

in accordance with all applicable 

Federal, State, and local laws and 

believes its revisions have addressed the 

commenter’s concerns. 

AA. Good Cause in Lease-Purchase 

Projects 

One commenter expressed concerns 

about the ‘‘good cause’’ definition, at 

proposed § 92.253(d)(1)(i)(A), stating 

that the language provides no provision 

for when a homebuyer fails to purchase 

a housing unit in a lease-purchase 

project. The commenter stated that this 

creates a loophole where after the 

failure of a lease-purchase agreement, a 

developer of property specifically for 

homeownership becomes locked into 

the long-term ownership and 

management of a HOME-assisted rental 

unit because the Department is not 

allowing this failure to be good cause to 

terminate the tenancy. The commenter 

recommended that a ‘‘business or 

economic reason’’ clause be added to 

the proposed ‘‘good cause’’ definition. 

HUD Response: The Department 

agrees with the commenter and is 

adding to this final rule a provision in 

§ 92.253(b)(10)(i)(A) and 

§ 92.253(c)(10)(i)(A) allowing for 

termination of a tenancy for a family 

that is occupying a unit under a leasepurchase program when that family 

does not acquire the housing unit in 

accordance with a lease-purchase 

agreement. The Department recognizes 

that owners of homeownership 

development projects should have the 

ability to terminate the tenancy of a 

tenant that fails to purchase the housing 

so that the owner may sell the 

homeownership unit to another eligible 

low-income homebuyer before the 

housing is converted to rental housing 

(see § 92.254(a)(7) for more 

information). 

The Department is declining to 

consider a business or economic reason 

as adequate grounds for termination of 

tenancy for the HOME rental housing 

tenancy addendum. In the proposed 

rule, HUD proposed that it would be 

good cause to terminate a tenancy when 

an owner intends to withdraw the unit 

from the rental market to occupy the 

unit; allow an owner’s family member to 

occupy the unit; or demolish or 

substantially rehabilitate the unit. This 

language is being maintained in this 

final rule and will allow owners to 

terminate for certain specific business or 

economic reasons. However, the 

Department was concerned that 

providing the more general grounds that 

the commenter requested would be too 

broad and could have unintended 

consequences. 

BB. Use of Previous Convictions To 

Terminate Tenancy or Refuse To Renew 

a Tenancy 

Commenters stated that the preamble 

for § 92.253(d)(1)(i)(D) discusses how 

the crime for which there has been a 

conviction is a crime ‘‘during the 

tenancy period’’ and that good cause 

cannot be based on a violation ‘‘that 

occurred prior to tenancy.’’ However, 

the commenter pointed out that these 

are not explicit in the regulatory text 

and urged HUD to explicitly state in the 

final rule that the record of conviction 

be of a crime that took place during a 

person’s tenancy and not prior to 

tenancy. The commenter also urged 

HUD to specify in the final rule that for 

‘‘good cause’’ the conviction must have 

a direct bearing on the tenant’s 

continued occupancy and pose an 

actual, substantial, and imminent threat 

to the health and safety of, and peaceful 

enjoyment of the premises by, others. 

The commenter repeated these 

suggestions as applied to the proposed 

TBRA provisions in § 92.253(d)(2)(i)(B). 

One commenter added that HUD 

should consider limiting this provision 

to convictions by a tenant, household 

member, current guest, or other person 

under the tenant’s control. The 

commenter further suggested that HUD 

should consider adding a definition of 

‘‘crime that bears directly on the 

tenant’s continued tenancy’’ or, 

alternatively, provide examples in subregulatory guidance accompanying the 

final rule. The commenter stated that 

the standard in the proposed rule is 

vague and could result in owners 

evicting for pretextual reasons and for 

criminal activity that does not pose a 

real threat to the health and safety of 

others. 

One commenter noted that the 

preamble states there must be a record 

of conviction for a crime ‘‘during the 

tenancy period’’ to justify termination of 

tenancy or refusal to renew a lease, but 

the text of the rule is not as explicit, and 

the commenter recommended HUD 

make the final rule text as clear as the 

preamble discussion. 

HUD Response: The Department 

agrees with the commenter that stated 

that the Department should define or 

provide examples of a ‘‘crime that bears 

directly on the tenant’s continued 

tenancy.’’ After much consideration, the 

Department is revising the language in 

the new paragraphs § 92.253(b)(10)(i)(C) 

and § 92.253(c)(10)(i)(B)(3) to state that 

an owner may establish good cause for 

a violation of an applicable Federal, 

State, or local law through a record of 

conviction of a crime that threatens the 

health, safety, or right to peaceful 

enjoyment of the premises by other 

tenants in the project. This standard is 

a sufficient threshold and is directly 

related to the statutory good cause 

conditions found in 42 U.S.C. 12755. 

The Department is declining to 

specify the time period of the conviction 

of the crime in the regulation itself. 

There may be times, such as when a 

person moves into a unit during a 

family’s ongoing tenancy, where tying 

the conviction to the family’s initial 

occupancy may be inappropriate. 

However, the Department maintains, as 

it stated in the proposed rule, that for 

tenants that have already been screened 

by the owner— 

‘‘good cause based on a violation of 

applicable Federal, State, or local law 

cannot be based on a violation that 

occurred prior to tenancy, a violation 

that does not have a direct bearing on 

a tenant’s continued tenancy, or a basis 

other than a record of conviction. An 

owner may consider any mitigating 

circumstances relevant to whether the 

tenant will commit further violations of 

the lease or applicable Federal, State, or 

local law.’’ 63

CC. Good Cause for Violation of Law 

Evidenced by Arrest for a Crime 

One commenter supported HUD’s 

proposal that an owner shall not use a 

record or arrest, parole or probation, or 

current indictment to establish a 

violation of law. 

Some commenters expressed 

opposition to the proposed language in 

§ 92.253(d)(1)(i)(D) that would require 

that establishment of good cause for 

violation of law to be predicated on the 

conviction of a crime. One commenter 

explained that this lease renewal 

requirement is an excessively high 

standard because a criminal conviction 

requires a ‘‘beyond a reasonable doubt’’ 

evidentiary standard. The commenter 

suggested that the rule should require a 

more reasonable ‘‘preponderance of the 

evidence’’ standard. Additionally, the 

commenter suggested that the proposed 

rule specify the types of criminal 

activity that would qualify as affecting 

the safety of persons or property, as it 

does not consider the potential risks to 

tenant and staff safety in cases where an 

arrest or current indictment is due to 

violent actions of the tenant. 

The commenter also noted that the 

proposed rule requires ‘‘that an owner 

shall not use a record of arrest, parole 

or probation, or current indictment to 


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establish a violation of applicable 

Federal, State, or local law.’’ The 

commenter expressed concerned that 

this language only gives power to 

owners in cases where a tenant has a 

record of conviction. The commenter 

suggested that the rule should allow for 

other evidence to be used besides just a 

conviction in cases where the owner 

believes the tenant or prospective tenant 

is a threat to the safety of residents, 

staff, or property. 

HUD Response: The Department 

understands the concerns of the 

commenters. The Department believes 

that direct threats to the safety of the 

tenants or employees of the housing, or 

imminent and serious threats to the 

property should constitute separate 

grounds for terminating a tenancy or 

refusing to renew a lease and is adding 

§ 92.253(b)(i)(B)(1) and 

§ 92.253(c)(i)(B)(1). The Department 

does not believe that such threats 

require a record of conviction so long as 

the threat to safety or property is 

evidenced by credible acts or threats 

that the harm will occur. As described 

in Section III of this preamble, this is 

not a low standard, but it is also not the 

legal standard of ‘‘beyond a reasonable 

doubt’’ evidenced by a conviction. The 

Department believes that with this 

change, and the change to allow 

termination in accordance with certain 

rules of other programs when tenants 

are assisted by each (see the next 

comment response), it has addressed the 

commenters’ concerns. 

DD. Conviction of a Crime and Section 

8 Housing Choice Voucher Regulations 

One commenter opposed the 

proposed changes to § 92.253(c) and (d), 

citing that many of the changes would 

create conflicts with existing HUD 

regulations because they go beyond 

what other HUD programs require and 

create conflict with the Housing Choice 

Voucher program. 

One commenter stated that the 

proposed changes to the current 

termination of tenancy regulations 

should match more closely the Housing 

Choice Voucher program’s termination 

of tenancy regulations to avoid 

conflicting interpretations. The 

commenter cites to examples where 

language mirrors section 8 regulations 

but is silent as to definitions of key 

terms. The commenter also stated that 

the requirement that ‘‘good cause’’ be 

established by conviction of a crime at 

the proposed § 92.253(d)(1)(i)(D) 

conflicts with treatment of criminal 

convictions under section 8 regulations, 

which allow for termination of tenancy 

for criminal activity regardless of 

conviction. The commenter also wanted 

clarification about whether signs of 

repeated drug activity on the premises 

through objectively verifiable contacts 

by emergency services were sufficient to 

constitute good cause to evict or if such 

activity must be coupled with a 

conviction because it constituted 

criminal activity in the jurisdiction. 

The commenter also explains that 

where a household member is engaged 

in criminal activity in the Section 8 

program, the requirements of 24 CFR 

982.310(h)(2) permit an owner to 

require a tenant to exclude a household 

member in order to continue to reside 

in the assisted unit, where that 

household member has participated in 

or been culpable for action or failure to 

act that warrants termination. The 

commenter believes that the HOME rule 

conflicts with the Section 8 rule because 

it requires that a civil court proceeding 

is instituted against the household 

member to remove them from the unit. 

HUD Response: The Department has 

revised the regulation at 

§ 92.253(b)(10)(i) to address the 

commenter’s concerns. If the tenant is 

participating in a program that is subject 

to 24 CFR part 5, subpart I; 24 CFR 

882.511; or 24 CFR 982.310, then the 

owner is permitted to terminate the 

tenancy of any tenant or household 

member or refuse to renew the lease of 

a tenant of rental housing assisted with 

HOME funds pursuant to those 

provisions. This new provision will 

allow these regulations that govern 

other programs to form the basis of a 

termination or refusal to renew and 

constitute good cause under the HOME 

program even though these would not 

necessarily be grounds for HOME 

tenants that are not assisted through 

programs subject to those regulations. 

This improves alignment and addresses 

the commenter’s concerns. 

EE. 60-Day Notice Before Termination of 

Tenancy or Refusal To Renew 

Some commenters supported the 

proposed change in § 92.253(d)(1)(ii) 

that would require owners to provide 60 

days notice to tenants before 

termination of tenancy or refusal to 

renew instead of 30 days notice before 

termination of tenancy or refusal to 

renew. One commenter stated that HUD 

should amend 92.253(d)(1)(ii) and 

92.253(d)(2)(ii) to require a 60-day 

notice of intent to terminate tenancy 

and/or not renew (both rental housing 

and TBRA should get 60-day notice). 

Another commenter suggested 

extending the 30-day eviction notice 

period for TBRA to 60 days to allow 

time for finding a suitable housing 

alternative. 

One commenter explained that this 

would help tenants avoid eviction by 

providing sufficient time to dispute or 

cure lease violations and, where tenants 

are unable to do so, 60 days notice 

would provide better opportunity for 

those tenants to find new affordable 

housing and avoid being rendered 

homeless. One commenter suggested 

that HUD should clarify that the tenant 

has the right to cure a lease violation 

during the notice period in 

92.253(d)(1)(ii). The commenter 

explained that allowing tenants to cure 

evictions in that time period promotes 

clarity in the law, and also prevents 

needless evictions. 

One commenter noted that while a 60- 

day notice could provide better tenant 

protections, a concern would be if an 

industry norm of reciprocated notice 

periods pushed landlords to extend 

these expanded 60-day timeline for 

tenants to notify landlords beyond 

HOME supported units. 

Some commenters opposed the 

provisions in the proposed rule that 

would extend the current requirement 

of a 30-day notice before a termination 

of tenancy to 60 days. Commenters 

expressed concern that the extension of 

the 30-day notice to a 60-day notice 

would conflict with local or State laws 

that vary widely on timing and 

requirements for eviction. A commenter 

stated that when a State has a 30-day 

notice in place for non-HOME tenants, 

administering and determining 

evictions in mixed-income communities 

will become difficult and may 

unintentionally cause confusion and 

inequity. The commenter recommended 

that HUD not institute a 60-day notice 

requirement and maintain the current 

30-day notice requirement. 

Other commenters also expressed 

concern with the extension of the notice 

period, contending that many housing 

providers cannot sustain the financial 

burden of nonpayment for an extended 

period of time and that the 30-day 

timeframe already leads to loss of 

income, increased operational costs, 

unsustainable balances for tenants, and 

disruptive delays. One commenter 

stated that the proposed 60-day notice 

of lease termination provision is 

particularly onerous and does not 

provide financially distressed tenants 

with the financial support that they 

need. Another commenter noted that 

owners should have access to timely 

recourse in the event of continued and 

ongoing lease violations and there are 

risks to housing providers, property 

operations, and maintenance when 

landlords are unable to collect rent 

revenue for extended periods and that 

HUD should not further extend the 


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HOME notice to quit period without 

additional resources for owners to 

weather the resulting ‘‘economic 

vacancies’’ or the resources for residents 

to find alternate housing. 

Commenters opposed increasing the 

notice of termination of tenancy to 60 

days for nonpayment of rent because it 

adds challenges to owners and current 

and prospective tenants. The 

commenters explained that increasing 

the timeline for nonpayment of rent to 

60 days increases the financial burden 

on owners who need rent to sustain 

property operations. The commenter 

further explained that enforcement of a 

longer notice period may incentivize 

owners to file for evictions sooner due 

to the slow pace of the court process 

and the costs it will incur. 

One commenter emphasized that its 

members are affordable housing 

providers; they are not in the ‘‘eviction 

business’’ as they are sometimes 

‘‘branded,’’ and a 60-day notice period 

would lead to a significant departure of 

some great housing providers from 

participation in the HOME program. 

This commenter further stated that its 

member housing providers often face 

noncommunication from tenants who 

are unable to pay their rent and argued 

that HUD needed to be fair and require 

tenants to communicate with landlords 

when they can’t pay their rent and make 

their best efforts to make timely partial 

payments as possible. The commenter 

also stated that housing providers are 

facing 60–120 days of nonpayment and 

uncollected rent in the millions, which 

leads to decreased operating budgets 

and fewer households assisted. 

Additionally, the commenter said that 

eviction cases can last several months. 

Another commenter objected to the 

eviction period extension from 30 days 

to 60 days, stating that it finds that 

statistically the longer someone is 

permitted to stay in a unit without 

paying rent, the longer they will stay 

without paying rent. The commenter 

said that it is more likely that the 

month’s rent will be just another 

month’s rent that goes unpaid to the 

landlord and decreases the cash 

available for that landlord to pay its 

bills or maintain the property. The 

commenter also stated that anything 

longer than a 30-day eviction notice 

would not benefit tenants because it 

could increase exposure to harmful 

conditions and increase owners’ 

scrutiny of tenants’ background records 

relative to past-owed amounts to 

landlords, bad landlord references, and 

credit issues. 

HUD Response: The Department 

thanks the commenters for reviewing 

the proposed rule. HUD agrees with 

commenters that the 60-day eviction 

notice for tenants in HOME-assisted 

rental units may conflict with State and 

local laws as well as the eviction 

requirements for tenants in units with 

project-based vouchers. HUD agrees that 

requiring owners to provide 60 days’ 

notice may be a financial burden to 

owners, particularly when the good 

cause for eviction is the tenant’s failure 

to pay rent. This burden may negatively 

impact the overall financial stability of 

the rental housing project, given local 

court processes and other delays once a 

termination action has been filed. The 

Department also understands that 

extending the notice period from 30 

days to 60 days reduces alignment with 

other HUD programs that require only 

30 days’ notice and could have a 

chilling effect on new and existing 

landlords. For these reasons, HUD is 

maintaining the existing regulatory 

requirement that a project owner 

provide a written notice to vacate at 

least 30 days before the termination of 

tenancy or refusal to renew in this final 

rule. 

FF. Providing Notice To Vacate to 

Participating Jurisdictions 

One commenter requested HUD 

explain what a participating jurisdiction 

is required to do once they receive an 

owner’s notice to vacate in accordance 

with the proposed § 92.253(d). For 

example, the commenter suggested that 

the final rule could clarify that, once 

collected, the participating jurisdiction 

should make the information available 

to HUD for compliance review. 

HUD Response: The participating 

jurisdiction already must maintain the 

documentation for its files and provide 

it to HUD upon request. So, the 

commenter’s recommendation is already 

covered by the recordkeeping 

requirements in § 92.508. The 

Department defers to participating 

jurisdictions on how best to use the 

notice to vacate. Some participating 

jurisdictions may wish to monitor the 

owners of projects that issue notices to 

vacate, especially if such notices are 

frequent. In other instances, 

participating jurisdictions may wish to 

intercede to attempt to stabilize the 

landlord-tenant relationship, if it is 

possible and practicable. These 

decisions are best left to participating 

jurisdictions and the owners they assist. 

The Department is simply attempting to 

empower participating jurisdictions by 

making sure they have current 

information on lease terminations in 

their HOME rental housing and tenantbased rental assistance portfolios. 

GG. Difference Between HOME 

Requirements and State Law 

Requirements on Notice of Termination 

of Tenancy or Refusal To Renew 

A commenter stated that many States 

have a rule of a 7-day ‘‘pay or quit’’ for 

an eviction based on non-payment of 

rent. The commenter asked for 

additional clarity on how to manage the 

7-day notice requirement in States with 

the proposed requirement of providing 

an accessible notice to vacate at least 30 

days prior to termination. 

HUD Response: Regardless of other 

State laws that may be more permissive, 

the HOME statutory minimum notice 

period prior to termination of tenancy or 

refusal to renew is 30 days (see 42 

U.S.C. 12755(b)). The only exception to 

the 30-day notice period is when the 

person poses a direct threat to the safety 

of the tenants or employees of the 

housing or an imminent and serious 

threat to the property and the 

termination or refusal to renew is in 

accordance with the requirements of 

State or local law. 

If an owner is in a State where the 

notice requirements are less stringent 

(i.e., States that require shorter notice 

periods) than the HOME statutory notice 

requirements, then the owner must still 

comply with the HOME tenant 

protections and adhere to the HOME 

requirements. The owner is making the 

decision to adhere to these stricter 

notice requirements when the owner 

and participating jurisdiction enter into 

a HOME agreement where the owner 

agrees to comply with the tenant 

protection requirements (see 24 CFR 

92.504(c)). This treatment and the 

statutory requirements are not being 

changed as part of this rulemaking. 

HH. Termination of Tenancy for Refusal 

To Provide Income Documentation 

One commenter suggested that the 

provision should also clearly state that 

the landlord may terminate their 

tenancy or not renew their lease for 

failure to provide satisfactory 

documentation. 

HUD Response: The Department 

declines to make failure to provide 

sufficient documentation an explicit 

form of good cause to terminate tenancy 

or refusal to renew in this final rule. The 

participating jurisdiction and owner 

must work with HOME-assisted tenants 

to obtain the appropriate documentation 

to determine the applicable income and 

HOME rents for HOME-assisted rental 

housing tenants. Failure to provide 

documentation may be for legitimate 

reasons. Further, the Department is 

attempting to reduce the burden of 

providing source documents during 


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64See 42 U.S.C. 12755(b). 

income determinations by providing an 

additional safe harbor that can be used 

at initial and annual income 

examinations in the new § 92.203(a)(3). 

II. Right To Renew Clause 

One commenter stated that HUD 

should have a right to renew clause for 

all tenants unless the tenants have 

violated the terms of their agreement. 

The commenter stated that HUD should 

require a landlord to provide 180 days 

advanced notice of their decision not to 

renew and said notice must offer a 

written explanation of the good cause 

for non-renewal. The commenter 

recommended that good cause be 

defined as follows: (1) the tenant has not 

accepted the renewal offer in writing 

within the time allowed; (2) the tenants 

who accepted the renewal offer, along 

with any replacement tenants 

acceptable to the landlord, have not 

returned a signed lease to the landlord 

within 10 days of receipt; (3) the 

landlord can demonstrate a lease 

violation; (4) the owner or a member of 

the owner’s immediate family is going 

to occupy the unit for a succeeding 

term; or (5) the landlord will no longer 

be renting the property out. 

HUD Response: The Department 

declines to create the right to renew 

clause described by the commenter in 

this final rule. The Department is also 

not going to impose through this final 

rule a requirement that an owner 

provide a family with 180 days’ notice 

before refusing to renew a lease. The 

Department believes 180 days is an 

unreasonably long amount of time and 

has reverted its notice requirements to 

30 days’ notice in response to public 

comment (see earlier preamble 

responses). 

The good cause requirements in the 

HOME program are statutory. In HOME, 

the tenant has the right to renew unless 

the owner has good cause to refuse to 

renew or terminate the tenancy.64 The 

Department is providing different forms 

of good cause that may allow an owner 

to terminate the tenancy but many of the 

grounds provided by the commenter 

provide insufficient protections to 

families or are inherent in the way that 

HOME projects and private market 

properties are managed. 

The Department is declining to 

describe in this final rule whether a 

tenant’s failure to accept a lease renewal 

offer or failing to execute a lease would 

constitute good cause to refuse to renew 

the tenants lease because in each case, 

the tenant has not renewed the lease. 

The Act requires that only serious or 

repeated lease violations be good cause. 

The Department is further defining the 

types of lease violations that should 

constitute good cause as ‘‘material’’ as 

the Department does not believe that 

frivolous or inconsequential lease 

violations should constitute good cause. 

As such, the Department believes the 

commenter’s language that ‘‘the 

landlord can demonstrate a lease 

violation’’ is not legally acceptable 

under the Act and is declining to adopt 

it. The Department does allow for 

owners of units occupied by tenants 

receiving tenant-based rental assistance 

to terminate a tenancy or refuse to 

renew if the owner wishes to occupy the 

unit, allow family to occupy the unit, or 

take the property off the market. The 

Department had proposed those as 

appropriate grounds for termination of 

tenancy or refusal to renew the lease in 

the proposed rule in § 92.253(d) and is 

maintaining those grounds in the 

redesignated § 92.253(c)(10)(i)(B)(5). As 

these grounds apply only to units on the 

private market and not to HOME rental 

housing, which must be owned and 

operated in accordance with the 

requirements of 24 CFR part 92 for the 

minimum period of affordability, the 

Department declines to include in this 

final rule these grounds for HOME 

rental housing terminations of tenancy 

or refusals to renew. 

JJ. Termination of Tenancy in TenantBased Rental Assistance 

One commenter recommended that 

any deviations between the two sets of 

protections be clearly stated. One 

commenter opposed the addition of 

§ 92.253(d)(2) because, according to the 

commenter, these standards should 

already apply more broadly and not just 

for TBRA clients. Additionally, the 

commenter stated that the word 

‘‘reasonable’’ would be too subjective 

and not allow for standardization of 

tenant selection across the program. 

This commenter also asserted that 

TBRA contracts should continue to be 

executed by the owner and support triparty rental assistance contracts where 

the owner, tenant, and participating 

jurisdiction all sign, as an option. This 

method would ensure the lease contains 

the HOME tenancy addendum and that 

the owner follows applicable TBRA 

requirements. 

HUD Response: The Department has 

reorganized the tenant protections in 

§ 92.253 and the tenant-based rental 

assistance contract provisions in 

§ 92.209(e) in this final rule in a way 

that addresses some of the commenters’ 

concerns. The Department is now 

placing the termination provisions 

directly in the HOME rental housing 

tenancy addendum and the HOME 

tenant-based rental assistance tenancy 

addendum. The Department is also 

requiring in § 92.209(e)(1) that owners 

and tenants each enter into a rental 

assistance contract with the 

participating jurisdiction when tenantbased rental assistance is provided. This 

may take the form of a tri-party contract 

or individual agreements between the 

participating jurisdiction and the owner 

and the participating jurisdiction and 

the tenant. 

The Department is declining in this 

final rule to define reasonable or to 

remove its usage in HUD regulations. 

Reasonable is a commonly used and 

understood term and is not too 

subjective. There is a body of caselaw 

and jurisprudence surrounding what is 

and is not reasonable under certain 

circumstances and HUD declines to 

further specify what reasonableness is 

in tenant selection. The Department also 

declines in this final rule to apply the 

termination of tenancy provisions 

applicable to tenant-based rental 

assistance to HOME rental housing 

tenants. The termination provisions for 

tenant-based rental assistance contain 

certain provisions that only apply to 

owners of private rental housing and not 

HOME rental housing projects, such as 

termination of tenancy so that the owner 

may move into their unit (See 

§ 92.253(c)(10)(i)(B)(5)). 

The Department agrees with the 

commenter on the benefits of tri-party 

rental assistance contracts but is 

providing participating jurisdictions 

with the option of entering into tri-party 

rental assistance contracts or into 

separate agreements with the owner and 

the tenant. This is because HOME is a 

block grant program, and participating 

jurisdictions should have discretion in 

how they bind owners and tenants to 

the requirements of their tenant-based 

rental assistance program. 

KK. Prohibiting Constructive Evictions 

One commenter supported HUD’s 

proposal to prohibit owners from 

performing ‘‘constructive evictions’’ 

(aka ‘‘self-help’’ evictions’’), such as 

locking a tenant out of their unit or 

stopping service on their utilities. One 

commenter supported requiring owners 

to provide tenants with uninterrupted 

utility service to ‘‘counteract a 

disturbing trend of so-called ‘self-help’ 

evictions’’, whereby owners use their 

control of utilities to force tenants to 

end their tenancy. 

HUD Response: The Department 

thanks the commenters and is including 

these provisions in this final rule. Due 

to reorganization of the tenancy 

addenda provisions, these provisions 

are now contained in § 92.253(b)(10)(v) 


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65See 42 U.S.C. 12755(d). 

66See Guidance on the Application of the Fair 

Housing Act to the Screening of Applicants for 

Housing’’ https://www.hud.gov/sites/dfiles/FHEO/ 

documents/FHEO_Guidance_on_Screening_of_

Applicants_for_Rental_Housing.pdf, mentioned by 

a commenter, and ‘‘Tenant Background Checks and 

Your Rights’’, https://www.hud.gov/sites/dfiles/ 

FHEO/documents/HUD_Tenant_Background_

Checks_and_Your_Rights.pdf, which is joint 

guidance developed by HUD, the Federal Trade 

Commission, the Department of Justice, and the 

Consumer Financial Protection Bureau. 

67See the Fair Housing Act guidance for tenant 

screening in rental housing here: https://

www.hud.gov/sites/dfiles/FHEO/documents/FHEO_

Guidance_on_Screening_of_Applicants_for_Rental_

Housing.pdf. 

and § 92.253(c)(10)(iv) and shall apply 

to both tenants in rental housing and 

tenants receiving tenant-based rental 

assistance. 

LL. Termination of Tenancy Because of 

Termination of Rental Assistance 

Contract 

One commenter opposed the revisions 

to § 92.253(d)(2)(i)(E) because the 

commenter believes tenants should have 

the ability to request termination if the 

rental assistance contract ends, but the 

landlord should not have the discretion 

to do so. The commenter also suggested 

adding tenant liens as a prohibited 

action in § 92.253(d)(1)(v). The 

commenter urged HUD to further 

indicate how confidential tenant 

information is handled. 

HUD Response: The Department 

agrees with the commenter and is 

removing from this final rule the 

termination of the rental assistance 

contract as specific grounds for 

termination of tenancy or refusal to 

renew. Instead, the Department is 

revising § 92.253 of this final rule to 

state that the HOME tenant-based rental 

assistance tenancy addendum shall 

terminate upon the termination of the 

rental assistance contract. 

The Department is declining to 

enumerate in this final rule specific 

measures projects owners must take to 

ensure tenant information is handled 

confidentially. Participating 

jurisdictions and owners should take 

reasonable measures to prevent 

unauthorized access to confidential 

information by persons without a need 

to know, (e.g., password protected 

systems, locking file cabinets and desk 

drawers that contain personal 

identifying information, etc.). 

MM. Tenant Selection Procedures 

Should Require That Owners Do Not 

Evaluate Previous Bankruptcies 

A commenter stated that a previous 

bankruptcy should not be treated as 

equivalent to a previous eviction when 

a person is applying for low-income 

housing. The commenter also 

recommended that, prior to charging an 

application processing fee, properties 

must inform persons applying for 

housing that a previous bankruptcy 

disqualifies them from housing at the 

property, if applicable. 

HUD Response: HOME is a block 

grant program, and neither the statute 

nor the regulations address whether or 

how previous bankruptcies are treated 

in the tenant screening process. The Act 

provides owners with discretion in 

tenant selection. As long as tenant 

selection is performed in accordance 

with the Act, all applicable Federal, 

State, and local laws (including but not 

limited to nondiscrimination and 

VAWA requirements), the owner has 

discretion to consider the effect of prior 

bankruptcies or past financial problems. 

The Department encourages tenant 

selection policies that do not unfairly 

penalize families for factors that no 

longer negatively impact their ability to 

pay or to live in HOME-assisted rental 

housing but recognizes that these 

determinations are fact-sensitive. The 

Department therefore declines to further 

impose requirements in this area at this 

time, including requiring notice prior to 

submission of application. HUD notes 

that the comment appears to address all 

low-income housing, not only housing 

funded through the HOME program. To 

the extent that this comment also 

describes programs that are not part of 

this rulemaking, that portion of the 

comment is outside the scope of this 

rulemaking. 

NN. Tenant Selection Procedures 

Should Incorporate Fair Chance 

Housing Practices 

One commenter suggested that HUD 

prohibit the use of explicit credit score 

and criminal history requirements, as 

well as limit the ‘‘look-back’’ period for 

eviction records to one year from the 

date of application. 

HUD Response: HUD appreciates the 

commenter’s feedback, but HOME is a 

block grant program, and participating 

jurisdictions and project owners are 

permitted to establish tenant screening 

and selection criteria. Similar to the 

previous response, the Department 

encourages tenant selection policies that 

do not unfairly penalize families for 

factors that no longer negatively impact 

their ability to pay or to live in HOMEassisted rental housing. The Department 

also reminds owners and participating 

jurisdictions that all tenant selection is 

subject to Federal, State and local 

requirements, including 

nondiscrimination and VAWA 

protections. However, as these 

determinations are fact-sensitive and the 

Act provided owners with discretion in 

tenant selection,65 the Department 

declines to further impose requirements 

in this area at this time. 

Owners should be aware that 

screening based on credit score and 

criminal history can have a disparate 

impact against protected classes in 

violation of the Fair Housing Act 66 and 

should ensure that their screening 

procedures do not run afoul of these 

laws. 

OO. Notification of Grounds of 

Disapproval Under § 92.253(e) Tenant 

Selection Procedures 

With regard to § 92.253(e)(6), one 

commenter suggested that HUD should 

require that the written notification to 

reject applicants describe the grounds 

for rejection with sufficient specificity 

that a person can prepare an appeal of 

the housing provider’s decision. The 

commenter stated that any supporting 

materials, such as a consumer report, 

must be provided to the tenant. The 

commenter further stated that these 

additional requirements align with 

HUD’s recent fair housing guidance on 

tenant screening. 

HUD Response: 42 U.S.C. 

12755(d)(4)(B) only requires ‘‘the 

prompt notification in writing of any 

rejected applicant of the grounds for any 

rejection’’ and does not provide any 

additional recourse. If an applicant 

believes that the grounds for 

disapproval violate Federal, State, or 

local law, they may make a complaint 

with the relevant legal authorities in 

accordance with the applicable process 

(e.g., contact HUD’s Office of Fair 

Housing and Equal Opportunity if an 

applicant has reason to believe that the 

grounds for rejection are due to 

discrimination). The Department has 

issued guidance on tenant screening and 

the Fair Housing Act, and such 

guidance applies to all HOME rental 

housing units and HOME tenant-based 

rental assistance.67

PP. Environmental, Health, and Safety 

Hazards 

One commenter supported the change 

to add language requiring a participating 

jurisdiction to notify owners and 

tenants of any environmental, health, or 

safety hazards affecting the project, a 

unit, or tenants, and provide them with 

a summary of the nature, date, and 

scope of the hazard. 

One commenter urged HUD to 

include in the final rule, in § 92.253(f), 

a requirement that where an owner has 

actual knowledge of an environmental, 

health or safety hazard, the owner must 

inform tenants (in addition to the 


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participating jurisdiction), and provide 

them with a summary of the nature, 

date, and scope of the hazard as well as 

actions the owner will take, if able, to 

address the hazard. Furthermore, one 

commenter suggested that HUD should 

require that the summary be in writing 

and that the owner should provide 

notice of the hazard to tenants, in 

addition to the participating 

jurisdiction. 

One commenter expressed concern 

regarding the proposed language at 

§ 92.253(f) requiring both a participating 

jurisdiction and an owner to notify the 

other party if one party has ‘‘actual 

knowledge of an environmental, health, 

or safety hazard affecting a project, unit, 

or HOME tenants.’’ The commenter 

noted that it is unclear what HUD 

intends ‘‘environmental, health, or 

safety hazards’’ to mean and expressed 

concern about the lack of any defining 

language to guide participating 

jurisdictions’ and owners’ actions to 

comply. The commenter stated that 

without definitions, several 

interpretations are possible. The 

commenter also noted concerns about 

the burden of paperwork and 

compliance monitoring on participating 

jurisdictions, their partners, and their 

staff. 

HUD Response: The Department has 

taken the comments into consideration 

and revised the language of § 92.253(f) 

to specify that a summary of the nature, 

date, and scope of such hazards be 

provided in writing. The Department 

also revised paragraph (f) to state that an 

owner must provide notice of the 

environmental, health, or safety hazard 

affecting their project, units within their 

project, or tenants residing within their 

projects to tenants in addition to the 

participating jurisdiction. The 

Department believes both commenters 

making recommendations are right. The 

Department is not further defining the 

language in regulation and has provided 

examples of the types of hazards in the 

proposed rule. The Department will 

provide additional implementation 

guidance on this provision and other 

tenant protections after publication of 

the final rule. The Department is also 

declining to require owners to further 

specify how they will address the 

damage. While the commenter’s intent 

is noble, most environmental, health, or 

safety hazards are not caused by owners 

of rental housing projects but by other 

intervening outside events. It is 

inappropriate to require owners to 

specify how they will address hazards 

they did not cause and are not 

responsible for resolving. 

QQ. Increasing Tenant Protections 

Could Increase Litigation or Other Costs 

One commenter expressed concerns 

about the potential for litigation and 

increased costs for nonprofit affordable 

housing developers and operators. The 

commenter expressed concerns about 

the provision of the proposed rule 

requiring ‘‘secure and confidential’’ 

storage of the personal records of 

applicants and residents and how HUD 

will monitor and enforce this 

requirement. The commenter stated that 

the costs for information technology 

staff or software packages would be 

burdensome, particularly for smaller 

organizations or organizations in rural 

areas that do not already have that 

capacity. The commenter also 

questioned whether HUD intended to 

require a certain information security 

standard, and, if so, at what cost. The 

commenter also stated that the vague 

nature of proposed language in the lease 

addendum section could expose owners 

to frivolous lawsuits and be difficult to 

comply with. The commenter 

recommended further clarification and 

definitions regarding words like 

‘‘unreasonably’’ or ‘‘reasonable’’ to 

avoid compliance issues, unnecessary 

litigation, or uneven application across 

participating jurisdictions. 

HUD Response: The Department 

disputes the commenter’s assertion that 

litigation costs are likely to increase 

through the provision of a baseline level 

of tenant protections. In response to the 

commenter’s concerns about how an 

owner can maintain confidential 

records, the Department notes that an 

owner can maintain confidentiality and 

securely store records through storing 

files in locked drawers, password 

protecting their computers, and using 

basic encryption if transmitting 

personally identifying information 

through email. This standard is not as 

burdensome as what the commenter 

describes and represents standard 

industry practices. Commonly used 

terms such as ‘‘reasonable’’ and 

‘‘unreasonably’’ have a body of 

jurisprudence and common law 

precedent that should provide greater 

predictability not less. The ‘‘frivolous’’ 

or ‘‘unnecessary’’ litigation that the 

commenter is describing would be 

litigation if an owner were to disclose or 

otherwise not protect confidential 

information of a tenant or household 

member participating in a Federal 

program. The Department does not 

believe that this is an accurate 

characterization and that violations of 

confidentiality are serious matters that 

may have major negative ramifications 

on people’s lives. As such, the 

Department is not removing the 

confidentiality requirements in the final 

rule. 

RR. Tenant Protections in the Rule May 

Conflict With Other Laws and Programs 

That Have Different Standards 

One commenter stated that the 

proposed language does not account for 

possible conflicts between local, State 

and other regulatory schemes and the 

protections in the proposed rule. 

Commenters recommended that HUD 

add language clarifying that the 

protections in the rule are not 

exhaustive and that they do not preempt 

participating jurisdictions, States or 

local governments from requiring other 

tenant protections. 

HUD Response: The Department 

revised the tenant protections to make 

the protections more consistent with 

Federal laws and HUD programs. The 

Department has revised § 92.253(b)(10) 

to enable owners to terminate tenancy 

in accordance with the requirements in 

24 CFR part 5, subpart I; 24 CFR 

882.511; or 24 CFR 982.310. This will 

apply to tenants living in units or 

receiving assistance that are covered by 

one of these regulations and allows 

owners to maintain a consistent 

approach to termination of tenancy 

when overlapping HUD program 

requirements apply. Similarly, the 

Department withdrew the proposal to 

extend the notice period for termination 

of tenancy or refusal to renew tenancy 

in rental housing to also maintain 

alignment with other Departmental 

rulemaking efforts. 

The Department agrees with the 

commenter that these requirements do 

not preempt a participating jurisdiction, 

State, or local government from 

providing additional protections. The 

Department has revised § 92.253(b)(6) 

and § 92.253(c)(6) to explicitly state that 

tenants may assert any protection under 

their lease and any applicable Federal, 

State, or local tenant protections. Where 

State or local landlord-tenant laws are 

more restrictive than HUD 

requirements, then the owner must 

follow the more restrictive 

requirements. 

§ 92.254—Qualification as Affordable 

Housing: Homeownership 

A. Downpayment Assistance Programs 

Help Low-Income Households 

One commenter stated that 

downpayment assistance programs are 

vital for low-income households to be 

able to purchase homes. 

HUD Response: HUD agrees with the 

commenter. 


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B. Homeownership Value Limits in 

§ 92.254(a) 

HUD received several comments on 

the HOME homeownership value limits, 

with many commentors stating that the 

limits are too low and that the data and 

process for calculating them should be 

updated to reduce burden on 

participating jurisdictions and increase 

options for homebuyers. One 

commenter noted that by limiting the 

value to 95 percent of area median home 

prices, families at or below 80 percent 

of area median income struggle to access 

homeownership in the community of 

their choosing. 

Some commentors pointed out that 

the value limits disproportionally 

impact rural communities or 

concentrate opportunities in minority 

communities while limiting 

opportunities in predominately white 

neighborhoods. One commenter stated 

the 95 percent HOME price limit 

hinders developers and homebuyers 

from accessing high opportunity 

neighborhoods. Another commenter 

agreed that the limitation creates a 

barrier for both developers looking to 

meet housing demand and homebuyers 

wanting to live in communities of their 

choice. The commenter said that the 

home price limit has long been an 

impediment to fair housing but given 

unprecedented home prices it is now an 

insurmountable obstacle. 

Several commentors suggested that 

HUD revert to using the FHA 203(b) 

Single Family Mortgage Market data. 

Commenters suggested the data from 

FHA 203(b) better supports rural 

communities as it is more dynamic than 

the current numbers and offers a higher 

national floor. Additionally, the 

commenters noted that there is 

precedent for this practice as HUD used 

203(b) data as the basis for the 95 

percent of median home price 

calculation ahead of its 2013 

rulemaking. 

One commentor stated that the 

homeownership value limit has been a 

problem for years, particularly in rural 

areas, because it is too low to enable the 

construction of new units or the 

acquisition-rehab of homeownership 

units for affordable sale. The commenter 

noted that HUD cited statutory 

restrictions against changing the limit 

but argued that there is significant room 

for HUD to make regulatory changes. 

For example, the commenter said that 

the statute is silent on how HUD should 

determine the median purchase price 

for an area, and, in fact, in 2013 HUD 

changed the source of the median home 

purchase price data from the FHA 

Single Family Mortgage Limits (203(b) 

limits) to the current source. 

One commentor stated that the limits 

are too low to cover repairs to older 

homes or meet the needs of larger 

families due to a lack of flexibility in 

rural areas to account for high costs 

from limited local contractor availability 

and infrastructure. 

A commentor stated that giving local 

participating jurisdictions a chance to 

calculate their own price limits is wellintentioned but of limited use. Another 

commenter stated that participating 

jurisdictions struggle with cost and 

capacity issues while attempting to 

establish their own limits. Commenters 

recommended that HUD build out its 

regulations to further limit the effect of 

the HOME homeownership value limits 

as much as possible. 

Another commentor argued that 

homeownership value limits were not 

needed as other quantitative controls 

exist in the form of income limits and 

affordability limits but acknowledged 

that HUD is still statutorily required to 

provide them. 

One commentor suggested that HUD 

use an alternative maximum sales price 

allowed to align with certain State 

programs that use 90 percent of the IRS 

annually published Average Area and 

Nationwide Area Average Purchase 

Prices. 

Commentors acknowledged 

congressional action, or new legislation 

would be needed to eliminate the 95 

percent limit, with one commentator 

suggesting that it be replaced with a 110 

percent limit or a percentage established 

by the Secretary. 

HUD Response: HUD acknowledges 

the numerous challenges communities 

face implementing homebuyer and 

homeowner rehabilitation programs. 

Section 215(b) of NAHA requires that 

the initial purchase price or afterrehabilitation value of homeownership 

units assisted with HOME funds not 

exceed 95 percent of the area median 

purchase price for single family 

housing, as determined by HUD. 

Historically, HUD used the FHA Single 

Family Mortgage Limit (known as the 

203(b) limits) as a surrogate for 95 

percent of area median purchase price. 

However, statutory changes require the 

203(b) limits to be set at 125 percent of 

area median purchase price. 

Consequently, in its July 2013 final rule, 

HUD eliminated the 203(b) limit as the 

sales price or after rehabilitation value 

limit for HOME-assisted 

homeownership housing. The 2013 

Final Rule established that HUD would 

begin to provide limits for affordable 

newly constructed housing based on 95 

percent of the median purchase price of 

newly constructed housing in the area 

using data from the Federal Housing 

Administration (FHA) and other 

appropriate data sources, with a 

minimum limit based on 95 percent of 

the U.S. median purchase price for new 

construction for nonmetropolitan areas. 

For existing single family housing units 

being acquired or rehabilitated with 

HOME funds, HUD would begin to 

provide limits for affordable existing 

housing based on 95 percent of the 

median purchase price of existing 

housing in the area using data from the 

FHA and other appropriate data sources 

on sale prices of existing homes in 

standard condition, with a minimum 

limit based on 95 percent of the Statewide nonmetropolitan area median 

purchase price using this data. 

The Department understands the 

unique challenges rural communities 

face using the HUD published 

homeownership value limits and has 

begun taking steps to assist those 

communities. In 2024, HUD made a 

major revision to the homeownership 

value limit methodology outlined in 

section 92.254(a)(2)(iii) of the July 2013 

Final Rule. For existing housing, HUD is 

now using the greater (rather than the 

lesser) of the State non-metropolitan 

and U.S. non-metropolitan media sales 

values as the minimum value in which 

the limit is calculated. This change will 

substitute more local, State-level data 

for national-level data. 

C. Beginning the Period of Affordability 

at Project Completion 

One commenter stated that the period 

of affordability for homebuyer projects 

should be measured by the assistedhomebuyer’s acquisition of the unit, not 

the project completion date. This is 

because the current rule is 

administratively burdensome, leads to 

unintentional noncompliance by 

participating jurisdictions, and confuses 

assisted buyers. The commenter noted 

that parties never know when the period 

of affordability ends because none of the 

parties knows for certain when the 

project is marked complete in the 

Integrated Disbursement and 

Information System (IDIS), which leaves 

participating jurisdictions confused. 

The commenter noted there is often 

unintentional compliance because 

participating jurisdictions need some 

time, if even only a few days, to review 

and compile final financial information 

needed to complete a project in IDIS, 

which means that project completion 

cannot be achieved on the same day an 

assisted buyer purchases the unit. 

One commenter noted that the period 

of affordability is a problem in multiaddress homeownership projects 


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because the buyer of the first HOMEassisted unit in a multi-address project 

may have taken possession and lived in 

their unit for months while other units 

were still under construction. The 

commenter stated that the project would 

not be considered complete under the 

definition until all assisted units have 

been transferred to eligible buyers, so no 

buyer’s POA has started to run until the 

last assisted unit is sold. The 

commenter recommended that HUD 

could encourage this information to be 

disclosed to buyers. 

HUD Response: The Department 

agrees with the commenter and is 

revising § 92.254(a)(4) to begin the 

period of affordability after execution of 

the instrument that requires the 

recapture of the HOME investment or 

recordation of the resale restrictions for 

sale to the next homebuyer. The 

Department is further requiring that 

execution of the instrument that 

requires the recapture of the HOME 

investment or recordation of the resale 

restrictions for sale to the next 

homebuyer only occur after the housing 

meets the participating jurisdiction’s 

property standards in accordance with 

§ 92.251(c)(3) and the property title is 

transferred to the homebuyer. This will 

provide the same necessary protections 

for homebuyers (i.e., that the property 

meets property standards, that title has 

transferred, and that the resale or 

recapture provisions have been applied 

to the property) without conditioning 

the period of affordability on the 

participating jurisdiction’s completion 

of the information in the disbursement 

and information system. 

D. Data Sources and Methodology 

Recommendations 

Commenters suggested that HUD 

change the data that it uses to calculate 

the homeownership limit to make the 

data more accurate or timely, with one 

commentor even suggesting that HUD 

remove the value limits if more accurate 

data couldn’t be used. One commentor 

recommended HUD incorporate an 

adjustment factor or inflation factor to 

make limits more current. Another 

commentor suggested using data that 

excludes investor-purchased homes and 

only includes owner-occupied sales, as 

investor purchases can skew data 

thereby undermining affordability goals. 

The commenter also suggested replacing 

the limit with a HOME Subsidy Limit 

focused on the ‘‘appropriateness of the 

amount of assistance’’ by participating 

jurisdictions to address concerns around 

the prudent use of funds without 

restricting homebuyers’ choices in 

neighborhood or home. 

HUD Response: While the Department 

is somewhat limited by NAHA, HUD 

will continue to look for ways to ensure 

the data used to calculate area median 

purchase price is as accurate as possible 

to support the use of HOME funds for 

homeownership assistance. 

Unfortunately, for the reasons stated 

earlier in this preamble, the Department 

cannot change the 95% limit itself. 

E. Support for Resale Formula Revisions 

in § 92.254(a)(5)(i) 

Several commentors expressed 

support and appreciation for providing 

resale formulas. Commenters stated that 

the formulas would improve 

consistency and fairness to homebuyers 

while resolving the frustrations felt by 

participating jurisdictions as they 

develop provisions or rely on 

inconsistent guidance. Commenters also 

expressed appreciation for retaining the 

ability to submit their own resale 

formulas for HUD approval, with one 

commentor asking HUD to provide more 

detail on the HUD approval process for 

submitting their own formulas. A 

commenter encouraged HUD to work 

with Congress to amend the relevant 

statutory language to better facilitate the 

homebuyer resale provision process. 

HUD Response: Through this rule 

making, HUD has worked within the 

statutory requirements of the Act to 

amend and clarify the homebuyer 

requirements at § 92.254 to assist 

participating jurisdictions that 

undertake homebuyer activities. HUD 

thanks the commenters for reviewing 

the proposed rule and is moving 

forward with the resale models without 

change. 

F. Undefined Terms in Resale 

§ 92.254(a)(5)(i) 

One commenter stated that a 

‘‘reasonable range of low-income 

buyers’’, ‘‘capital improvement’’, and 

how to value a capital improvement are 

not explained and are open to 

interpretation. A commenter suggested 

that HUD provide a definition of ‘‘fair 

return on investment’’ in precise 

percentage terms and recommended that 

HUD, or the participating jurisdiction, 

be responsible for providing down 

payment assistance to ensure the sale 

price provides an ROI that meets the 

definition. 

HUD Response: As a Federal block 

grant program, HOME provides 

flexibility to State and local 

governments to determine how best to 

address community needs. By giving 

participating jurisdictions the ability to 

define what constitutes a fair return on 

investment, and a reasonable range of 

low-income buyers, HUD is permitting 

participating jurisdictions to design 

resale provisions to address community 

goals and adapt to local market 

conditions. The Department also 

believes that ‘‘capital improvement’’ is a 

known term in real estate and that a 

participating jurisdiction should not 

have difficulty determining whether a 

capital improvement has been made to 

the property. Capital improvements can 

be valued based on appraisals, the costto-build, or other commercially 

reasonable methods. The Department is 

providing four models that can be used 

to determine resale, some of which 

involve the selection of a fixed 

percentage or use of an index that can 

assist the participating jurisdiction in 

determining the fair return on 

investment in accordance with the 

HOME regulations and statute. The 

Department refuses, however, to provide 

a fixed percentage or range, as the 

commenter suggests. To assist 

participating jurisdictions in defining 

these terms, HUD has published 

guidance in CPD Notices and technical 

assistance products. For the reasons 

listed above, HUD has declined to 

further define these terms in regulation. 

G. Use of HUD-Provided Formulas in 

§ 92.254(a)(5)(i) Will Not Provide 

Significant Return to Homebuyer 

One commenter, that does not use the 

resale option in its program, stated that 

a HOME-assisted buyer who sells their 

home wouldn’t receive much of a return 

using HUD’s four proposed formulas. 

The commenter noted that the benefit of 

homeownership is wealth building 

through the appreciation of home value 

and equity. 

HUD Response: HUD does not agree 

with this comment. HOME is a block 

grant program. Participating 

jurisdictions have the flexibility to 

establish fair return standards that are 

more or less generous depending on 

their markets and their policy 

objectives. Moreover, if an assisted 

homebuyer owns the housing as their 

principal residence through the period 

of affordability, then the resale 

provisions terminate, and they will be 

able to realize the full benefits of wealth 

accumulation that come with 

homeownership. 

H. Support for Recapture of Investment 

Revisions in § 92.254(a)(5)(ii) 

A commenter stated that they support 

the proposed changes to the HOME 

recapture language clarifying that the 

recapture amount is the direct 

assistance to the homebuyer that 

enabled the homebuyer to purchase the 

unit. 


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HUD Response: HUD thanks the 

commenter for reviewing and is moving 

forward with this clarification. 

I. Adding Rent Restrictions to Accessory 

Dwelling Units in § 92.254(a)(6) 

A commenter stated that the HOME 

program should set a rent cap on ADUs 

where a homebuyer is purchasing a 

multi-unit property with HOME 

assistance. The commenter stated that 

this would prevent the misuse of HOME 

funds. The commenter also stated that 

real estate tax exemptions should be 

provided to homebuyers who are 

operating within an ADU rent cap limit. 

The commenter stated that these 

suggestions would help increase 

community support for ADU projects 

and benefit the wider community while 

offering a modest boost to homeowners. 

HUD Response: Whether a unit is 

subject to the HOME rental housing 

period of affordability requirements in 

§ 92.252 depends upon whether HOME 

funds were used to assist in the 

acquisition of the unit, as described 

more fully in § 92.254(a)(6), which was 

only revised for minor technical 

corrections. The Department believes 

that through its revisions to small-scale 

housing provisions in §§ 92.2, 92.251, 

92.252, and 92.253, it has enabled 

purchasers of single family housing, 

including housing with ADUs, to more 

effectively manage these units as HOME 

rental housing units when those 

requirements apply. State and local 

property tax exemptions are outside the 

scope of this rule. 

J. Preserving Affordability in 

§ 92.254(b)—Clarify the Parties That 

Have Rights of First Refusal 

One commenter expressed concerns 

that neither participating jurisdictions 

nor program participants fully 

understand that rights of first refusal 

and other preemptive rights are not 

acceptable beyond those permitted to a 

participating jurisdiction and a 

community land trust. The commenter 

noted that some developers seek to 

retain rights of first refusal, particularly 

in the case of homeownership units 

under recapture provisions, and the 

repurchase price prevents buyers from 

realizing any appreciation otherwise 

attributable to the owner. The 

commenter noted that HUD should 

make clear that only participating 

jurisdictions and community land trusts 

are permitted by statute to exercise 

rights of first refusal. 

HUD Response: The Department 

appreciates the commenter’s concern 

that program participants often fail to 

understand when preemptive rights are 

granted and to whom. The Continuing 

Appropriations Act, 2016 (Pub. L. 114– 

113) extended a participating 

jurisdiction’s right to exercise purchase 

options, rights of first refusal or other 

preemptive rights provided in 42 U.S.C. 

12742 of the Act to Community Land 

Trusts that developed the 

homeownership units. Neither the Act 

nor the Continuing Appropriations Act, 

2016 (Pub. L. 114–113) provide any 

other entity the right to exercise 

purchase options, rights of first refusal 

or other preemptive rights to acquire 

housing when there is a termination 

event threatening the affordability 

restrictions (e.g., foreclosure, transfer in 

lieu of foreclosure or assignment of an 

FHA-insured mortgage to HUD). If a 

developer of HOME-assisted homebuyer 

housing attempts to exercise a right of 

first refusal during the HOME period of 

affordability, the unit will no longer be 

in compliance with HOME period of 

affordability requirements. Section 

12744(b) of the Act requires owners of 

HOME-assisted homebuyer units under 

a resale provision to sell only to another 

low-income homebuyer, while units 

under a recapture provision must be 

sold on the open market and the 

participating jurisdiction must use the 

recaptured funds for other eligible 

activities in accordance with HOME 

requirements. Thus, if another entity 

other than the participating jurisdiction 

or community land trust that developed 

the project attempts to exercise a right 

of first refusal, it could lead to 

repayment of the HOME investment 

because the unit will cease to be 

affordable housing under the Act. 

K. Concerns With § 92.254(b) 

Requirement That the Home Be Resold 

Within 6 Months to an Eligible 

Homebuyer 

Two commenters expressed concerns 

regarding the proposed requirement in 

§ 92.254(b)(1)(i) that would require a 

participating jurisdiction to resell a 

home acquired by the participating 

jurisdiction through preemptive rights 

to an eligible low-income homebuyer 

within 6 months. Both commenters 

recommended that HUD extend the 

deadline for the participating 

jurisdiction to resell a home acquired 

through preemptive rights to 12 months 

instead of 6 months. Several 

commenters expressed concern that the 

proposed § 92.254(b)(3)(i) would require 

community land trusts that acquire 

HOME-assisted housing through 

preemptive rights to resell the housing 

to an eligible homebuyer within 6 

months. These commenters stated that 

HUD should raise the 6-month resale 

requirement to 9 or 12 months, which 

several commenters noted would align 

with the current regulation or proposed 

revisions in § 92.254(a)(3). One 

commenter noted that HUD may want to 

measure compliance with any 

established resale date against the date 

of a ratified sales contract. The 

commenter also suggested that HUD 

could establish provisions that would 

extend the period of affordability by the 

period the community land trust is in 

possession of the property prior to 

transferring it to another buyer. Another 

commenter stated that establishing a 

minimum deadline of no less than 12 

months for both community land trusts 

and participating jurisdictions to 

complete the sale of a property would 

allow community land trusts, which 

often have limited resources a 

reasonable amount of time to bring the 

housing to an appropriate standard and 

identify an appropriate buyer. 

HUD Response: HUD agrees that 

extending the timeframe from 6 to 12 

months to resell a homebuyer unit 

acquired through purchase options, 

rights of first refusal, or other 

preemptive rights will provide both 

participating jurisdictions and 

community land trusts additional time 

to rehabilitate a unit, identify a qualified 

buyer, and permit the buyer to obtain 

the financing necessary to acquire the 

unit. Extending the timeframe from 6 to 

12 months will also align with the 12- 

month homebuyer sales deadline in 

§ 92.254(a)(3). 

L. Confusion Over Preserving 

Affordability in § 92.254(b) 

One commenter found the language 

on preserving affordability of housing 

assisted with HOME funds in 

§ 92.254(b) confusing and suggested 

reversing sections (1) and (2) such that 

the proposed language would begin by 

stating how the participating 

jurisdiction may acquire the housing by 

using additional HOME funds, followed 

by the requirements for selling the 

housing. 

HUD Response: HUD thanks the 

commenter for the suggested 

reorganization but is maintaining the 

order of sections (1) and (2) in 

§ 92.254(b), as section (b)(1) defines the 

specific actions a participating 

jurisdiction may take to preserve 

affordability of homebuyer housing 

when there is a termination event, and 

section (b)(2) defines the eligible use of 

additional HOME funds should the 

participating jurisdictions choose to 

preserve the affordability of the housing. 


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M. Community Land Trusts Exercising 

Preemptive Purchase Rights Under 

§ 92.254(b) 

One commenter supported the 

inclusion of community land trusts’ 

right to exercise preemptive purchase 

rights while several commenters 

expressed concern or opposition to 

HUD’s proposed language codifying the 

amendments to NAHA in the 

Consolidated Appropriations Act, 2016 

(Pub. L. 114–113) that community land 

trusts may hold and exercise purchase 

options, rights of first refusal, or other 

preemptive rights to purchase housing 

to preserve affordability, including but 

not limited to the right to purchase the 

housing in lieu of foreclosure. 

One commenter expressed broad 

concerns about the proposed language 

in § 92.254(b)(3) stating that it was 

unclear what would happen should a 

community land trust be unable to 

purchase a home prior to foreclosure, 

find an eligible household within 6 

months, and the participating 

jurisdiction cannot provide additional 

HOME funds to assist the unit. The 

commenter noted that proposed 

language would create barriers for the 

community land trust, the participating 

jurisdiction because the unit would 

likely be sold on the private market, and 

the participating jurisdiction may be 

required to repay the HOME funds. The 

commenter stated it would welcome 

additional guidance from HUD. 

HUD Response: The Department 

appreciates the comments. HUD 

understands that a community land 

trust may need additional funds to 

exercise a preemptive purchase right on 

a HOME-assisted homebuyer unit to 

preserve affordability. Because it cannot 

use additional HOME funds for this 

purpose, community land trusts 

interested in exercising the preemptive 

rights pursuant to the Continuing 

Appropriations Act, 2016 (Pub. L. 114– 

113) and the requirements promulgated 

in § 92.254(b)(3) must either use other 

non-HOME funds to acquire the unit 

and preserve affordability, or may 

request the participating jurisdiction to 

preserve affordability of the unit 

through the preemptive rights provided 

to the participating jurisdiction under 

§ 92.254(b)(1) and (2). 

Further, even if a community land 

trust may not assist the next homebuyer 

using HOME funds, the participating 

jurisdiction is permitted to provide 

additional HOME assistance directly to 

the next homebuyer should a 

community land trust exercise its 

preemptive purchase rights to preserve 

the affordability of the unit. HUD thanks 

the commenter that believed that a 

participating jurisdiction is prohibited 

from directly assisting the next 

homebuyer. This was not HUD’s intent, 

and to address any confusion, HUD is 

adding clarifying language to 

§ 92.254(b)(3)(iv) to state that a 

participating jurisdiction may provide 

direct assistance to the next homebuyer 

of a unit preserved by a community land 

trust through preemptive purchase 

rights. 

N. Other Organizations Should Be Able 

To Use Preemptive Purchase Rights 

Under § 92.254(b) 

Two commenters encouraged HUD to 

evaluate whether preemptive purchase 

rights could be made available to a 

wider range of organizations or 

affordable housing models. One 

commenter stated that they believed 

Congress meant to apply preemptive 

rights broadly to non-profit 

organizations whose purpose and goal is 

to preserve affordable homeownership 

opportunities, including shared equity/ 

long-term affordability homeownership 

programs and not just to community 

land trusts. The commenter noted that 

many participating jurisdictions do not 

have the capacity or desire to expend 

time and resources to repurchase 

properties and should be permitted to 

allow nonprofit developers to use a 

preemptive purchase option or to assign 

the participating jurisdiction’s 

preemptive purchase options to 

nonprofit developers to ensure longterm affordability. The commenter also 

states that limiting preemptive rights to 

participating jurisdictions and 

community land trusts only in the case 

of foreclosure is too limiting, 

particularly if HUD and Congress’ goal 

is for HOME-assisted housing to fulfill 

the required period of affordability. The 

commenter states that the homeowner is 

unnecessarily burdened by these 

restrictions because they are responsible 

for finding and qualifying a subsequent, 

eligible homebuyer. The commenter 

suggests that eligibility for using 

preemptive purchase options should be 

determined based on the intent of the 

nonprofit developer to exercise the right 

for the purpose of preserving 

affordability and reselling to another 

eligible homebuyer, not whether the 

nonprofit formerly owned the land after 

the initial sale or acquired both land 

and improvements through exercise of 

the preemptive purchase right. 

HUD Response: The Continuing 

Appropriation Act, 2016 (Pub. L. 114– 

113) provided preemptive purchase 

rights only to community land trusts 

and only with respect to properties 

these community land trusts properties 

developed with HOME funds. Congress 

did not intend broader applicability of 

these preemptive purchase right than 

HUD is promulgating in this final rule. 

The Department disagrees with the 

commenter’s statement that 

participating jurisdictions do not have 

the capacity or resources to exercise 

preemptive rights. HUD clarified in 

§ 92.254 (b)(2) that participating 

jurisdictions may use additional HOME 

funds for certain eligible costs. 

Specifically, a participating jurisdiction 

may use additional HOME funds in 

accordance with § 92.254(b)(2) to obtain 

ownership of the housing, undertake 

any necessary rehabilitation, hold the 

housing pending sale to another 

homebuyer, and assist an eligible 

homebuyer in purchasing the unit. 

Consequently, a participating 

jurisdiction that chooses to exercise 

preemptive rights should have the 

resources necessary to preserve 

affordable housing. 

Further, a participating jurisdiction is 

not permitted to assign its preemptive 

rights to a developer to exercise in 

response to a termination event, or in 

the case of a right of first refusal should 

a developer wish to acquire a HOMEassisted unit at resale. The commenter 

incorrectly states that homeowners’ 

seeking to sell the HOME-assisted unit 

during the period of affordability are 

responsible for identifying and 

qualifying another eligible low-income 

homebuyer. While a homebuyer unit 

under a resale provision must be sold to 

another low-income buyer at a price that 

provides the seller with a fair return on 

investment, the homeowner is not 

responsible for identifying the next 

buyer or determining whether the buyer 

is income eligible. The participating 

jurisdiction is responsible for overseeing 

the subsequent sale of a homebuyer unit 

under resale and ensuring that all 

HOME requirements are met. 

Homebuyer units under a recapture 

provision must be sold on the open 

market with any recaptured funds 

returned to the participating jurisdiction 

to use for other eligible activities in 

accordance with HOME requirements. 

O. Recalculating the Period of 

Affordability When a Participating 

Jurisdiction or Community Land Trust 

Exercises a Preemptive Purchase Right 

Under § 92.254(b) 

One commenter stated that the 

proposed requirement at 

§ 92.254(b)(3)(iii) that the period of 

affordability for the eligible buyer must 

be equal to the remaining period of 

affordability of the former homeowner 

will inadvertently bar a community land 

trust from requiring a new 99-year 

affordability restrictions upon resale of 


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68See the proposed definition of community land 

trust in § 92.2, paragraph (4), in the proposed rule. 

89 FR 46657. 

a previously assisted home. The 

commenter stated that rather than 

requiring a fixed period of period of 

affordability upon resale as a condition 

to a community land trust’s preemptive 

acquisition and resale of a HOMEassisted property in order to preserve its 

affordability, HUD should encourage 

long-term affordability by stating that 

the new period of affordability must be 

‘‘at least equal to’’ or ‘‘equal to or greater 

than’’ the remaining period of 

affordability of the former homeowner. 

HUD Response: The Department 

appreciates the commenter’s feedback 

but believes the commenter is confusing 

the community land trust long-term 

ground lease with the HOME period of 

affordability required in § 92.254(a)(4). 

The HOME period of affordability and 

associated affordability restrictions are 

separate from the long-term ground 

lease the homeowner executes with the 

community land trust. Nothing in the 

HOME regulations would prohibit a 

community land trust from continuing 

to enforce a 99-year ground lease on a 

new homebuyer following the 

community land trust executing its 

preemptive rights under § 92.254(b)(3). 

Should a community land trust choose 

to exercise its preemptive rights during 

the period of affordability in accordance 

with § 92.254(b)(3), the new HOMEassisted homebuyer would be required 

to meet the HOME affordability 

restrictions (i.e., principal residency and 

resale requirements) for the remaining 

period of affordability on land held by 

the community land trust under a 

ground lease for a term established by 

the community land trust. Participating 

jurisdictions are permitted to impose 

longer periods of affordability, perhaps 

even aligning with the term of the 

ground lease but would be required to 

monitor the HOME affordability 

restrictions for the longer period. 

P. Providing Additional HOME 

Assistance to Property Purchased 

Through Preemptive Purchase Rights 

Under § 92.254(b) 

Several commenters expressed 

concern or opposition to the proposed 

language at § 92.254(b)(3)(iv) that states 

that a participating jurisdiction may not 

provide additional HOME funds to a 

community land trust to obtain 

ownership, rehabilitate the housing, 

own/hold the housing pending sale to 

the next homebuyer, or provide down 

payment assistance to the next eligible 

homebuyer. 

A commenter questioned why HUD 

would prohibit community land trusts 

from providing additional HOME funds 

to rehabilitate units acquired through 

their right of first refusal or from 

assisting buyers of such units because a 

property may need renovations or 

upgrades to comply with codes between 

owners. Several commenters expressed 

concern or opposition to the proposed 

language at § 92.254(b)(3)(iv) that states 

that a participating jurisdiction may not 

provide additional HOME funds to a 

community land trust to obtain 

ownership, rehabilitate the housing, 

own/hold the housing pending sale to 

the next homebuyer, or provide down 

payment assistance to the next eligible 

homebuyer. A commenter questioned 

why HUD would prohibit community 

land trusts from providing additional 

HOME funds to rehabilitate units 

acquired through the next eligible 

homebuyer. 

Two commenters questioned why 

participating jurisdictions may use 

additional HOME funds to obtain 

ownership, rehabilitate, hold the 

housing pending resale, or provide 

downpayment assistance, yet a 

community land trust is not. Both 

commenters questioned the policy 

rationale behind this distinction, and 

one commenter stated that this 

prohibition runs counter to the 

regulatory definition’s purpose of 

enshrining the preemptive right to 

purchase,68 and urged HUD to provide 

community land trusts with a more 

complete array of tools to preserve the 

structure and affordability of their 

housing units. 

One commenter expressed concern 

regarding the proposed restrictions on 

community land trusts that would 

prevent community land trusts from 

obtaining ownership through a 

preemptive purchase option. The 

commenter argued that disallowing the 

use of HOME funds undercuts the 

benefit to a community land trust of 

having a preemptive purchase option at 

all, and as a result of this restriction 

participating jurisdictions would not 

support community land trusts’ 

purchase option since exercising their 

own would allow them to apply 

additional funding to the HOMEassisted project, and that the restriction 

places the burden of rehabilitation and 

management on a community land trust 

without providing additional resources 

to do so responsibly. The commenter 

said that it is essential that a community 

land trust exercising the preemptive 

purchase option be able to access HOME 

funds to rehab a home in preparation for 

a new homebuyer and recommended 

that community land trusts be able to 

use HOME funds for the same purposes 

as participating jurisdictions. 

One commenter stated that the 

proposed language creates ambiguity 

regarding assistance to subsequent 

homebuyers purchasing property in a 

community land trust. The commenter 

stated that the language is unclear on 

whether the term ‘‘to the Community 

Land Trust’’ modifies each of the 

following listed elements in 

§ 92.254(b)(3)(iv) or only applies to the 

‘‘to obtain ownership’’ element. The 

commenter stated that the lack of clarity 

led to confusion on whether it could 

provide homeownership assistance 

directly to a subsequent buyer of a home 

in a community land trust where it had 

provided assistance to a previous buyer 

and the prior period of affordability was 

still applicable. The commenter 

suggested that HUD could address the 

issue by updating the proposed 

definition to the following: ‘‘The 

participating jurisdiction may not 

provide additional HOME funds to the 

Community Land Trust to obtain 

ownership, to rehabilitate the housing, 

to own/hold the housing pending resale 

to the next homebuyer, or to provide 

homeownership assistance to the next 

eligible homebuyer.’’ One commenter 

asked for clarification on the 

preemption of providing HOME funds 

to community land trusts for ownership, 

rehab, holds pending resale, or 

downpayment under proposed 

§ 92.254(b)(3)(iv). The commenter also 

sought clarification on the misalignment 

with § 92.254(a)(9)(ii) that permits 

additional HOME funds if it meets the 

maximum-per-unit subsidy cap. One 

commenter explained that community 

land trusts require an enforcement 

mechanism due to their structure and 

purpose to provide permanent 

affordability, requiring financially 

sound operators to adhere to covenant 

enforcement and to retain sufficient 

resources to execute the right of first 

refusal. The commenter further 

explained that because of these 

additional measures, HUD should 

consider if participating jurisdictions 

should perform underwriting similar to 

that of a robust organization to cover 

these mechanisms, perhaps using the 

multifamily requirements as a template. 

The commenter stated that this could 

better ensure a sound operational 

foundation for the organization during 

the duration of the period of 

affordability. 

HUD Response: The Department 

thanks the commenters for their 

feedback. However, HUD is moving 

forward with the provisions in 

§ 92.254(b)(3), which do not permit a 

participating jurisdiction from 


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providing additional HOME funds to a 

community land trust that has exercised 

preemptive rights to preserve 

affordability of HOME-assisted 

homebuyer housing. The Continuing 

Appropriations Act, 2016 (Pub. L. 114– 

113) did not authorize HUD to permit a 

community land trust, during the 

HOME period of affordability, to request 

additional HOME funds from a 

participating jurisdiction. Instead, the 

Continuing Appropriations Act, 2016 

(Pub. L. 114–113) only allowed a 

community land trust to take possession 

of the property and resell to an eligible 

low-income homebuyer, thereby 

preventing the participating jurisdiction 

from having to repay the HOME 

investment because the property failed 

to meet the HOME requirements for the 

full period of affordability. 

While the Continuing Appropriations 

Act, 2016 (Pub. L. 114–113) permitted 

community land trusts to exercise 

preemptive rights to preserve the 

affordability of housing, a community 

land trust is not required to exercise 

such options and may instead notify the 

participating jurisdiction that action is 

required to preserve the HOME-assisted 

unit. The participating jurisdiction may 

invest additional HOME funds in 

accordance with § 92.254(b)(1) and (2) 

to acquire, rehabilitate, hold the housing 

pending sale, and assist an eligible 

homebuyer to purchase the unit. The 

total amount of HOME funds invested, 

(i.e., the original investment plus 

additional investment) cannot exceed 

the maximum per-unit subsidy in effect 

at the time of the additional investment, 

subject to HUD approval. 

A community land trust that chooses 

to exercise its preemptive rights under 

§ 92.254(b)(3) may use existing 

organizational resources or other 

funding sources to acquire, rehabilitate, 

hold the unit pending sale to another 

eligible homebuyer, and assist the next 

eligible homebuyer. The Department is 

adding clarifying language to 

§ 92.254(b)(3)(iv) that a participating 

jurisdiction may provide direct 

assistance to an eligible homebuyer of a 

unit preserved by a community land 

trust through preemptive rights. The 

Department agrees with the commenter 

that the original proposed language in 

§ 92.254(b)(3)(iv) was not clear about 

whether a participating jurisdiction 

could directly assist the subsequent 

buyer should a community land trust 

take action to preserve the affordability 

of the unit. The Department is also 

clarifying the period of affordability 

applicable to any homeownership 

assistance provided by the participating 

jurisdiction to the next eligible 

homebuyer. 

While the Department agrees with the 

commenter that community land trusts 

that exercise preemptive rights under 

§ 92.254(b)(3) should have sufficient 

resources to execute these rights and 

resell the unit to an eligible homebuyer, 

the Department is not requiring a 

participating jurisdiction to underwrite 

the community land trust. The 

participating jurisdiction may choose to 

exercise its own preemptive rights in 

lieu of the community land trust should 

the community land trust not have the 

financial resources needed. 

Q. Revise the Lease-Purchase 

Requirements in § 92.254(e)(7) 

One commenter recommended HUD 

extend the lease purchase completion 

deadline from 36 months to 5 years 

because they believe local experience 

suggests that the model is more effective 

when a client has more time from the 

date of offer and is offered homebuyer 

education. One commenter requested 

that the proposed § 92.254(a)(7) enable a 

second chance at a successful leasepurchase agreement if an initial leasepurchase on the property fails. One 

commenter stated that if a leasepurchase fails, the developer is locked 

into a lengthy cycle of rental 

administration, closing off much-needed 

affordable inventory for 

homeownership. 

HUD Response: The Department 

appreciates the comments on the 

proposed lease-purchase changes and 

agrees that providing additional time to 

identify an eligible homebuyer is 

beneficial. However, if the first 

homebuyer is unable to acquire the 

housing within 36 months, the 

Department does not agree that entering 

into a subsequent lease-purchase 

agreement with a new homebuyer is 

prudent as an indefinite period cannot 

be permitted to pass before the 

homeownership unit meets the HOME 

homeownership requirements. Instead, 

HUD is revising § 92.254(a)(7) to 

provide the owner with an additional 12 

months to sell the housing to another 

eligible low-income homebuyer. While 

the owner would be prohibited from 

selling the unit through another leasepurchase agreement, the participating 

jurisdiction could provide 

homeownership assistance to the next 

eligible homebuyer. If the owner is 

unable to sell the unit to an eligible 

homebuyer within 48 months of the 

execution of the original lease-purchase 

agreement, the unit must convert to 

rental housing in accordance with 

§ 92.252. 

R. Support for Nonprofit Lender 

Revisions to § 92.254(f) 

One commenter expressed support for 

HUD’s clarification that participating 

jurisdictions may provide HOME funds 

to nonprofit lending institutions as a 

contractor or subrecipient. The 

commenter stated this would allow 

nonprofit lenders to provide HOME 

homeownership assistance alongside 

first mortgage financing and thereby 

strengthen the nonprofit delivery 

system’s ability to meet affordable 

homeownership needs. 

HUD Response: HUD thanks the 

commenter for reviewing and is moving 

forward with revisions to specify that 

nonprofit lenders can be either 

contractors or subrecipients. 

S. Changes to Homebuyer Underwriting 

in § 92.254(g) 

Several commenters voiced support 

for the changes to § 92.254(g)(1) that 

revise the homebuyer underwriting 

standards. Some commenters praised 

the simplified focus on evaluating the 

projected overall after-purchase debt of 

a family, while others were concerned 

that families could be subjected to 

foreclosure if monthly expenses are not 

properly evaluated. Other commenters 

suggested HUD instead follow the 

standards provided by Qualified 

Mortgages or Community Development 

Financial Institutions while a few 

commentors disagreed with HUD’s 

clarification on providing a single 

amount of assistance to all homebuyers. 

HUD Response: HUD appreciates the 

comments and is moving forward with 

the proposed change. 

T. Standardize or Align Third-Party 

Underwriting Standards in § 92.254(g) 

Some commenters noted that the 

existing structure in which each 

participating jurisdiction develops their 

own underwriting standards can create 

confusion and inconsistencies and 

suggested that HUD standardize and 

align with existing mortgage products to 

help address the issue. These 

commenters suggested HUD consider 

establishing a safe harbor if the 

underwriting of the first mortgage meets 

the standards of a Qualified Mortgage as 

defined by the Consumer Financial 

Protection Bureau (CFPB). Two 

commentors suggested HUD defer to the 

underwriting standards of a certified 

Community Development Financial 

Institution (CDFI) as CDFIs have 

experience underwriting loans to lowand moderate-income borrowers. 

HUD Response: The Department 

disagrees with the commenters that 

HUD should align homebuyer 


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underwriting requirements with 

standard mortgage requirements such as 

the Qualified Mortgage standards 

established by the CFPB. HOME 

participating jurisdictions must have 

separate underwriting standards for 

HOME-assisted homebuyers because the 

first mortgage underwriting is not a 

valid proxy for underwriting a second 

HOME-mortgage where the participating 

jurisdiction must consider the 

homebuyer’s overall debt, including the 

first mortgage debt. Further, Qualified 

Mortgages, as defined by the CFPB, are 

not focused on evaluating the lowincome populations participating 

jurisdictions are required to serve. 

While the CFPB requirements are a good 

starting point for assessing the 

appropriateness of private first 

mortgages, a participating jurisdiction’s 

underwriting policy must consider 

additional factors because HOMEassisted homebuyers are low-income. 

Participating jurisdictions must 

continue to establish and use their own 

homebuyer underwriting standards in 

accordance with § 92.254(g) to 

adequately protect the low-income 

homebuyers from risky and 

unsustainable mortgages. The 

Department is moving forward with the 

proposed change. 

U. Changes to Evaluation of Family Debt 

in Underwriting in § 92.254(g) 

Two commenters noted that HUD 

correctly identified that the current 

regulation excludes households that 

have overall debt and monthly expenses 

that exceed a participating jurisdiction’s 

underwriting standards but demonstrate 

an ability to sustain a mortgage through 

other indicators and argued that rigid 

ratios for housing expense and total debt 

is reflective of an outdated practice. The 

commenters stated that the current 

requirements can prevent a buyer from 

buying their preferred home in their 

location of choice because they favor 

borrowers with strong credit ratings, 

high down payments and cash reserves, 

and other factors. The commenters 

supported HUD’s proposal to eliminate 

the requirement that a participating 

jurisdiction evaluate monthly expenses, 

to establish a standard to determine the 

maximum amount of direct HOME 

assistance, and to prohibit participating 

jurisdictions from providing a single, 

fixed amount of assistance to every 

homebuyer receiving assistance but 

asked HUD to provide additional 

guidance to participating jurisdictions 

as it finalizes this rulemaking and 

implements the requirements. One 

commenter agreed with some changes 

that would eliminate the need to 

evaluate both the housing debt and 

overall debt of the family in favor of 

evaluating overall debt of the family 

projected after purchase, but this 

commenter expressed concerns with the 

proposed rule’s elimination of the 

requirement that participating 

jurisdictions evaluate the monthly 

expenses of the family. The commenter 

stated that the lender cannot see if a 

family can afford a loan if they are not 

doing their due diligence. The 

commenter recommended that HUD 

interpret the rule’s language that ‘‘the 

standards must evaluate the... financial 

resources to sustain housing’’ as 

requiring robust evaluations to ensure 

that the overall financial health of the 

family is still assured prior to home 

purchase. 

Two commenters stated that they do 

not support HUD’s proposal to eliminate 

the requirement that participating 

jurisdictions evaluate a family’s debt 

during underwriting. One commenter 

explained that debt evaluation prevents 

a family from purchasing a home that is 

over their income capacity and from 

putting the family at risk of foreclosure. 

Another commenter stated that this 

proposed change is counterintuitive to 

protecting families from financial 

distress, jeopardizing the investment of 

HOME funds due to foreclosure, short 

sale, or other issues. 

HUD Response: HUD is removing the 

requirement that the overall debt of the 

family be reviewed as part of the HUDrequired underwriting analysis 

performed by the participating 

jurisdiction but is retaining the 

requirement in § 92.254(g)(1) that 

‘‘[t]hese standards must evaluate the 

projected overall debt of the family after 

the purchase of the housing.’’ HUD 

believes that the evaluation of the 

overall debt of the family after the 

purchase of the housing is the correct 

measure for determining whether the 

housing would be at risk of foreclosure 

and whether the family would be in 

financial distress. HUD does not believe 

that separately accounting for the 

current overall debt of the family adds 

to this analysis. HUD notes that 

restructuring of debt can occur 

throughout the closing process, and so 

overall debt of the family pre-closing is 

not as informative as overall debt of the 

family after closing and any necessary 

repair or rehabilitation work that may be 

needed on the property. 

V. Prohibition of Providing a Single 

Amount of Assistance in § 92.254(g) 

Several commenters stated they do 

not support the proposed change to 

§ 92.254(g)(1) of explicitly stating that a 

participating jurisdiction may not 

provide a single, fixed amount of 

assistance to every homebuyer receiving 

assistance in the participating 

jurisdiction’s homebuyer program. Two 

commenters expressed concerns that 

tailoring the amount of assistance to 

each homebuyer is difficult and could 

be seen as arbitrary. Other commenters 

stated that tailoring assistance may 

result in a higher subsidy amount to a 

higher income buyers or buyers 

purchasing more expensive homes. 

One commenter stated that HUD 

should base appropriateness of 

assistance on the local housing market 

through methods such as percent of 

median home value. Another 

commenter supported HUD’s attempt to 

add clarity by stating that a participating 

jurisdiction establishes a standard to 

determine the maximum amount of 

assistance per family by market area but 

believes that by establishing a cap, a 

participating jurisdiction should be 

considered compliant. The commenter 

also recommended basing the 

appropriateness of the assistance on the 

local housing market and using a 

percentage of the median home value. 

HUD Response: While the Department 

appreciates the comments, the 

prohibition against providing a single 

amount of homebuyer assistance is not 

a proposed change. The 2013 HOME 

Final Rule required participating 

jurisdiction to establish homebuyer 

program policies and procedures, 

including but not limited to homebuyer 

underwriting guidelines. In accordance 

with § 92.254(g), a participating 

jurisdiction must utilize underwriting 

standards to determine the amount of 

HOME assistance each applicant needs 

to sustain homeownership. HUD is 

declining to make a change that would 

permit participating jurisdictions to 

establish programs that provide the 

same amount of HOME assistance to 

every homebuyer irrespective of need. 

The Department is also not providing a 

safe harbor where the participating 

jurisdiction establishes a maximum cap. 

A participating jurisdiction can always 

establish a maximum cap for assistance, 

but if that cap is too low, and every 

homebuyer is provided the same 

amount, then the participating 

jurisdiction is not evidencing that it is 

appropriately sizing the assistance to 

meet the requirements of § 92.254. 

The Department also disagrees with 

establishing the appropriateness of 

assistance based on a set percentage of 

median home value or the local housing 

market. Participating jurisdictions must 

perform the necessary underwriting to 

determine whether it is possible to 

assist the family, and how much 

assistance the family requires in order to 

be able to maintain sustainable 


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homeownership. Establishing set 

percentages or basing assistance on 

factors that do not involve an evaluation 

of the family’s finances and do not 

ensure that the homeownership is 

sustainable. Impact of other resale 

restrictions on the property. 

X. Resale Restrictions 

One commenter stated that HUD 

should clarify whether it is appropriate 

to allow non-HOME resale restrictions 

to be imposed by non-participating 

jurisdiction State or local government 

programs that are funded by HOME. The 

commenter noted this clarification is 

needed because participating 

jurisdictions have declined to provide 

homebuyer assistance to low-income 

buyers from local density bonus 

programs because the housing was deed 

restricted in a resale-like manner by 

non-HOME State or local programs. 

HUD Response: The only resale or 

recapture restrictions that may be 

placed on a HOME homeownership 

property are those that are consistent 

with the restrictions provided in the 

participating jurisdiction’s consolidated 

plan in accordance with 24 CFR 

91.220(l)(2)(iii) or 24 CFR 

91.320(k)(2)(ii), as applicable, and 

included in the participating 

jurisdictions written agreement in 

accordance with § 92.504. 

Y. Manufactured Housing in HOME 

Homeownership Programs 

One commenter stated that it is 

important that when States and 

localities use funds for down payment 

assistance for affordable first-time home 

purchase, that these programs do not 

inadvertently exclude manufactured 

homes. The commenter noted that 

personal property manufactured home 

loans have distinctive attributes that can 

sometimes result in down payment 

assistance programs not reaching these 

homebuyers. The commenter referenced 

2003 guidance and requested that HUD 

updated the program to consider any 

changes to the regulations would 

negatively impact manufactured 

housing homeownership opportunities. 

The commenter also stated that since 

manufactured home purchases and 

financing can be sold differently than 

site-built home purchases, it is 

important that States and localities 

conduct appropriate outreach to these 

channels, to ensure manufactured 

homebuyers have the same access to 

these down payment programs. 

One commenter stated that while the 

purchase, rehabilitation, and 

development of manufactured homes 

and manufactured home communities 

are statutorily eligible uses of HOME 

funds, HOME is not being used to 

preserve and improve manufactured 

home communities as affordable 

housing and homebuyers and 

homeowners are routinely denied access 

to HOME-funded programs, even though 

they are some of the lowest-income 

homeowners in America and play a 

crucial role in the inventory of 

affordable housing. One commenter 

stated HUD should engage in outreach 

to States and localities to ensure that 

their HOME-funded downpayment 

assistance programs do not exclude 

manufactured homes. The commenter 

stated that this unintentional exclusion 

has persisted for some time often 

because manufactured homes are 

ordered in a different manner, and it is 

imperative to address the issue. 

HUD Response: HUD agrees that the 

acquisition, rehabilitation, and 

installation of manufactured homes and 

manufactured home communities are all 

eligible HOME projects if they meet the 

requirements in the HOME regulations. 

HUD also agrees that manufactured 

housing is an important source of 

affordable housing, and that 

participating jurisdictions and other 

program partners may not fully 

understand the ways in which HOME 

funds can be used for manufactured 

homes and manufactured home 

communities, including 

homeownership assistance and 

rehabilitation. Because manufactured 

homes may be personal property in 

some states and real property in others, 

there is variation in how HOME funds 

can be used to assist the acquisition of 

these units. HOME funds can be used to 

acquire both the unit and the lot, or to 

lease the lot for the period of 

affordability and purchase the housing 

unit. HOME funds can also be used to 

rehabilitate manufactured housing as 

homeowner rehabilitation projects, so 

long as the units meet the property 

standards in § 92.251 upon completion. 

The Department will consider further 

ways in which to address any 

misunderstandings about the allowable 

use of HOME funds in supporting 

manufactured home homeownership 

through guidance or technical assistance 

products. 

Z. Barriers to Using HOME To Purchase 

Manufactured Home Communities 

The commenter pointed to regulatory 

barriers that prevent HOME funds from 

being used for resident acquisition of 

manufactured home communities and 

stated that HOME funds for acquisition 

need to be implemented through an 

entity that can meet strict timeframes 

and work with manufactured home 

communities owners, that HOME funds 

should be used to reduce the cost of 

debt for acquisition, and that HOME 

funds should be used by participating 

jurisdictions to make equity grants in 

CDFIs to specifically finance resident 

purchases of manufactured home 

communities. 

HUD Response: The Department 

thanks the commenter for reviewing the 

rule and notes that some of the 

suggestions fall outside the scope of this 

rulemaking. However, HUD agrees that, 

while an eligible use of funds, it can be 

challenging to use HOME funds to 

acquire and rehabilitate manufactured 

home communities. A primary reason 

for this is that not all residents of a 

manufactured home community qualify 

as low-income, and ownership can vary 

from resident to resident. A more viable 

model might be to use another financing 

source such as CDBG to acquire the 

manufactured housing community and 

reserve HOME funds to acquire or 

rehabilitate manufactured housing units 

for income eligible residents. HUD can 

provide technical assistance to 

participating jurisdictions in structuring 

HOME projects involving manufactured 

home communities. 

AA. Encourage Homeownership 

Activities 

One commenter also suggested that 

HUD take further steps to encourage 

participating jurisdictions to make 

HOME funding available in their 

communities for affordable 

homeownership construction, 

rehabilitation, and repair by promoting 

guidance for best practices by 

participating jurisdictions. 

HUD Response: Supporting State and 

local efforts to expand homeownership 

is a key goal of the HOME program. 

HUD appreciates the comment and will 

continue to provide technical assistance 

and guidance to participating 

jurisdictions interested in using HOME 

funds for homeownership. In recent 

years, HUD has developed and 

administered several webinars, and inperson trainings focused on providing 

in-depth guidance and sharing best 

practices to participating jurisdictions 

looking to create or expand their 

homebuyer programs. HUD will 

continue to offer trainings and look for 

new ways to ensure participating 

jurisdictions have the resources and 

capacity to expand affordable 

homeownership. 

Specific solicitation of comment #11: 

The Department requests public 

comment on whether the existing 9- 

month deadline for the sale of 

homebuyer units acquired, 

rehabilitated, or constructed with HOME 

funds is reasonable and whether 


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extending the deadline to 12 months 

would increase the use of HOME funds 

for homeownership programs. 

A. Comments in Support of a 12-Month 

Deadline for Purchase by an Eligible 

Homebuyer 

Several commenters supported the 

extension to 12 months. Commenters 

stated that they support the proposed 

extension for the sale of a homebuyer 

unit acquired, rehabilitated, or 

constructed with HOME funds to 12 

months because 9 months is an 

insufficient amount of time. One 

commenter stated that less than 12 

months is an unreasonable time period 

due to market volatility and because 

small cities do not have the capacity to 

become landlords or to repay HUD for 

HOME funds when a property does not 

sell or convert to a rental unit. In 

addition, the commenter recommended 

that HUD remove the requirement for 

renting all together so that participating 

jurisdictions have time to sell the home. 

Another commenter stated that the three 

additional months would give potential 

homeowners more time to comply with 

requirements such as homebuyer 

counseling and income qualifications. 

One commenter explained that they 

support the change because, currently, it 

takes longer to find income eligible 

buyers given higher sales prices and 

interest rates. Some commenters said 

the extension would add flexibility to 

the program and one commenter stated 

it would make it more attractive to use 

HOME in such projects. One commenter 

stated that the added time may 

incentivize some participating 

jurisdictions to add or expand 

homeownership programs using HOME 

funds. 

One commenter, in expressing 

support for the extension to a 12-month 

deadline, stated that this change would 

especially benefit new construction and 

enable the local governments who 

encounter hurdles or delays to close the 

deal by providing an additional 3 

months. 

One commenter supported extending 

the deadline from 9 to 12 months but 

warned that developers and non-profits 

building owner-occupied housing lack 

rental property management experience 

and warned of the risks and deterrent 

effects of this misalignment. The 

commenter suggested requiring 

homebuyer projects to convert to a 

lease-to-purchase model instead of 

rental. 

One commenter noted that having an 

additional three months to sell HOMEassisted homeownership units may 

increase the use of HOME funds for 

homeownership programs for some 

participating jurisdictions, but high 

interest rates likely have more of an 

impact on the success of the program in 

most markets. 

HUD Response: HUD thanks the 

commenters and agrees that adding an 

additional three months to the 

homebuyer deadline will benefit local 

communities by alleviating potential 

noncompliance. The Department is 

moving forward with the proposed 

change by extending the homebuyer 

sales deadline from 9 to 12 months. 

B. Comments in Support of a Sales 

Deadline of More Than 12 Months 

One commenter stated that because of 

the current economy the time to sell a 

home should be extended to 15 to 20 

months. 

One commenter stated the 

requirement should be at least 12 

months because of volatility in the 

housing market. The commenter 

suggested that a participating 

jurisdiction and owner can provide a 

mutually agreeable plan to obtain 

occupancy no later than an additional 6 

months (total of 18 months) from the 

completion of construction if there is no 

sale at 12 months. 

One commenter stated they support 

increasing the number of months before 

converting a homeowner unit that hasn’t 

sold to rental housing from 9 months to 

12 months but would prefer that HUD 

eliminate the provision altogether. 

HUD Response: HUD acknowledges 

the volatility of the housing market but 

has determined that 12 months is an 

appropriate homebuyer sales deadline. 

A deadline of 15 months or greater is 

too long for HOME homeownership 

housing to remain on the housing 

market. If an owner is not able to sell 

the unit to an eligible homebuyer within 

12 months, then the unit must be 

converted into rental housing and run in 

accordance with § 92.252, or the 

participating jurisdiction must repay the 

investment. 

C. Current Requirement of Nine Months 

Is Not Hard To Meet 

One commenter said that they do not 

have challenges closing on homebuyer 

units within the existing timeline but 

understand that other markets may not 

be similarly situated and that the 

shrinking pool of available Federal 

funding utilized as mortgages is leading 

to extremely long waiting periods for 

homebuyers. The commenter doubted 

whether extending the deadline would 

meaningfully impact the proportion of 

HOME funding used to support 

homeownership programs because the 

sales deadline is only one very small 

part of the barriers in the HOME 

regulations and laws. Rather, the 

commenter cites the primary reason for 

the decline in uses of HOME for 

homeownership is decision-making at 

the participating jurisdiction level that 

prioritizes rental uses for HOME funds 

over homeownership uses as well as 

shrinking appropriations and a national 

proportion of HOME set aside for 

CHDOs that has not exceeded 20 

percent since 2015. The commenter 

recommended that HUD use its 

authority to ease barriers in HUD 

regulations, such as raising the 

Homeownership Value Limits and to 

work with homeownership advocates to 

identify ways to incentivize the use of 

the HOME program for homeownership 

activities. 

HUD Response: HUD thanks the 

commenters for their response and 

acknowledges that multiple factors 

impact the proportion of HOME funds 

that are used for homebuyer housing. In 

2024, HUD made changes to the 

methodology used to calculate the 

homeownership value limits and will 

continue to explore how it can address 

other barriers facing HOME funded 

homeownership. 

D. Clarify Rule on When Housing Is Not 

Sold by the Deadline 

One commenter stated that the 

extension of the proposed sales deadline 

to 12 months is appreciated, but the 

requirements for homeownership 

housing using HOME funds do not 

specify how a home that has been leased 

under the provision can subsequently be 

sold to an eligible homebuyer. The 

commenter stated that this has led to 

participating jurisdictions concluding 

that selling the home as originally 

intended is not allowed or that it can 

only be sold via the lease-purchase 

provisions of the regulations. The 

commenter recommended that HUD 

clarify how a home leased under 

§ 92.254(a)(3) can be sold to an eligible 

buyer within 12 months of a tenant 

voluntarily moving out of the rented 

home or after being legally evicted for 

cause. The commenter also 

recommended that HUD issue clear 

guidance on this matter for participating 

jurisdictions. 

HUD Response: HUD would like to 

clarify that a HOME-assisted homebuyer 

unit that fails to sell to an eligible 

homebuyer by the 12-month deadline, 

must be converted to a rental project in 

accordance with § 92.252. Once the unit 

is designated as a rental unit in 

accordance with § 92.252, a 

participating jurisdiction cannot execute 

a lease purchase agreement with a 

potential homebuyer because the unit 

has become a rental unit and lease 


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69See 42 U.S.C. 12755 for good cause and 42 

U.S.C. 12745(a)(3), which contemplates overincome tenants and explains what rent they must 

be charged. 

purchase is only permitted under 

§ 92.254(a)(7). In accordance with 

§ 92.255, a participating jurisdiction 

may permit the owner of a HOMEassisted rental unit to convert the unit 

to homeownership unit if the existing 

tenant is willing and eligible to buy the 

unit. The conversion of a HOMEassisted homebuyer unit into a rental 

unit after a 12-month vacancy is not 

intended to serve as a temporary 

solution for periods of weak market 

demand. Participating jurisdictions that 

are unable to sell a homebuyer unit after 

a 12-month period should consider 

evaluating local market demand for lowincome homebuyer projects. If the 

owner refuses to convert the unit into a 

rental housing unit under these 

provisions, then the participating 

jurisdiction must repay the investment 

of HOME funds for the development of 

that housing unit, as it failed to meet the 

requirements of § 92.254 and § 92.252. 

E. Other Comments Received in the 

Solicitation 

One commenter said that HOME 

funds are currently unable to assist in 

areas of homeownership opportunities 

because of increasing home prices and 

recommended HUD allow higher perunit subsidies and after rehabilitation 

values and sales prices to increase such 

opportunities. The commenter also 

supported a rehabilitation per unit 

subsidy limit that incorporates new 

construction and requested HUD 

provide an example of a proposed resale 

formula in its final rule. 

HUD Response: HUD acknowledges 

that increasing home prices pose a 

significant challenge to homebuyer 

programs. The final rule is proposing to 

make several revisions to the HOME 

program’s maximum per-unit subsidy 

limits at § 92.250 and a revised 

methodology that allows HUD an 

improved ability to review ongoing 

construction cost changes will be 

published in a future Federal Register 

publication. HUD has also taken recent 

steps to update the methodology used to 

calculate the HOME homeownership 

value limits and will continue to 

evaluate how those numbers are 

calculated. 

HUD has published examples of each 

of the four resales models on HUD.gov, 

and will provide training, technical 

assistance, and publish updated 

guidance to support the implementation 

of the new resale models. 

§ 92.255—Purchase of HOME Units By 

In-Place Tenants 

Commenters stated that HUD should 

make an exception to the current 

requirement that a tenant must qualify 

as low-income at the time of purchase 

of a HOME unit. One commenter 

encouraged HUD to consider regulatory 

changes that would provide more 

flexibility in income determination in 

the event of a purchase by an in-place 

tenants. Other commenters stated that if 

HOME units were originally developed 

using LIHTCs, then in-place LIHTC 

tenants that originally income qualified 

for both HOME and LIHTC should be 

able to purchase the units as in-place 

tenants without need for income 

recertification. In many cases, the 

commenters specifically cited to leasepurchase programs but the leasepurchase arrangements they were 

describing were not lease-purchases as 

defined under the HOME program but 

actually purchase of rental housing 

units by in-place tenants. 

Another commenter stated that 

homeownership is inadvertently 

disincentivized due to these existing 

regulations, and urged HUD to consider 

regulatory changes that would provide 

more flexibility in income 

determination in the event of a lease 

purchase agreement. The commenter 

noted that in § 92.254(a)(7), current 

regulations state that ‘‘HOME funds may 

be used to assist homebuyers through 

lease-purchase programs for existing 

housing and for housing to be 

constructed.’’ The commenter explained 

that during the rental period, the HOME 

rules defer to the LIHTC qualification 

standards for whether a renter is eligible 

to rent a HOME-assisted unit. The 

commenter further explained that 

LIHTC qualification standards require 

an initial qualification of the tenant at 

the time of lease, but if the tenant 

household income increases over the 

LIHTC and/or HOME maximum, the 

tenant is still qualified to live in the unit 

and is not displaced. However, the 

commenter pointed out that since 

HUD’s adoption of the 2013 HOME final 

rule, many participating jurisdictions 

are requiring a tenant to re-qualify 

under the homeownership rules at the 

time of the sales transaction once they 

are eligible to purchase their single 

family home at the end of the LIHTC 

compliance period. The commenter 

stated that if the tenant exceeds 80 

percent of area median income at the 

time of requalifying, they are 

disqualified from purchasing the 

HOME-assisted unit. 

HUD Response: The Department 

considered its flexibility under 42 

U.S.C. 12745(a)(1)(E) to reduce or 

eliminate the remaining period of 

affordability on the rental unit to allow 

the in-place over-income tenant to 

purchase the property and determined 

that this was within the Secretary’s 

discretion as it is consistent with the 

purposes of the Act, which emphasized 

moving families from poverty to stable 

homeownership. The Department has 

added language to §§ 92.254(a)(3), 

92.255(b), and 92.255(c) to enable the 

purchase of units by in-place overincome HOME tenants. As a condition 

of allowing the in-place over-income 

tenant to purchase the property, the 

tenant must agree to the participating 

jurisdiction’s resale restrictions for the 

remaining period of affordability, 

similar to other income eligible in-place 

tenants that purchase their units (see 

§ 92.255(b)). Since an over-income 

tenant purchasing their HOME unit is 

no longer income eligible, the tenant 

may not receive additional HOME funds 

to assist them in the purchase of their 

unit. 

The Department understands that 

there is a lot of confusion about what 

rules control when HOME units are 

designated in a LIHTC project. The 

Department is correcting the commenter 

because HOME rules do not ‘‘defer’’ to 

the LIHTC qualification standards. 

HOME tenants must be income eligible 

under the HOME program at initial 

occupancy. The commenter is correct 

that an owner may not refuse to renew 

a tenant’s lease because the tenant has 

become over-income, as this is not good 

cause under the Act.69 However, the 

commenter is also incorrect that the 

2013 HOME Rule revised the 

regulations to prohibit in-place overincome tenants from purchasing their 

HOME rental housing units. Until this 

final rule, this has never been permitted 

in the HOME program. 

§ 92.300—Set-Aside for Community 

Housing Development Organizations 

(CHDOs) 

A. Applicability of Proposed Changes 

A commenter requested additional 

clarity as to whether the proposals 

relating to CHDOs only applied to 

CHDOs in rural areas or if they are 

applicable to all CHDOs. 

HUD Response: The Department 

proposed several changes to the 

definition of community housing 

development organization at § 92.2 and 

the CHDO set-aside requirements at 

§ 92.300, many with the intent of 

improving CHDO availability and 

capacity in rural areas. However, the 

changes made are not specifically 

applicable to CHDOs in rural areas but 

any organization receiving CHDO setaside funds through the HOME program. 


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B. Changes to Role of CHDO in 

§ 92.300(a)—Support 

Commenters supported these changes. 

One commenter stated that the proposed 

revisions to the required role of the 

CHDO as owner, developer, or sponsor 

of housing at § 92.300, when combined 

with the proposed changes to the CHDO 

definition at § 92.2, would enable more 

community-based housing organizations 

to qualify as CHDOs and access the 

CHDO set-side. 

A commenter stated that they support 

the proposed change that allows CHDOs 

serving as rental housing sponsors to 

convey a project to a non-profit 

organization at a predetermined time 

after completion of the project. 

Several commenters supported the 

proposed change to sponsorship in 

§ 92.300(a)(4) that would allow a CHDO 

(or its subsidiary) sponsoring a project 

to be the ‘‘managing general partner’’ 

rather than the ‘‘sole general partner,’’ 

or the ‘‘managing member’’ rather than 

the ‘‘sole managing member’’ of a 

limited partnership. 

HUD Response: HUD thanks the 

commenters for their support. However, 

HUD notes that the provision at 

§ 92.300(a)(5) that permits CHDOs 

serving as rental housing sponsors to 

convey a project to a non-profit 

organization at a predetermined time 

after project completion is not new and 

is not being substantively changed by 

this rulemaking. 

C. Changes to Role of CHDO in 

§ 92.300(a)—Opposition 

One commenter opposed the 

proposed changes regarding all three 

CHDO roles and stated they will have 

the unintended consequence of 

reducing CHDO requirements and 

allowing non-CHDOs to fully benefit 

from a CHDO designation while not 

being held accountable to CHDO 

standards. The commenter stated that 

for the CHDO owner, developer, and 

sponsor projects, many non-CHDO forprofit and non-profit developers 

document their relationships with 

CHDOs in a way that gives them an 

appearance of decision-making 

authority they do not actually have. For 

sponsorship projects, the commenter 

recommended that the regulations 

permit two CHDOs with service areas 

covering the same geography be 

permitted to be owners of the general 

partner entity. 

HUD Response: HUD shares the 

commenter’s concern about entities 

other than the CHDO controlling the 

development process in contravention 

of the regulations and the statutory 

intent of the CHDO set-aside 

requirement, which is the reason why it 

strengthened and clarified the CHDO 

regulations in the 2013 final rule. 

However, the Department believes that 

the possibility that a non-CHDO entity 

will attempt to use this flexibility to 

access CHDO set-aside funds for a 

project it controls, is not a sufficient 

justification to deny many 

neighborhood-based nonprofit 

organizations the opportunity to 

participate in the CHDO set-aside. This 

is particularly significant because 

participating jurisdictions have the 

ability through recent appropriation 

provisions to use uncommitted CHDO 

set-aside funds for other HOME 

activities after two years. Participating 

jurisdictions and CHDOs must 

themselves be alert to efforts to evade 

the regulatory requirements applicable 

to CHDO set-aside funds. 

HUD also notes that under the 

sponsorship provisions of the current 

HOME regulations, two CHDOs that 

work in the same area are permitted to 

be the partners of the ownership entity, 

as long as one of the CHDOs is in charge 

of the project. 

D. Request for Greater Flexibility Under 

§ 92.300(a) To Allow for Grant-to-Loan 

or Other Pass-Through Lending 

Structures To Facilitate Tax Credit 

Transactions 

Commenters asked HUD to consider 

permitting alternative funding 

structures with HOME funds for LIHTC 

projects, for example, allowing the 

participating jurisdiction to lend or 

grant the HOME funds to a CHDO which 

in turn would have an agreement to loan 

or contribute the HOME funds to the 

project. 

HUD Response: A participating 

jurisdiction may not grant or provide 

HOME funds to an entity that then lends 

the HOME funds to the owner of an 

affordable rental project because HOME 

statutory and regulatory requirements 

require the participating jurisdiction to 

ensure compliance with HOME 

requirements through binding 

contractual agreements with the project 

owner. A participating jurisdiction may 

only provide HOME funds to an entity 

to lend to the owner of an affordable 

rental project if the entity is a 

subrecipient to the participating 

jurisdiction. See HOMEfires, Vol. 16 No. 

1, September 2021, (HUD discusses the 

statutory and regulatory provisions 

governing how HOME project owners 

are assisted). 

E. Ownership by a CHDO Throughout 

the Period of Affordability and Transfers 

of Ownership in § 92.300(a) 

Commenters stated that they support 

the proposed change to eliminate the 

requirement that HOME-assisted rental 

projects must be owned by the CHDO 

during the period of affordability. 

Commenters stated that allowing 

conveyance of the CHDO-developed or 

-sponsored project to eligible private 

nonprofits would create an additional 

opportunity for long-term preservation 

and ongoing operation of existing 

properties. Some commenters stated 

that permitting a transfer of ownership 

to a non-CHDO when necessary to 

maintain compliance with HOME 

program requirements will help 

preserve HOME-assisted stock of 

affordable housing and preserve HOME 

affordability requirements. 

Commenters questioned why the 

same ability was not extended to 

projects under the CHDO ownership 

role and advocated that HUD make that 

change in the final rule. One commenter 

said that the same difficulties HUD cites 

with respect to housing that is 

‘‘developed’’ and ‘‘sponsored’’ by 

CHDOs, also applies to housing owned 

by CHDOs and urged HUD to consider 

eliminating the requirement that the 

project be owned by a CHDO throughout 

the period of affordability at 

§ 92.300(a)(2) in addition to paragraphs 

(a)(3) and (a)(4). 

Commenters stated that they support 

the proposal to eliminate the 

requirement that HOME-assisted rental 

projects must be owned by the CHDO 

during the period of affordability. 

Several commenters requested that HUD 

issue sub-regulatory guidance on how to 

affect such a transfer. Another 

commenter recommended that the final 

rule explicitly state that ownership 

transfers are permitted when necessary 

to sustain a CHDO project and maintain 

compliance with HOME affordability 

requirements and requested HUD issue 

sub-regulatory guidance to facilitate 

such transfers. 

One commenter stated that when such 

transfers occur, the regulation should 

permit the participating jurisdiction to 

impose alternative affordability 

restrictions at the time of transfer, if the 

transfer is for the purpose of refinancing 

the property under the LIHTC program. 

Two commenters opposed the 

proposed changes that would permit 

transfer of CHDO set-aside projects to 

entities that are not CHDOs. One 

commenter recommended that HUD 

grant hardship exceptions rather than 

changing the regulations, stating that the 

change would allow for a CHDOVerDate Sep<11>2014 17:56 Jan 03, 2025 Jkt 265001 PO 00000 Frm 00109 Fmt 4701 Sfmt 4700 E:\FR\FM\06JAR2.SGM 06JAR2

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developed project to be transferred to a 

for-profit organization that has no 

connection to the community to benefit 

from the asset in the long-term. Another 

commenter stated that they prefer that 

CHDOs maintain ownership and asked 

for additional clarity on how the HOME 

Program proposed rule incentivizes 

CHDOs to maintain ownership rather 

than sell ownership. 

A commenter requested additional 

clarity on whether CHDOs are required 

to maintain ownership of rental housing 

for the full term of affordability. 

HUD Response: HUD appreciates the 

comments. In response to commenters 

recommending that HUD extend the 

flexibility provided to projects 

developed by a CHDO under paragraph 

(a)(3) and sponsored by a CHDO under 

(a)(4) to projects owned by the CHDO 

under § 92.300(a)(2), HUD believes that 

projects that were funded under the 

CHDO ownership model should 

continue to be owned by a CHDO 

throughout the period of affordability. 

HUD appreciates the suggestion that it 

provide hardship exceptions rather than 

revising the rule. However, HUD has 

been involved in situations in which a 

transfer had to occur on a timeframe 

inconsistent with a case-by-case waiver 

or exception process. HUD agrees with 

the commenter that recommended that 

the final rule explicitly state that 

ownership transfers are permitted when 

necessary to sustain a CHDO project and 

maintain compliance with HOME 

affordability requirements. As described 

in the preamble to the proposed rule, 

HUD intended to apply this flexibility to 

instances involving a CHDO’s 

bankruptcy, decrease in capacity, or 

other business necessity that requires 

sale or other transfer of the housing to 

preserve the viability or affordability of 

the project. However, the proposed rule 

language was more permissive than 

intended. Consequently, while HUD is 

adopting the flexibility, it also is 

revising the final rule to make clear that 

a participating jurisdiction may permit 

a CHDO to sell or otherwise convey 

housing to a nonprofit organization that 

is not a CHDO only if determines and 

documents that the CHDO no longer has 

the capacity to own and manage the 

housing for the full period of 

affordability and there are no CHDOs 

with capacity to own and manage the 

project for the full period of 

affordability. This provision would 

prohibit transfer of a CHDO project to an 

entity that does not qualify for a CHDO 

for routine reasons such as refinancing 

of a project at the end of a LIHTC 

period. 

F. Clarify CHDO Ownership Role 

A commenter asked for additional 

clarity regarding whether a CHDO is 

always required to be the sole owner or 

if it is permitted for CHDOs to have 

partners that are co-owners. 

HUD Response: The Department 

thanks the commenter for reviewing the 

proposed rule. A CHDO is not always 

required to be the sole owner of a rental 

housing project. Specifically, rental 

project partnerships are permitted under 

the CHDO ‘‘sponsor’’ definition if the 

CHDO, or its wholly owned subsidiary, 

is the managing general partner of a 

limited partnership or the managing 

member of a limited liability company. 

G. Clarify How a CHDO May Share 

Responsibilities as a Developer Under 

§ 92.300(a) 

Commenters supported HUD’s 

proposed changes to § 92.300(a)(3) to 

permit the CHDO to share 

responsibilities in the development 

process, provided that the CHDO 

remains in charge of these 

responsibilities. Several commenters 

recommended that HUD better describe 

the sharing of responsibilities when the 

CHDO acts as developers in 

§ 92.300(a)(2), by stating that it means 

‘‘partnering, contracting, or procuring 

services from other entities.’’ These 

commenters requested that HUD 

include ‘‘project management’’ in the 

list of responsibilities that may be 

shared or contracted. 

HUD Response: HUD thanks 

commenters for their support of this 

provision. HUD declines to add project 

management to the list of 

responsibilities that may be shared as 

the term is vague and open to 

interpretation, whereas the list of 

responsibilities included in the 

proposed rule are discrete and easily 

understood. HUD is adopting the 

proposed rule language and, in response 

to comments, is adding language 

describing the mechanisms through 

which responsibilities can be shared 

and decision-making retained. 

H. Removal of CHDO in Sponsored 

Limited Partnerships ‘‘for cause’’ in 

§ 92.300(a) 

A commenter supported the proposed 

change to sponsorship of rental housing 

in § 92.300(a)(4)(i) that would allow a 

sponsored CHDO’s limited partnership 

or limited liability company to be 

removed ‘‘for cause’’ as the managing 

general partner or managing member, 

provided that the CHDO must be 

replaced by another CHDO. The 

commenter recommended HUD issue 

sub-regulatory guidance to facilitate 

transfers necessary to sustain CHDO 

projects. 

HUD Response: HUD thanks the 

commenter and notes that this is not a 

change from the existing rule. 

I. Opposition to the 10 Percent 

Limitation on Homeownership 

Assistance to Homebuyer in CHDO 

Homeownership Projects in § 92.300(a) 

One commenter noted that only 10 

percent of the funds awarded to a CHDO 

for development of housing may be used 

for downpayment assistance, which is 

in high demand. The commenter urged 

HUD to increase the 10 percent 

threshold and coordinate with 

Congressional partners, where 

appropriate, to allow greater flexibility 

in the 10 percent ceiling. 

HUD Response: HUD is declining to 

make a change at this time. The 

downpayment assistance provided as 

part of a HOME homeownership project 

developed by a CHDO is only intended 

to be a small part of the overall 

homeownership program. HUD had 

proposed 10 percent as part of a 

previous rulemaking and this provision 

was not being revised as part of this 

rulemaking (see 78 FR 44628 for the 

final rule, 76 FR 78344 at 78359 for 

proposed rule). 

J. Encourage Participating Jurisdictions 

To Allow CHDOs To Retain Project 

Proceeds 

One commenter recommended that 

HUD encourage participating 

jurisdictions to allow CHDOs to retain 

proceeds from the sale of housing 

developed, owned, or sponsored by the 

CHDO, as permitted under 

§ 92.300(a)(6)(ii). 

HUD Response: Because HOME is a 

block grant program, each participating 

jurisdiction has the discretion to 

determine whether to allow an 

organization to retain proceeds from the 

sale of housing in accordance with 

§ 92.300(a)(6)(ii). This determination 

can be fact-sensitive and organizationor deal-specific. It is best made by the 

participating jurisdiction in 

consideration of local housing needs. 

K. Provide Easier Format for Designating 

a CHDO 

One commenter urged HUD to issue 

clarification on the registration 

requirements for CHDOs in a format that 

can be shared with organizations 

because many nonprofits struggle to 

understand and meet the requirements. 

The commenter pointed to the CHDO 

toolkit checklist as an example of clear 

guidance and urged HUD to align HUD 

guidance with the checklist. 


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HUD Response: There is no set format 

or ‘‘registration requirements’’ for an 

organization to be determined to be a 

CHDO under the regulations. In 

accordance with § 92.300(a), ‘‘[t]he 

participating jurisdiction must certify 

the organization as meeting the 

definition of ‘‘community housing 

development organization’’ and must 

document that the organization has 

capacity to own, develop, or sponsor 

housing each time it commits funds to 

the organization.’’ The definition of 

CHDO is found in § 92.2. The 

Department intends on providing 

further implementation guidance on 

qualifying an organization as a 

‘‘community housing development 

organization’’ under the revised 

definition in § 92.2. The Department 

will ensure that its guidance is aligned 

with the requirements and will consider 

other guidance materials that are 

currently available. 

L. Frequency of CHDO Designation in 

§ 92.300(a) 

Commenters stated that HUD should 

remove the current requirement that ties 

CHDO certification to a HOME-funded 

project and make certification 

independent of project-based funding as 

well as allow certification to be valid for 

three years. The commenters stated that 

participating jurisdictions could certify 

a CHDO for three years and then use a 

simpler ‘‘desktop certification’’ process 

to confirm the organization is still 

eligible whenever funding is requested. 

A commenter expressed disappointment 

that the proposed rule does not address 

the administrative burden of CHDO 

certification and stated that CHDOs 

should be certified periodically instead 

of on a project-by-project basis. 

HUD Response: The Department is 

declining to change the frequency with 

which a participating jurisdiction must 

certify that a CHDO meets the definition 

in § 92.2 and demonstrates capacity to 

develop a HOME project. Tying this 

requirement to the date of commitment 

is the most consistent approach to 

implementing the set-aside provisions 

contained in 42 U.S.C. 12771, which 

does not contemplate an extended 

qualification process or a continuous 

designation for CHDOs. Further, the 

Consolidated Appropriations Act of 

2012 (P. Law 112–55) and Consolidated 

Appropriations Act of 2013 (P. Law 

113–6) stated that a participating 

jurisdiction may not reserve funds to a 

CHDO unless it has determined that the 

CHDO has paid staff with demonstrated 

development experience, thereby 

further reinforcing that Congress 

intended for the CHDO certification 

process to be a determination made each 

time a new CHDO project is assisted 

with set-aside funds. 

The requirement that qualification as 

a CHDO be examined each time a CHDO 

is funded was included in the 

Consolidated Appropriation Acts and 

the 2013 HOME final rule to address the 

prevalence of participating jurisdictions 

providing CHDO set-aside funds to 

organizations that lacked adequate 

development capacity to successfully 

complete projects. This lack of due 

diligence by participating jurisdictions 

resulted in significant numbers of 

incomplete and failed projects, which 

took several years to resolve through 

repayments by participating 

jurisdictions to their HOME accounts. In 

addition to questions of capacity, 

examining a CHDO’s qualifications 

before committing CHDO set-aside 

funds ensures that a CHDO meets 

requirements related to the governing 

board and other provisions, which will 

also prevent noncompliance. HUD is 

unable to make this change based on the 

provisions of the Act but also believes 

that the regulation is critical to ensuring 

HOME compliance and successful 

completion of projects. 

M. HUD Should Allow Wholly Owned 

For-Profit Subsidiaries in § 92.300(a)(4) 

One commenter believed that HUD 

should not revise paragraph (a)(4) to 

require that wholly owned subsidiaries 

of CHDOs be nonprofit organizations. 

HUD Response: HUD thanks the 

commenter for reviewing the proposed 

rule. HUD agrees that a subsidiary of a 

CHDO may be either a for profit or nonprofit entity and is making the change. 

N. HUD Should Add Additional 

Oversight Requirements to § 92.300(a) 

One commenter recommended that 

HUD add a subparagraph (a)(8) to 

implement explicit oversight 

requirements allowing participating 

jurisdictions to evaluate the CHDO’s 

ongoing participation in the project as 

required under (2)-(6). 

HUD Response: The Department 

thanks the commenter for reviewing the 

proposed rule. This is already a 

requirement for participating 

jurisdictions, which under § 92.504(a) 

includes ‘‘ensuring that HOME funds 

are used in accordance with all program 

requirements and written agreements, 

and taking appropriate action when 

performance problems arise.’’ 

Additionally, § 92.504(a) also requires 

that the ‘‘participating jurisdiction must 

have and follow written policies, 

procedures, and systems, including a 

system for assessing risk of activities 

and projects and a system for 

monitoring entities consistent with this 

section, to ensure that the requirements 

of this part are met.’’ Participating 

jurisdictions have the flexibility to 

determine how best to engage in 

ongoing oversight of the project owners 

and projects that it funds, consistent 

with § 92.504 and the requirements of 

part 92. Consequently, additional 

regulatory language is not required to 

require or permit such oversight, and 

the Department is declining to make the 

change. 

O. HUD Should Clarify the Effect of the 

Revisions to § 92.300(b) 

A commenter requested clarification 

on the provision allowing up to 20 

percent of the minimum CHDO set-aside 

to be committed to organizations that 

meet all but the capacity requirement. 

HUD Response: The Department is 

revising § 92.300(b) to allow for new 

participating jurisdictions that do not 

have existing CHDOs with capacity to 

award up to 20 percent of the new 

participating jurisdiction’s set-aside 

funds in each of the participating 

jurisdiction’s first two years to 

organizations that meet all but the 

capacity requirements contained in 

paragraph (9) of the CHDO definition in 

§ 92.2. This will enable the 12 new 

participating jurisdictions receiving 

their first HOME grants in Fiscal Year 

2024 to use their CHDO set-aside funds 

effectively as they begin to establish 

their HOME programs. 

P. HUD Should Explain the Conditions 

for Using Set-Aside Funds for nonCHDO Projects 

Commenters stated that before 

redesignating uncommitted CHDO 

funds as non-CHDO funds, HUD should 

require a participating jurisdiction to 

demonstrate that it took all available 

actions to use the funds for CHDOeligible projects. One commenter 

recommended that HUD require 

participating jurisdictions to document 

that it completed a specific set of 

actions, including: (1) provide the full 

five percent of CHDO operating funds 

under § 92.208; (2) provide the full 

amount of capacity building funding 

under § 92.300(b); and (3) implement 

‘‘revolving CHDO fund’’ policies, 

sometimes known as ‘‘CHDO proceeds’’ 

policies, to make their CHDO program 

as attractive and additive to capacity 

building growth, as possible. 

HUD Response: Congress via HUD 

Appropriations Acts annually provides 

relief to participating jurisdictions by 

enabling them without limitation to 

redesignate any CHDO set-aside funds 

that have not been committed to a 

project within 24 months for use in nonCHDO projects. As explained in the 


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70Title II, Division H, Pub. L. 116–94 (133 Stat. 

2989); Title II, Division L, Pub. L. 116–260, (134 

Stat. 1881); Title II, Division L, Pub. L. 117–103 

(136 Stat. 742); Title II, Division L, Pub. L. 117–328 

(136 Stat. 5156); Title II, Division F, Pub. L. 118– 

42 (138 Stat. 361). 

71Section 235, Title II, Division L, Pub. L. 115– 

141; Section 233, Title II, Division K, Pub. L. 116– 

6; Title II, Division H, Pub. L. 116–94 (133 Stat. 

2988); Title II, Division L, Pub. L. 116–260, (134 

Stat. 1881); Title II, Division L, Pub. L. 117–103 

(136 Stat. 742); Title II, Division L, Pub. L. 117–328 

(136 Stat. 5156); Title II, Division F, Pub. L. 118– 

42 (138 Stat. 361). 

72https://www.hud.gov/sites/dfiles/CPD/ 

documents/HOMEfires-Vol-18-No1-CHDOSetasidefunds.pdf. 

following paragraphs, HUD is declining 

to add additional limitations beyond 

those contained in NAHA and HUD 

Appropriations Acts. 

The requirement in 42 U.S.C. 

12771(b) states that if any CHDO funds 

‘‘remain uninvested for a period of 24 

months, then the Secretary shall deduct 

such funds from the line of credit in the 

participating jurisdiction’s HOME 

Investment Trust Fund and make such 

funds available by direct reallocation 

. . . .’’ By statute, HUD is required to 

recapture and reallocate any funds that 

are not committed to projects 

developed, sponsored, or owned by 

CHDOs within 24 months. 

The requirement in 42 U.S.C. 12742 

was suspended by section 233 of 

Division G of the Consolidated 

Appropriations Act, 2019 (Pub. L. 116– 

6). Specifically, section 233 of Public 

Law 116–6 stated, ‘‘[s]ection 231(b) of 

such Act shall not apply to any 

uninvested funds that otherwise were 

deducted or would be deducted from 

the line of credit in the participating 

jurisdiction’s HOME Investment Trust 

Fund in 2018, 2019, 2020, or 2021 

under that section.’’ The 2020, 2021, 

2022, 2023, and 2024 appropriations 

acts added 2022, 2023, 2024, 2025, and 

2026 respectively, to the years covered 

by the suspension.70

Additionally, section 242 of Division 

K of the Consolidated Appropriations 

Act, 2017 (Pub. L. 115–31) suspended 

the 24-month commitment deadline 

requirement set forth in Section 218(g) 

of NAHA (42 U.S.C. 12748(g)). Section 

242 of Public Law 115–31 stated that 

‘‘Section 218(g) of the CranstonGonzalez National Affordable Housing 

Act (42 U.S.C. 12748(g)) shall not apply 

with respect to the right of a jurisdiction 

to draw funds from its HOME 

Investment Trust Fund that otherwise 

expired or would expire in 2016, 2017, 

2018, or 2019 under that section.’’ The 

2018, 2019, 2020, 2021, 2022, 2023, and 

2024 appropriations acts added 2020, 

2021, 2022, 2023, 2024, 2025, and 2026 

respectively, to the years covered by the 

suspension.71

The combined effect of the 

suspension of the 2-year commitment 

deadline at Section 218(g) of NAHA and 

the suspension of the 24-month CHDO 

reservation requirement at Section 

231(b) of NAHA means that HUD will 

no longer deobligate a participating 

jurisdiction’s CHDO set-aside funds that 

remain uncommitted to CHDO projects 

after 24 months of HUD obligating the 

participating jurisdiction’s grant, or 

HOME funds that become uncommitted 

from a CHDO project after the 24-month 

deadline. Instead, a participating 

jurisdiction may continue to accumulate 

those funds for CHDO set-aside projects 

or may request HUD allow the funds to 

be used for non-CHDO projects 

consistent with its guidance.72 HUD 

does not believe this is an area that it 

could or should further regulate, given 

the ongoing Congressional action taken 

in this area of the HOME requirements. 

Q. HUD Should Create a Public-Facing 

List of CHDOs 

One commenter recommended that 

HUD create and maintain a publicly 

available annual list of organizations 

certified as CHDOs with the information 

already submitted to participating 

jurisdictions. The commenter noted that 

it is currently challenging for 

researchers, intermediaries, capacity 

building organizations, and others to 

research trends among CHDOs, target 

non-governmental capacity building 

resources to CHDOs, and evaluate the 

extent to which the CHDO Program is 

meeting its goals. A commenter stated 

that HUD should create, maintain, and 

make publicly available on its website 

the organizations certified as CHDOs 

based on already available information. 

HUD Response: The Department does 

not have access to a list of designated 

and currently active CHDOs, as each 

participating jurisdiction is required to 

determine an organization’s status on a 

project-by-project basis at the time of 

commitment (see § 92.2 and earlier 

responses to comment on this issue). 

Moreover, the Department is unsure of 

the merit of obtaining information 

relative to the burden of continuously 

obtaining and updating this 

information. There is no guarantee that 

an organization that has met the 

qualifications of a CHDO in a given year 

for a specific project will continue to 

meet those criteria continuously. As the 

HOME requirements are based on a 

single point in time, at project 

commitment, and do not convey a 

CHDO’s status for a specific period of 

time, whatever information is reflected 

on a list may not prove to be accurate 

at the time the participating jurisdiction 

wishes to commit funds to the 

organization. The Department will 

continue to consider how to better 

facilitate the participation of CHDOs in 

the HOME program. However, this 

rulemaking is not the appropriate 

method to convey this information. 

R. CHDO Oversight 

A commenter requested additional 

clarity regarding how participating 

jurisdictions can use granted funds for 

the CHDO and how oversight will be 

conducted regarding this issue. 

HUD Response: In accordance with 

§ 92.300, a participating jurisdiction 

may use up to 15 percent of its HOME 

allocation for CHDO set-aside activities 

including housing that is owned, 

developed or sponsored by the CHDO. 

The HOME regulations at § 92.504 

require a participating jurisdiction to 

ensure that HOME funds are used in 

accordance with all program 

requirements and written agreements 

and take appropriate action when 

performance problems arise. In 

addition, the participating jurisdiction 

must have and follow written policies, 

procedures, and systems, including a 

system for assessing risk of activities 

and projects and a system for 

monitoring program partners, including 

CHDOs, to ensure all HOME 

requirements are met. 

S. Changes to the CHDO Set-Aside 

Two commenters recommended that 

HUD expand the range of activities 

eligible for the CHDO set-aside (i.e., 

housing owned, developed, or 

sponsored by a CHDO). One commenter 

stated that HUD should allow CHDO 

operating funds to be used in 

conjunction with TBRA to encourage 

more utilization of this activity in the 

HOME program. 

Another commenter suggested that 

HUD permit participating jurisdictions 

to use CHDO set-aside funds to 

rehabilitate homes for existing lowincome owner-occupants. The 

commenter explained that in areas 

without CHDOs, owner-occupied repair 

would be a low-barrier entry point for 

local nonprofit organizations to become 

CHDOs. The commenter stated that the 

ability of these nonprofits to move to 

administratively more difficult and 

costlier work, like new construction, is 

limited by their ability to grow their 

capacity. 

A commenter stated that HUD should 

eliminate the CHDO set-aside 

requirement and permit participating 

jurisdictions, whether in rural or urban 

areas, to exercise discretion in the 

amount of HOME funds they will award 


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to a CHDO. The commenter stated that 

HUD’s CHDO set-aside requirement 

hinders communities who have 

unqualified and inexperienced CHDOs 

or no eligible CHDO and affect the 

timeliness of meeting the encumbrance 

and expenditure deadline. Another also 

recommended that HUD eliminate the 

CHDO set-aside, stating that many 

community development entities do not 

want to change their board composition 

and can still access the non-CHDO 

portion of their participating 

jurisdiction’s HOME funds. This 

commenter opined that the 15 percent 

CHDO set-aside is too small to be useful. 

One commenter supported an 

increase in CHDO set asides for 

homeownership, not just rentals, as the 

current 10 percent leaves participating 

jurisdictions unable to assist CHDOs. 

HUD Response: The CHDO set-aside 

is statutory. 42 U.S.C. 12771(a) states 

that ‘‘[f]or a period of 24 months after 

funds . . . are made available to a 

jurisdiction, the jurisdiction shall 

reserve not less than 15 percent of such 

funds for investment only in housing to 

be developed, sponsored, or owned by 

CHDOs . . .’’ 

The Department does not have the 

discretion to consider tenant-based 

rental assistance or homeowner 

rehabilitation activities to be eligible for 

the CHDO set-aside, even if they are 

administered by a CHDO. The 

participating jurisdiction must enter 

into a subrecipient agreement with the 

CHDO to perform those projects. The 

Department cannot eliminate or reduce 

the percentage of HOME funds that are 

set-aside nor require that an additional 

amount be set-aside beyond that which 

is required in the Act. 

§ 92.352—Environmental Review 

One commenter requested HUD 

permit reliance on a single part 58 

Environmental Review by multiple 

participating jurisdictions funding a 

project. For example, if a city and 

county are both providing HOME funds 

to a project and one of the jurisdictions 

completes a part 58 Environmental 

Review, HUD should allow the other 

jurisdiction to rely on this review for its 

determination and notification. 

One commenter recommended that 

HUD add language to § 92.352 that 

would expressly permit upcoming 

guidance from HUD’s Office of 

Environment and Energy regarding the 

Fiscal Responsibility Act of 2023 to be 

followed. The commenter recommended 

adding a paragraph (b)(4) that would 

read, ‘‘(4) HUD or the jurisdiction may 

utilize a Categorical Exclusion and 

environmental review from other 

Federal agencies under the Fiscal 

Responsibility Act of 2023 and 

implementing regulations adopted by 

The Council on Environmental Quality 

(CEQ) and guidance from HUD’s Office 

of Environment and Energy, when 

issued.’’ 

HUD Response: The environmental 

review requirements contained in 24 

CFR part 58 are outside the scope of this 

rulemaking. However, HUD notes that 

24 CFR 58.14 allows cooperating 

responsible entities to prepare a single 

review for activities that require an 

Environmental Assessment or 

Environmental Impact Statement, if the 

coordinated and overall review 

responsibilities are established through 

a written agreement and the lead agency 

is responsible for preparing the review, 

coordinating consultation (including 

designating a lead agency for 

compliance with Section 106 of the 

National Historic Preservation Act 

pursuant to 36 CFR 800.2(a)(2)), and 

approving the review. 

§ 92.356—Conflict of Interest 

A commenter stated that they support 

the proposed change to the conflict of 

interest requirements. 

HUD Response: The Department 

appreciates the commenter’s review of 

the rule. The Department is making one 

minor revision for clarity to the conflict 

of interest requirements to state that of 

the publication methods, ‘‘a 

combination of at least two of’’ the list 

provided will be sufficient. The 

Department believes this will be clearer 

in what the Department means by 

‘‘combination.’’ 

§ 92.502—Program Disbursement and 

Information System 

A commenter stated that they support 

the proposed removal of the 

requirement that participating 

jurisdictions enter HOME project 

completion within 120 days of the final 

project draw because the four-year 

project completion is already in place to 

ensure compliance. 

HUD Response: HUD thanks the 

commenter for reviewing the rule and is 

moving forward with this change. 

§ 92.503—Program Income, 

Repayments, and Recaptured Funds 

A. Program Income Streamlining 

One commenter stated that HUD 

should create a narrow exception to the 

standard full review process for any use 

of program income. Specifically, the 

commenter proposed HUD streamline 

review for instances where there is no 

construction of a new unit and the 

participating jurisdiction, State, or local 

recipient is in good standing. This 

streamlining would allow HOME funds 

to recycle more rapidly and therefore 

support more low-income families. 

HUD Response: HUD permits 

participating jurisdictions to allow 

Subrecipients and State Recipients to 

retain program income through the 

written agreement provisions of 

§ 92.504. HUD believes this is the only 

time that a participating jurisdiction 

should be allowed to permit a 

streamlined process, as the State 

Recipient or Subrecipient already has an 

ongoing relationship under a written 

agreement with the participating 

jurisdiction. HUD also notes that the 

current HOME rule at § 92.503(d) 

permits participating jurisdictions to 

retain program income received during 

its program year, include program 

income on-hand in its next annual 

action plan, and commit the program 

income to specific projects. 

B. Recaptured Funds for CHDO Projects 

One commenter stated that § 92.503(c) 

refers to a participating jurisdiction 

allowing a CHDO to retain recaptured 

funds, which contradicts provisions in 

§ 92.504(c)(3)(ii)(B) that require CHDOs 

to return recaptured funds. The 

commenter noted that this issue could 

be fixed by replacing ‘‘. . .unless the 

participating jurisdiction permits the 

State recipient, subrecipient, or CHDO 

to retain . . .’’ with ‘‘. . .unless the 

participating jurisdiction permits the 

State recipient or subrecipient to retain 

. . .’’ 

HUD Response: The commenter is 

mistaken. The current rule and this final 

rule permit CHDOs to retain funds 

recaptured when a HOME-assisted 

homebuyer sells their home during the 

period of affordability and use those 

funds for additional HOME projects 

pursuant to the written agreement 

required by § 92.504. There is no 

contradiction in the current regulations. 

Paragraph § 92.504(c)(3)(x), the current 

regulation addressing CHDO projects, 

states that ‘‘[r]ecaptured funds are 

subject to the requirements of § 92.503.’’ 

Paragraph § 92.503(c) of the current 

rule, as the commenter points out, states 

that CHDO may retain recaptured funds 

as follows: ‘‘Recaptured funds must be 

deposited in the participating 

jurisdiction’s HOME Investment Trust 

Fund local account unless the 

participating jurisdiction permits the 

State recipient, subrecipient, or 

community housing development 

organization to retain the recaptured 

funds for additional HOME projects 

pursuant to the written agreement 

required by § 92.504.’’ 


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§ 92.504—Participating Jurisdiction 

Responsibilities; Written Agreements 

One commenter cited to the written 

agreement provisions in § 92.504 and 

stated that participating jurisdictions 

should be permitted to require 

subrecipients, include members of a 

consortium to establish and comply 

with their own requirements, including 

income determinations, underwriting 

and subsidy layering, rehabilitation 

standards, refinancing guidelines, 

homebuyer program policies, and 

affordability requirements. The 

commenter stated that this change is 

important because the subrecipient or 

consortium member may be serving a 

different area or population where the 

participating jurisdiction’s requirements 

may not be appropriate. 

HUD Response: HUD has established 

minimum requirements that 

participating jurisdictions must place 

into their written agreements with 

subrecipients in § 92.504(c)(2). In many 

of these cases, HUD permits 

participating jurisdictions to create 

policies and procedures and implement 

their own standards so long as those 

standards meet or exceed HUD’s 

minimum requirements. This allows 

participating jurisdictions the discretion 

to create jurisdiction-specific 

requirements such as underwriting 

standards, income verification methods, 

rehabilitation standards, etc. This type 

of discretion is due to HOME’s nature as 

a block grant program. This type of 

discretion is warranted under statute 

and regulations because HUD’s 

relationship is with the participating 

jurisdiction, and the participating 

jurisdiction has both certified to comply 

with program requirements and 

executed a grant agreement with HUD 

that makes them ultimately responsible 

in the event of program violations. 

Subrecipients do not have a direct 

contractual relationship with HUD and 

so certain requirements must be created 

and enforced by the participating 

jurisdiction and cannot be delegated to 

a Subrecipient. HUD did not propose 

revisions to this portion of § 92.504(c)(2) 

and is declining to make this change to 

allow Subrecipients to create their own 

requirements. HUD notes that 

consortium members are not 

subrecipients to the consortium, as they 

are part of the participating jurisdiction 

(i.e., the consortium) itself. However, 

the lead entity of the consortium must 

enter into written agreements that meet 

the requirements of § 92.504(c)(2) with 

consortium members to which it is 

distributing funds. 

§ 92.551—Corrective and Remedial 

Actions 

A commenter stated that they support 

the proposed change that would allow 

participating jurisdictions to correct a 

deficiency in a HUD finding by taking 

a reduction in a HOME grant equal to 

the amount of HOME expenditures that 

were not in compliance with HOME 

requirements. Another commenter 

stated support for HUD’s clarification on 

sanctions, in which HUD may permit a 

voluntary grant reduction in a 

participating jurisdiction’s HOME 

grants, as long as the participating 

jurisdiction chooses which grant to 

reduce. 

HUD Response: HUD appreciates the 

comments and is adopting the proposed 

rule language without change. 

Specific solicitation of comment #1: 

The Department specifically solicits 

public comment about any additional 

changes it should consider, within 

statutory constraints, that will improve 

CHDO availability and capacity in rural 

areas. 

A. Eligibility for Participants in USDA 

Mutual Help Housing and 

Homeownership Programs 

Commenters stated that CHDO rules 

should allow mutual self-help housing 

to be CHDO-eligible under the 

definition of owner, sponsor, or 

developer. The commenters stated that 

the proposed rule is not clear on 

whether a nonprofit can operate a USDA 

Rural Development Section 523 mutual 

self-help housing program as a CHDO, 

but the rule should allow this as CHDO 

eligible. Commenters recommended 

providing targeted technical assistance 

to CHDOs in rural areas hoping to 

access HOME CHDO set-aside funds. 

One commenter further suggested that 

HUD should explicitly allow families to 

qualify for HOME funding based on the 

low-income limits of the USDA’s 

Section 502 Homeownership Direct 

Loan Program, when the HOME project 

is either constructed via Section 523 

Mutual Self-Help Housing or sold via 

the USDA Section 502 Loan Program. 

HUD Response: HUD recognizes that 

nonprofits operating Section 523 mutual 

self-help housing programs successfully 

assist very low- and low-income 

households to build homes in rural 

areas. However, the Section 523 model 

does not qualify as homeownership 

housing developed by a CHDO under 

§ 92.300(a)(6). As commenters noted, 

these nonprofit organizations do not 

maintain fee simple ownership of the 

land and housing throughout the 

construction period, as required by 

§ 92.300(a)(6). Further, the Section 523 

grantee’s role managing homebuyers’ 

mutual self-help activities is distinct 

from that of a housing developer with 

control of project financing and 

construction. HUD therefore declines to 

make a change to HOME CHDO 

regulations. HUD also notes that the 

income-banding approach used in 

USDA programs is not permissible 

under the HOME program statute. 

Consequently, HUD is not making 

changes to the final rule based on these 

comments. 

B. Technical Assistance on HOME 

Requirements May Assist Rural CHDOs 

and Participating Jurisdictions 

One commenter stated that rural 

CHDOs often require targeted and 

specific technical assistance to succeed 

in competitive funding cycles and can 

benefit from local partnerships and 

business relationships and urged HUD 

to consider what existing regulations 

may limit those partnerships and rectify 

the barriers. One commenter 

recommended provision of targeted 

technical assistance around HOME 

underwriting requirements such as proforma development to support rural 

CHDOs applying for competitively 

awarded State HOME funds. A 

commenter also suggested that HUD 

provide participating jurisdictions with 

training on how to proactively award 

CHDO capacity building funds, such as 

when they see multiple unawarded 

funding applications from a rural 

CHDO. 

HUD Response: One commenter 

recommended providing technical 

assistance on HOME underwriting 

requirements, such as pro forma 

development for rural CHDOs. The 

HOME statute states that if a 

participating jurisdiction is unable to 

identify a sufficient number of capable 

community housing development 

organizations within the first 24 months 

of their participation in the HOME 

program, the participating jurisdictions 

may allocate up to 20 percent of its 

funds—up to a maximum of $150,000— 

to activities that develop the capacity of 

CHDOs. In response, while training 

participating jurisdictions on how to 

award capacity-building funds to 

develop rural CHDOs is commendable, 

it will not assist many CHDOs since 

most participating jurisdictions have 

been in the program for more than 24 

months. However, HUD has developed 

a CHDO training program that 

participating jurisdictions can use to 

train on CHDO requirements. 

Participating jurisdictions may also 

request direct technical assistance to 

build CHDO capacity, especially in rural 

areas where multiple applications go 


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unfunded due to organizational capacity 

limitations. 

HUD also appreciates the suggestion 

to expand eligible activities for rural 

CHDOs to include the rehabilitation of 

owner-occupied homes and USDA 

Section 523 mutual self-help housing. 

While these activities support rural 

housing initiatives, the entities involved 

do not develop, own, or sponsor 

housing investments, which does not 

align with the statutory intent for a 

CHDO under HOME. The statute 

requires CHDOs to develop, sponsor, or 

own housing as a core requirement for 

participating in the HOME program. 

C. Change How a Person Is Determined 

as Low-Income for Purposes of LowIncome Board Representation 

Requirements in Paragraph (5) of the 

Definition of Community Housing 

Development Organization in § 92.2 

One commenter recommended that 

HUD factor in a county’s median 

income rather than median incomes of 

counties State-wide and that the 

county’s median income be considered 

in CHDO board representation 

requirements of low-income residents or 

organizations. 

HUD Response: HUD thanks the 

commenter for reviewing the proposed 

rule. However, Title I of NAHA defines 

low-income families as ‘‘families whose 

incomes do not exceed 80 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 ceilings higher or 

lower than 80 percent 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 fair market rents, 

or unusually high or low family 

incomes.’’ 

HUD is declining to make this change 

because the current regulation faithfully 

implements the statute and introducing 

different standards for what constitutes 

low-income into the program will create 

confusion and potential noncompliance. 

D. HUD Should Examine and Remove 

Barriers for Nonprofits in Rural 

Communities 

One commenter wants participating 

jurisdictions to make concerted efforts 

to remove barriers for nonprofit 

organizations in rural communities and 

encouraged HUD to examine barriers 

that maybe inadvertently be caused by 

participating jurisdiction policy and 

determine whether the barriers are 

disproportionately impacting rural 

areas. 

HUD Response: HUD thanks the 

commenter for reviewing the proposed 

rule. HUD agrees that participating 

jurisdictions should take steps to 

remove unnecessary barriers to rural 

nonprofit organizations to become 

CHDOs. HOME is a block grant program, 

and participating jurisdictions are free 

to establish policies and procedures for 

their programs. HUD believes that a 

more appropriate role is for HUD to 

offer technical assistance to 

participating jurisdictions interested in 

facilitating the entry of CHDOs to their 

programs. 

§ 570.200—General Policies— 

Reimbursement for Pre-Award Costs 

A commenter stated that they do not 

support changing the effective date of 

the grant agreement to the date HUD 

executes the grant agreement. The 

commenter noted that this change 

would require them to front costs 

because HUD has timely executed grant 

agreements on only two occasions in the 

last twelve funding cycles. 

HUD Response: HUD appreciates the 

commenter’s concern, especially since it 

originates from a grantee with a program 

year start date of July 1 or later, which 

accounts for more than 81 percent of 

Community Development Block Grant 

(CDBG) entitlement grantees. HUD’s 

proposed change to the introductory 

text of 24 CFR 570.200(h), in 

conjunction with the proposed addition 

to § 92.212(b) for the HOME program, 

was designed to eliminate the need for 

the Department to issue annual waivers 

to assist the approximately 19 percent of 

grantees particularly hampered in recent 

years by late Congressional 

appropriations. However, HUD’s 

proposed change to § 570.200(h) 

decoupled the effective date of a grant 

agreement from a grantee’s program year 

start date and, as the commenter noted, 

would have subjected it and hundreds 

of other grantees with similar program 

year start dates to incurring pre-award 

costs on an annual basis. HUD sees the 

need to maintain the connection 

between the grant agreement effective 

date and program year start dates to 

reserve pre-award costs to those 

incurred before a program year start 

date. Therefore, HUD will retain the 

existing introductory text to 

§ 570.200(h) and instead add a new 

§ 570.200(h)(3) that makes the effective 

date of the grant agreement, in a year 

when an annual appropriation occurs 

less than 90 days before a grant 

recipient’s program year start date, the 

earlier of either the program year start 

date or the date that the consolidated 

plan is received by HUD. This change 

addresses the commenter’s concern, 

aligns CDBG better with the new HOME 

program regulation at § 91.212(b)(2), and 

continues practices implemented 

through annual waivers. 

Outside the Scope of the HOME 

Rulemaking 

A. HUD Should Commission a Study of 

CHDOs 

Commenters stated HUD should 

commission a study every three to five 

years on the universe of nonprofit 

organizations that could potentially 

become CHDOs, and the research could 

evaluate trends in CHDO certification, 

financial health, production, and 

organizational needs. 

HUD Response: The Department 

thanks the commenters for reviewing 

but believes that the study that the 

commenters are requesting is beyond 

the scope of this rulemaking. The 

Department will consider this area as a 

research area in the future. 

B. HUD Should Consider Metrics To 

Evaluate Needs of Rural Communities 

and Tribes 

One commenter encouraged HUD to 

consider metrics to measure the needs 

of rural and Tribal communities, and to 

encourage States to use HOME funds for 

projects that meet those identified 

needs. 

HUD Response: The Department is 

declining to develop metrics and 

measures on rural or Tribal needs as 

part of this rulemaking. Participating 

jurisdictions are required to engage in 

the consolidated planning process in 24 

CFR part 91. This evaluation includes 

the consideration of the needs of rural 

communities within a participating 

jurisdiction, including rural 

homelessness. Separately, Tribes 

assisted under the Indian Housing Block 

Grant program engage in the preparation 

of an Indian Housing Plan in accordance 

with 24 CFR part 1000, subpart C. This 

includes an evaluation of housing needs 

for each assisted Tribe. Each of these 

planning processes enables HUD 

grantees to identify housing needs using 

their own data and metrics, as well as 

HUD-provided data, and determine how 

to best address the challenges within 

their jurisdictions. Additionally, these 

plans are public facing, thereby 

allowing the public to review the data 

as it sees fit. 

C. HUD Should Increase Section 8 

Assistance 

A commenter stated that HUD should 

increase funding allocations to HAP 

budgets to cover increased rents because 

of the expected increase of rent charged 

to PBVs and HCVs. The commenter 


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73See 42 U.S.C. 12742(a)(5) and 42 U.S.C. 4822 

for the lead-based paint requirements for HOME. 

noted that this change is necessary so as 

not to reduce the number of vouchers 

available. Another commenter requested 

an increase in the HAP budget for 

Section 8 programs to account for the 

additional rent costs that will result 

from applying the HOME rent limit only 

to the tenant contribution to rent. 

Another commenter urged HUD to 

consider the impact of participating 

jurisdiction to regulate the HOME rent 

limits on units assisted by PBV that this 

issue will have on a PHA’s overall per 

unit cost and the long-term 

consequences for PHA budgets. 

HUD Response: While HUD is 

revising the rent reasonableness 

regulations for the Section 8 program, 

Section 8 funding is beyond the scope 

of this rulemaking. 

D. Lead-Based Paint Regulations in 24 

CFR Part 35 Should Be Updated 

One commenter stated that HUD’s 

current lead paint regulations are out-ofdate given higher construction costs and 

extended requirements. The commenter 

recommended that the ranges that 

determine intervention level be updated 

to the following: (1) Lead-safe work 

practices less than $20,000; (2) interim 

controls between $20,001 and $50,000; 

and (3) abatement for more than 

$50,000. 

HUD Response: Lead-based paint 

requirements are outside the scope of 

this rulemaking. HUD did not propose 

any revisions to 24 CFR part 35 or to 

how HUD applies lead-based paint 

requirements to the HOME program. 

Further, the dollar thresholds in the part 

35 regulations are established in Section 

1012 of Title X of the Housing and 

Community Development Act of 1992 

and are statutory for the HOME 

program.73

E. Provide Build America, Buy America 

Guidance 

Commenters expressed frustration 

over the limited Buy America, Build 

America (BABA) waiver availability and 

increased cost incurred due to sourcing 

domestic materials. Commenters stated 

that the lack of guidance from HUD on 

BABA compliance has further 

compounded challenges for developers 

and contractors, hindering their ability 

to provide feedback and navigate 

problems. A commenter stated that HUD 

should clarify the impact of BABA on 

the green building standards because 

the impact is unclear at this time. 

HUD Response: BABA is beyond the 

scope of this rulemaking. The 

Department is developing guidance on 

how to implement BABA for HUD 

programs. Until this guidance is 

developed, HUD cannot determine the 

effect of BABA compliance on the green 

building incentive or overall 

compliance with the HOME final rule. 

F. Create a Risk-Lowering Pilot Program 

One commenter recommended that 

HUD should consider creating a ‘‘risklowering pilot program for nonprofit 

affordable housing developers.’’ The 

commenter suggested that the pilot 

program it suggests might offer a 

preapproval for nonprofits that enables 

those organization to bid for HOME 

funding with no or low environmental 

review process-based risk. The 

commenter stated that in the program it 

suggests that a limited number of 

nonprofits could enter an agreement 

with HUD that guarantees HUD 

reimbursed costs for environmental 

reviews for unsuccessful applicants. 

The commenter noted that the pilot 

program could be designed in a way that 

it would not cover overhead costs of the 

nonprofit but only cover the hard costs 

of specialists. The commenter stated 

that this design would lower the risk of 

high pre-development costs being lost. 

The commenter suggested that this pilot 

program could be targeted at CHDOs 

already partnering with HUD or else be 

based on nonprofit operating budgets, 

geographic targeting, or other 

community characteristics, such as 

persistent poverty counties. 

HUD Response: Establishing a pilot 

program of the nature contemplated by 

the commenter is beyond the scope of 

this rulemaking. The Department 

recognizes that environmental 

requirements can pose a challenge to 

many aspiring developers and owners. 

In recognition of those challenges, HUD 

revised the regulations in § 92.206(d) to 

allow HUD environmental review or 

other environmental studies or 

assessments to be reimbursable 

expenses if the participating jurisdiction 

agrees to pay for those costs in the 

written agreement. 

G. Issue Waivers To Better Enable 

HOME Homeownership Activities 

One commenter asked HUD to 

provide waivers to Habitat for Humanity 

chapters so that participating 

jurisdictions can assist more with 

following HOME guidelines. 

HUD Response: HUD appreciates the 

comment but is uncertain what types of 

waivers the commenter is 

recommending. Outside of 

Presidentially-declared disasters or 

national emergencies, the Department is 

declining to announce the availability of 

waivers for the HOME program. The 

Department will still consider waiver 

requests on a case-by-case basis and 

determine whether the waiver states 

good cause upon which relief can be 

granted in accordance with 24 CFR 

5.110 and applicable law. 

H. Increase Opportunities for Persons 

With Disabilities 

Another commenter stated that 

opportunities for HUD loans for people 

with disabilities and those who may 

have medical needs should be explored 

in every State and territory and that 

HUD must support those who wish to 

rehabilitate homes in regard to 

accessibility. The commenter 

emphasized the need for access to 

universally designed housing for people 

with disabilities. 

HUD Response: HUD thanks the 

commenter for reviewing the proposed 

rule. The recommendation that HUD 

explore opportunities for HUD loans for 

people with disabilities or medical 

needs is outside the scope of this 

rulemaking. Other aspects of this rule 

are intended to provide clarity and 

enhance affordable housing 

opportunities for eligible beneficiaries, 

including individuals with disabilities. 

In addition, accessibility requirements 

for programs and activities apply to 

HUD recipients under HUD’s existing 

Section 504 requirements, and housing 

may be subject to additional 

accessibility requirements under the 

Fair Housing Act and the Americans 

with Disabilities Act, as applicable. 

I. HUD Should Perform Additional 

Rulemaking on the Consolidated 

Planning Regulations at 24 CFR Part 91 

One commenter recommended that 

HUD issue a separate advance notice of 

proposed rulemaking (ANPR) regarding 

how the Consolidated Plan could be 

improved and simplified. The 

commenter stated that the ANPR should 

consider improvements to the Annual 

Action Plan (AAP) and Consolidated 

Annual Performance and Evaluation 

Report (CAPER) with a special focus on 

reducing redundancies across planning 

documents. The commenter also urged 

HUD to facilitate greater consistency 

among local HUD offices in how 

Consolidated Plans and related planning 

regulations and guidance are 

interpreted. 

HUD Response: HUD thanks the 

commenter. However, as the commenter 

notes, the suggestion would require a 

separate rulemaking process and is 

outside the scope of this rulemaking. 


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J. Incentivizing Use of Section 8 

Housing Choice Vouchers in LIHTC 

Projects 

A commenter said HUD should help 

communities develop nondiscriminatory language and potential 

administrative rules so that many in the 

LIHTC system can access HCVs and 

adopt inclusive low-income energy 

assistance standards. Generally, the 

commenter said HUD should 

incentivize renting through HCVs and 

assisting communities by incorporating 

sources of income discrimination. 

HUD Response: By statute, owners of 

HOME-assisted rental housing may not 

discriminate against persons with 

Section 8 voucher assistance (42 U.S.C. 

12745(a)(1)(D)). HUD is expanding this 

protection to include a source of income 

protection for all forms of Federal 

tenant-based rental assistance provided 

to an applicant of HOME-assisted rental 

housing through this final rule. 

Incentivizing HCV utilization in LIHTC 

projects or in housing that is not HOMEassisted is beyond the scope of 

rulemaking. 

K. Provide Guidance on Participating 

Jurisdiction-Imposed Unit Caps in 

HOME Rental Housing Programs 

One commenter suggested that HUD 

should provide guidance to 

participating jurisdictions on maximum 

unit counts. For example, the 

commenter stated in one State, there is 

a 56-unit maximum rule for HOME 

funds, and that maximum makes HOME 

projects ineligible for utilizing four 

percent tax credits. Additionally, the 

commenter explained that anything less 

than a 100-unit maximum creates 

additional barriers to building 

integrated, inclusive housing 

communities for people with and 

without disabilities (i.e., HUD Section 

811 PRA). 

HUD Response: The commenter’s 

request for guidance is outside the scope 

of this rulemaking and HUD declines to 

make a change. The HOME regulations 

require that the HOME funds be costallocated in multi-unit properties to 

ensure that, at a minimum, an 

appropriate number of units are 

designated as HOME-assisted units; 

however, they do not cap the number of 

HOME-assisted units in a project. A 

participating jurisdiction imposed this 

cap as a matter of policy and any appeal 

should be handled at that level. 

L. Healthy Homes Requirements Should 

Be Integrated Into Environmental 

Review Requirements for HUD Programs 

One commenter stated HUD should 

integrate healthy home inspection 

requirements into environmental 

assessments as well as cover them under 

the eligible cost framework. The 

commenter recommended that HUD use 

the healthy homes standard under 42 

U.S.C. 711, the Maternal, Infant, and 

Early Childhood Home Visit Program. 

The commenter stated this standard is 

useful because it focuses on those most 

at risk from poor indoor air quality and 

would capture the health effects on a 

significant number of residents in 

public housing. 

HUD Response: HUD appreciates the 

comment. However, the required 

elements of environmental reviews 

conducted under 24 CFR part 58 are 

outside the scope of this rulemaking, 

and HUD declines to make any change. 

M. Rents Under Tenant-Based Rental 

Assistance 

One commenter asked if HUD has 

considered changing the requirement 

from the fair market rent to rent 

reasonableness. 

HUD Response: HUD thanks the 

commenter. While HUD is revising the 

rent reasonableness regulations for the 

Section 8 program, HUD is not revising 

the rent reasonable requirement used in 

HOME tenant-based rental assistance 

programs. This is beyond the scope of 

this rulemaking. 

V. Severability 

Consistent with the requirements of 

the Administrative Procedure Act, HUD 

has carefully responded to all public 

comments received in response to its 

notice of proposed rulemaking and 

acted within its statutorily delegated 

authority in the promulgation of 

regulations that are consistent with the 

Act. Nonetheless, if any provision of 

this final rule, or any provision of 24 

CFR part 92, is held to be invalid or 

unenforceable as applied to any action, 

that provision should be construed so as 

to continue to give the maximum effect 

to the provision permitted by law. If 

such holding is that the provision of this 

part is invalid and unenforceable in all 

circumstances, then HUD views each 

provision as severable from the 

remainder of this part and a finding that 

a provision is invalid should not affect 

the remaining provisions. Additionally, 

if a provision should be held to be 

invalid or unenforceable, HUD would 

have its predecessor provision, the 

equivalent provision in effect prior to 

this rulemaking, come back into effect. 

As this rulemaking is comprehensive 

and concerns all aspects of the HOME 

program, the Department recognizes the 

need to maintain the regulations to the 

maximum effect, if permissible, and to 

sever them as necessary if a court 

challenge prevails. This provides 

stability for participating jurisdictions, 

which must rely upon regulations for all 

activities, regardless of litigation or 

court orders affecting certain provisions 

or for certain activities. 

VI. Findings and Certifications 

Regulatory Review—Executive Orders 

12866, 13563, and 14094 

Under Executive Order 12866 

(Regulatory Planning and Review), a 

determination must be made regarding 

whether a regulatory action is 

significant and, therefore, subject to 

review by the Office of Management and 

Budget in accordance with the 

requirements of the order. Executive 

Order 13563 (Improving Regulations 

and Regulatory Review) directs 

executive agencies to analyze 

regulations that are ‘‘outmoded, 

ineffective, insufficient, or excessively 

burdensome, and to modify, streamline, 

expand, or repeal them in accordance 

with what has been learned.’’ Executive 

Order 13563 also directs that, where 

relevant, feasible, and consistent with 

regulatory objectives, and to the extent 

permitted by law, agencies identify and 

consider regulatory approaches that 

reduce burdens and maintain flexibility 

and freedom of choice for the public. 

Executive Order 14094 (Modernizing 

Regulatory Review) amends section 3(f) 

of Executive Order 12866, among other 

things. Updating the HOME program 

regulation is consistent with the 

objectives of Executive Order 13563 to 

reduce burden, as well as the goal of 

modifying and streamlining regulations 

that are outmoded and ineffective. 

This final rule revises the HOME 

program regulations, which were first 

promulgated in 1991, and have not been 

significantly updated since 2013. This 

final rule: revises CHDO qualification 

requirements for community-based nonprofit housing organizations to access 

CHDO set-aside funds to own, develop, 

and sponsor affordable housing; revises 

HOME rent requirements to implement 

statutory changes made to the U.S. 

Housing Act of 1937 by section 

2835(a)(2) of HERA; facilitates the use of 

HOME funds for small one-to-four-unit 

rental projects; incentivizes inclusion of 

ambitious Green Building standards in 

new construction, reconstruction, and 

rehabilitation projects; and expands 

flexibilities for community land trusts to 

participate in the HOME program. The 

final rule also provides enhanced 

flexibility in TBRA programs; 

strengthens and expands tenant 

protections; and clarifies the resale 

requirements for homeownership 

housing. The final rule also includes 


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technical amendments or 

simplifications to certain changes made 

in the 2013 HOME Final Rule, the 

HOTMA Final Rule, and the NSPIRE 

Final Rule. This final rule was 

determined to be a significant regulatory 

action under section 3(f) of Executive 

Order 12866, as amended by Executive 

Order 14094, but was not deemed to be 

significant under section 3(f)(1). 

Regulatory Impact Analysis 

HUD prepared a regulatory impact 

analysis (RIA) that addresses the costs 

and benefits of the final rule. HUD’s RIA 

is part of the docket file for this rule at 

https://www.regulations.gov. 

As described in the RIA, HUD 

anticipates that the economic impact of 

the final rule will be almost entirely 

within the HOME program. In other 

words, the changes to the HOME 

program will affect what participating 

jurisdictions do with the HOME funds 

they receive from HUD and how 

projects that accept this funding source 

operate. Many of the policy adjustments 

will only have a practical impact if 

participating jurisdictions choose to 

respond to the policy adjustments by 

altering how they use HOME funds. 

HUD strongly encourages the public to 

view the docket file. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

(5 U.S.C. 601 et seq.) generally requires 

an agency to conduct a regulatory 

flexibility analysis of any rule subject to 

notice and comment rulemaking 

requirements unless the agency certifies 

that the rule will not have a significant 

economic impact on a substantial 

number of small entities. This rule aims 

to improve the HOME program by 

making several changes to the program’s 

regulations through increasing 

flexibility for grantees in using their 

HOME grants, streamlining 

administrative requirements, 

implementing statutory changes 

regarding rent restrictions in HOME 

rental projects, and enhancing tenant 

protections for HOME-assisted rental 

households. As described in the RIA, 

HUD anticipates that the economic 

impacts of this rule will be almost 

entirely within the HOME program. In 

other words, the changes to the HOME 

program will affect what participating 

jurisdictions do with the HOME funds 

they receive from HUD and how 

projects that accept this funding source 

operate. Many of the policy adjustments 

will only have a practical impact if 

participating jurisdictions choose to 

respond to them by altering how they 

use HOME funds. For the reasons 

presented, the undersigned certifies that 

this rule will not have a significant 

economic impact on a substantial 

number of small entities. 

Environmental Impact 

A Finding of No Significant Impact 

(FONSI) with respect to the 

environment was made, at the proposed 

rule stage, in accordance with HUD 

regulations in 24 CFR part 50 that 

implement section 102(2)(C) of the 

National Environmental Policy Act of 

1969 (42 U.S.C. 4332(2)(C)). The FONSI 

remains applicable to this final rule and 

is available through the docket file at 

https://www.regulations.gov. The FONSI 

is also available for public inspection 

during regular business hours in the 

Regulations Division, Office of General 

Counsel, Room 10276, Department of 

Housing and Urban Development, 451 

Seventh Street SW, Washington, DC 

20410–0500. Due to security measures 

at the HUD Headquarters building, you 

must schedule an appointment in 

advance to review the FONSI by calling 

the Regulations Division at 202–708– 

3055 (this is not a toll-free number). 

HUD welcomes and is prepared to 

receive calls from individuals who are 

deaf or hard of hearing, as well as 

individuals with speech or 

communication disabilities. To learn 

more about how to make an accessible 

telephone call, please visit https://

www.fcc.gov/consumers/guides/ 

telecommunications-relay-service-trs. 

Federalism—Executive Order 13132 

Executive Order 13132 (Federalism) 

prohibits an agency from publishing any 

rule that has Federalism implications if 

the rule either: (i) imposes substantial 

direct compliance costs on State and 

local governments and is not required 

by statute, or (ii) preempts State law, 

unless the agency meets the 

consultation and funding requirements 

of section 6 of the Executive Order. This 

final rule does not have Federalism 

implications and does not impose 

substantial direct compliance costs on 

State and local governments or preempt 

State law within the meaning of the 

Executive Order. 

Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (2 U.S.C. 1531– 

1538) (UMRA) establishes requirements 

for Federal agencies to assess the effects 

of their regulatory actions on State, 

local, and Tribal governments, and on 

the private sector. This final rule does 

not impose any Federal mandates on 

any State, local, or Tribal governments, 

or on the private sector, within the 

meaning of the UMRA. 

Paperwork Reduction Act 

The information collection 

requirements contained in this final rule 

have been approved by OMB in 

accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501– 

3520) and assigned the OMB control 

number 2506–0171. In accordance with 

the Paperwork Reduction Act, an agency 

may not conduct or sponsor, and a 

person is not required to respond to, a 

collection of information, unless the 

collection displays a currently valid 

OMB control number. 

The final rule would change the 

annual income determination 

requirement for households assisted 

with HOME TBRA from annual to when 

a new rental assistance contract must be 

executed, which can be as long as 2 

years, which reduces the burden hours. 

The final rule includes a new provision 

in 24 CFR 92.250 to increase the 

maximum subsidy limit allowed for 

HOME projects based on whether the 

project shall meet a more 

comprehensive property standard that 

includes Green Building criteria, which 

would lead to a slight increase in 

burden for participating jurisdictions 

with qualified projects. The final rule 

would amend 24 CFR 92.252 to 

eliminate the requirement that a 

participating jurisdiction must submit to 

HUD a marketing plan for any HOMEassisted rental units that have not 

achieved initial occupancy within six 

months of project completion in IDIS, 

which would reduce the reporting 

burden on participating jurisdictions 

with unoccupied HOME-assisted rental 

units. The final rule adds paragraph 

(g)(1) to 24 CFR 92.252 to permit an 

owner of small-scale housing to reexamine annual income every three 

years, rather than annually, therefore 

reducing burden for income 

determination. The tenancy lease 

addendum, described in 24 CFR 92.253, 

replaces multiple, separate functions, 

and results in a decrease in paperwork 

burden. The changes in 24 CFR 92.300 

to define the qualifications for a CHDO 

result in increased applications and 

certification, which may lead to an 

increase of paperwork burden. Overall, 

the final rule results in a net decrease 

of burden by 28,852 total estimated 

annual burden hours. 

The burden of the information 

collections in this final rule is estimated 

as follows: 


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REPORTING AND RECORDKEEPING BURDEN

24 CFR section reference Number of 

parties 

Frequency of 

responses 

Number of 

responses 

per party 

Estimated 

average time 

for requirements (hours) 

Total 

estimated 

annual burden 

(hours) 

§ 92.252(g)(1) Small scale housing income determination .. 2,000 Annual .............. 1 2 4,000 

§ 92.209(c)(1) Annual income determination for TBRA ........ 72,000 Annual .............. 1 0.75 54,000 

§ 92.250 Increase maximum subsidy limits for ambitious 

green building.

188 Annual .............. 1 2 376 

§ 92.253 Tenant protections (including lease addendum requirement).6,667 Annual .............. 1 3 20,001 

§ 92.300 Designation of CHDOs ........................................... 600 Annual .............. 1 1.5 900 

§ 92.251 Property standards and inspection requirements .. 6,000 Annual .............. 1 3 18,000 

§ 92.252 6-month marketing plan for unoccupied rental 

units.

60 Annual .............. 1 1 60 

§ 92.507 Grant closeout procedures ..................................... 652 Annual .............. 1 1 652 

List of Subjects 

24 CFR Part 91 

Aged, Grant programs—housing and 

community development, Homeless, 

Individuals with disabilities, Low and 

moderate income housing, Reporting 

and recordkeeping requirements. 

24 CFR Part 92 

Administrative practice and 

procedure; Low and moderate income 

housing; Manufactured homes; Rent 

subsidies; Reporting and recordkeeping 

requirements. 

24 CFR Part 570 

Administrative practice and 

procedure; American Samoa; 

Community development block grants; 

Grant programs—education; Grant 

programs—housing and community 

development; Guam; Indians; Loan 

programs—housing and community 

development; Low and moderate 

income housing; Northern Mariana 

Islands; Pacific Islands Trust Territory; 

Puerto Rico; Reporting and 

recordkeeping requirements; Student 

aid; Virgin Islands. 

24 CFR Part 982 

Grant programs—housing and 

community development; Grant 

programs—Indians; Indians; Public 

housing; Rent subsidies; Reporting and 

recordkeeping requirements. 

For the reasons stated in the 

preamble, HUD amends 24 CFR parts 

91, 92, 570, and 982 as follows: 

PART 91—CONSOLIDATED 

SUBMISSIONS FOR COMMUNITY 

PLANNING AND DEVELOPMENT 

PROGRAMS 

■ 1. The authority citation for part 91 

continues to read as follows: 

Authority: 42 U.S.C. 3535(d), 3601–3619, 

5301–5315, 11331–11388, 12701–12711, 

12741–12756, and 12901–12912. 

§ 91.220 [Amended] 

■ 2. Amend § 91.220 by: 

■ a. Removing the words ‘‘affordability 

period’’ and adding in their place the 

words ‘‘period of affordability’’ in 

paragraph (l)(2)(iv)(B); 

■ b. Removing ‘‘92.254(a)(2)(iii)’’ and 

adding in its place ‘‘92.254(a)(2)(iv)’’ in 

paragraph (l)(2)(v); 

■ c. Removing ‘‘92.253(d)’’ and adding 

in its place ‘‘92.253(e)’’ in paragraph 

(l)(2)(vii)(D); 

■ d. Removing paragraph (l)(2)(viii). 

§ 91.320 [Amended] 

■ 3. Amend § 91.320 by: 

■ a. Removing the words ‘‘affordability 

period’’ and adding in their place the 

words ‘‘period of affordability’’ in 

paragraph (k)(2)(iv)(B); 

■ b. Removing ‘‘92.254(a)(2)(iii)’’ and 

adding in its place ‘‘92.254(a)(2)(iv)’’ in 

paragraph (k)(2)(v); 

■ c. Removing ‘‘92.253(d)’’ and adding 

in its place ‘‘92.253(e)’’ in paragraph 

(k)(2)(vii)(D); 

■ d. Removing paragraph (k)(2)(viii). 

PART 92—HOME INVESTMENT 

PARTNERSHIPS PROGRAM 

■ 4. The authority citation for part 92 

continues to read as follows: 

Authority: 42 U.S.C. 3535(d) and 12701– 

12839; 12 U.S.C. 1701x. 

■ 5. Amend § 92.2 by: 

■ a. Removing the definition of ‘‘ADDI 

funds’’; 

■ b. In the definition of ‘‘Commitment’’ 

by removing the word ‘‘official’’ in 

paragraph (1) introductory text and 

adding in its place the word ‘‘officials’’, 

by removing the word ‘‘downpayment’’ 

in paragraph (1)(i) and adding in its 

place the word ‘‘homeownership’’, by 

removing the words ‘‘or subrecipient’’ 

wherever it appears in paragraph 

(2)(ii)(A), by removing the words 

‘‘owner or the tenant’’ in paragraph 

(2)(iii) and adding in their place the 

words ‘‘owner and tenant’’, and by 

adding paragraph (2)(ii)(C); 

■ c. Revising paragraphs (4), (5), (8)(i), 

and (9) in the definition of ‘‘Community 

housing development organization’’; 

■ d. Adding a definition for 

‘‘Community land trust’’ in alphabetical 

order; 

■ e. Removing the definitions of 

‘‘Displaced homemaker’’ and ‘‘First-time 

homebuyer’’; 

■ f. In the definition of 

‘‘Homeownership’’ by revising the 

introductory text and paragraph (1) and 

by removing the words ‘‘Low Income 

Housing Tax Credits’’ in paragraph (4) 

and adding in their place the words 

‘‘Low-Income Housing Credits (26 

U.S.C. 42)’’; 

■ g. In the definition of ‘‘Housing’’ by 

removing the words ‘‘single-family 

dwellings’’ and adding in their place the 

words ‘‘single family housing units’’; 

■ h. Adding a definition for ‘‘Period of 

affordability’’ in alphabetical order; 

■ i. Revising the introductory text and 

paragraphs (2) and (3) in the definition 

of ‘‘Program income’’; 

■ j. Revising the last sentence in the 

definition of ‘‘Reconstruction’’; 

■ k. Removing the words ‘‘one-to fourfamily’’ and adding in their place the 

words ‘‘one-to four-unit’’ in the 

definition of ‘‘Single family housing’’; 

■ l. Removing the definition of ‘‘Single 

parent’’; 

■ m. Removing the word ‘‘dwelling’’ 

and adding in its place the word 

‘‘housing’’ the definition of ‘‘Single 

room occupancy (SRO) housing’’; 

■ n. Adding a definition for ‘‘Smallscale housing’’ in alphabetical order; 

■ o. Removing the semicolon after ‘‘this 

part’’ and the words ‘‘however, for 

purposes of the American Dream 

Downpayment Initiative (ADDI) 

described in subpart M of this part, the 

term ‘‘state’’ does not include the 

Commonwealth of Puerto Rico (except 

for FY2003 ADDI funds)’’ in the 

definition of ‘‘State’’; 


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■ p. Revising the definition of ‘‘State 

recipient’’; 

■ q. In the definition of ‘‘Subrecipient’’ 

by removing the words ‘‘public agency’’ 

wherever they appear and adding in 

their place the words ‘‘governmental 

entity’’, by removing the word 

‘‘downpayment’’ and adding in its place 

the word ‘‘homeownership’’, and by 

removing the word ‘‘solely’’; and 

■ r. Removing the word ‘‘dwelling’’ 

wherever it appears and adding in its 

place the word ‘‘housing’’ in the 

definition of ‘‘Tenant-based rental 

assistance’’. 

The additions and revisions read as 

follows: 

§ 92.2 Definitions. 

* * * * * 

Commitment: * * * 

(2) * * * 

(ii) * * * 

(C) If the participating jurisdiction (or 

State recipient or subrecipient) is 

providing HOME funds to a family to 

acquire single family housing for 

homeownership that does not meet the 

participating jurisdiction’s property 

standards, as described in § 92.251(c)(3), 

then the commitment must meet the 

requirements of this paragraph (2)(ii)(C). 

The participating jurisdiction (or State 

recipient or subrecipient) and the family 

must have executed a written agreement 

under which HOME assistance will be 

provided for the purchase of the single 

family housing. The written agreement 

will require the property to meet the 

standards in accordance with 

§ 92.251(c)(3) and will require the 

property title to be transferred to the 

family within six months of the 

agreement date. 

* * * * * 

Community housing development 

organization * * * 

(4) Is tax exempt as follows: 

(i) The private nonprofit organization 

has a tax exemption ruling from the 

Internal Revenue Service under section 

501(c)(3) or (4) of the Internal Revenue 

Code of 1986 (26 CFR 1.501(c)(3)–1 or 

1.501(c)(4)–1)); 

(ii) The private nonprofit organization 

is a subordinate organization that has 

been included in its 501(c)(3) or (4) 

central organization’s group exemption 

letter by the Internal Revenue Service; 

or 

(iii) The private nonprofit 

organization is wholly owned by the 

community housing development 

organization, as defined in this part, and 

is disregarded as an entity separate from 

its owner organization for Federal tax 

purposes. 

(5) Is not a governmental entity 

(including the participating jurisdiction, 

other jurisdiction, Indian Tribe, public 

housing authority, Indian housing 

authority, housing finance agency, or 

redevelopment authority) and is not 

controlled by a governmental entity. An 

organization that is created by a 

governmental entity may qualify as a 

community housing development 

organization; however, no more than 

one-third of the board members of the 

organization may be officials or 

employees of the participating 

jurisdiction or governmental entity that 

created the community housing 

development organization. Further, no 

governmental entity may have the right 

to appoint more than one-third of the 

organization’s board members. The 

board members appointed by a 

governmental entity and the board 

members that are officials or employees 

of the participating jurisdiction or 

governmental entity that created the 

organization may not appoint any of the 

remaining two-thirds of the board 

members. The officers or employees of 

a governmental entity may not be 

officers or employees of a community 

housing development organization; 

* * * * * 

(8) * * * 

(i) Maintaining at least one-third of its 

governing board’s membership for 

residents of low-income neighborhoods, 

low-income beneficiaries of HUD 

programs, other low-income community 

residents, designees of low-income 

neighborhood organizations, or 

designees of nonprofit organizations in 

the community that address the housing 

or supportive service needs of lowincome residents or residents of lowincome neighborhoods, including 

homeless providers, Fair Housing 

Initiatives Program providers, Legal Aid, 

disability rights organizations, and 

victim service providers. For urban 

areas, ‘‘community’’ may be a 

neighborhood or neighborhoods, city, 

county, or metropolitan area; for rural 

areas, it may be a neighborhood or 

neighborhoods, town, village, county, or 

multi-county area (but not the entire 

State); and 

* * * * * 

(9) Has a demonstrated capacity for 

carrying out housing projects assisted 

with Federal funds, Low-Income 

Housing Credits (26 U.S.C. 42), Federal 

Home Loan Bank Affordable Housing 

Program (12 U.S.C. 1430) funds, or local 

and State affordable housing funds. 

(i) To satisfy this requirement and 

demonstrate capacity as a developer of 

a HOME-assisted project, the nonprofit 

organization must have paid employees 

with housing development experience 

who will work directly on the HOMEassisted project. Where the paid 

employees of the organization do not 

demonstrate capacity to develop a 

HOME-assisted project alone, the 

experience of paid employees may be 

supplemented by board members or 

officers of the organization that are 

volunteers. If a nonprofit organization is 

demonstrating capacity using a 

volunteer board member’s or officer’s 

experience, the volunteer may not be 

compensated by or have their services 

donated by another organization. For its 

first year of funding as a community 

housing development organization, an 

organization may satisfy this 

requirement through a contract with a 

consultant who has housing 

development experience to train 

appropriate key, paid staff of the 

organization; 

(ii) An organization that will own 

housing must demonstrate capacity to 

act as owner of a project and meet the 

requirements of § 92.300(a)(2); 

(iii) An organization that will sponsor 

housing must demonstrate capacity as a 

developer or capacity to act as owner, as 

described in paragraphs (9)(i) and (ii) of 

this definition; and 

* * * * * 

Community land trust means a 

nonprofit organization that: 

(1) Has as its primary purposes 

acquiring, developing, or holding land 

to provide housing that is permanently 

affordable to low-income persons; 

(2) Is not sponsored or controlled by 

a for-profit organization; 

(3) Uses a lease, covenant, agreement, 

or other enforceable mechanisms to 

require housing and related 

improvements on land held by the 

community land trust to be affordable to 

low-income persons for at least 30 years; 

and 

(4) Retains a right of first refusal or 

preemptive right to purchase the 

housing and related improvements on 

land held by the community land trust 

to maintain long-term affordability. 

* * * * * 

Homeownership means ownership in 

fee simple title in single family housing 

or an equivalent form of ownership 

approved by HUD. 

(1) The land upon which the housing 

is located may be owned in fee simple 

or the homeowner may have a ground 

lease for the lowest of the following 

time periods, as applicable: 

(i) For housing, the ground lease must 

be for 99 years or more; 

(ii) For housing located in an insular 

area, the ground lease must be 40 years 

or more; 

(iii) For housing located on Indian 

trust or restricted Indian lands or a 


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Community Land Trust, the ground 

lease must be 50 years or more; or 

(iv) For manufactured housing, the 

ground lease must be for a period at 

least equal to the applicable period of 

affordability in § 92.254. 

* * * * * 

Period of affordability means the 

period of time, as specified in §§ 92.252 

and 92.254, that requirements under 

this part apply to HOME-assisted 

housing. 

* * * * * 

Program income means gross income 

received by the participating 

jurisdiction, State recipient, or a 

subrecipient at any time, generated from 

the use of HOME funds or matching 

contributions. When program income is 

generated by housing that is only 

partially assisted with HOME funds or 

matching funds, the program income 

shall be the amount prorated to reflect 

the percentage of HOME funds invested 

in the project. Program income includes, 

but is not limited to, the following: 

* * * * * 

(2) Gross income from the use or 

rental of real property, owned by the 

participating jurisdiction or State 

recipient that was acquired, 

rehabilitated, or constructed, with 

HOME funds or matching contributions, 

less costs incidental to generation of the 

income. Program income does not 

include gross income from the use, 

rental, or sale of real property received 

by the project owner or developer, 

unless all or a portion of the income 

must be paid to the participating 

jurisdiction, subrecipient, or State 

recipient, in which case, the amount 

that must be paid to the participating 

jurisdiction, subrecipient, or State 

recipient is program income; 

(3) Payments and repayments on 

grants, loans (i.e., principal and 

interest), or investments made using 

HOME funds or matching contributions, 

including such payments and 

repayments made after the period of 

affordability; 

* * * * * 

Reconstruction * * * Reconstruction 

is rehabilitation for purposes of this 

part, except that the property standards 

for new construction in § 92.251(a) 

apply to all reconstruction projects. 

* * * * * 

Small-scale housing means a rental 

housing project of no more than four 

units or a homeownership project with 

no more than three rental units on the 

same site. 

* * * * * 

State recipient means a unit of general 

local government designated by a State 

participating jurisdiction to receive 

HOME funds to administer all or some 

of the State participating jurisdiction’s 

HOME programs, own or develop 

affordable housing, provide 

homeownership assistance, or provide 

tenant-based rental assistance. 

* * * * * 

■ 6. Revise § 92.3 to read as follows: 

§ 92.3 Applicability of 2025 regulatory 

changes. 

This part applies to projects based on 

when an income determination is made 

or when the HOME funds for the project 

were committed, as applicable. Projects 

where the HOME funds were committed 

before a certain date may be subject to 

previous versions of this part. This 

section provides instruction regarding 

which version of this part applies. 

(a) Effective date of this part as it 

exists on February 5, 2025. Except as 

described in this section, this part, as it 

exists on February 5, 2025 is applicable 

to projects for which HOME funds are 

committed on or after February 5, 2025. 

A participating jurisdiction must 

perform income determinations in 

accordance with § 92.203 after February 

5, 2025. 

(b) One year compliance period. 

Participating jurisdictions are permitted 

to choose to continue to comply with 

the requirements of this part as they 

existed on February 4, 2025 for 

commitments made on or before 

February 5, 2026. 

(c) Delayed compliance date for 

income determinations. Participating 

jurisdictions are permitted to continue 

to comply with the income 

determination requirements in 

accordance with § 92.203 that the 

participating jurisdiction was 

implementing on February 4, 2025 until 

February 5, 2026, or longer as 

determined by HUD. 

(d) Applicability of this part as it 

exists on February 5, 2025 to prior 

agreements. A participating jurisdiction 

may choose to amend its written 

agreements for funds committed prior to 

February 5, 2025 to conform to the 

requirements of this part, except that: 

(1) Certain costs allowed to be 

reimbursable under § 92.206(d)(1) and 

(2), as effective February 5, 2025 may 

only be included in written agreements 

for projects if the participating 

jurisdiction committed the HOME funds 

for the project on or after February 5, 

2025. 

(2) Requesting an increase in 

maximum per-unit subsidy in 

accordance with § 92.250(c) is only 

permitted for projects if the 

participating jurisdiction committed the 

HOME funds for the project on or after 

February 5, 2025. 

(3) Use of the revised dollar 

thresholds for the periods of 

affordability in §§ 92.252 and 92.254 is 

only permitted for projects if the 

participating jurisdiction committed the 

HOME funds for the project on or after 

February 5, 2025. 

(4) Tenant protections provided in 

§ 92.253, including the tenancy addenda 

requirements in § 92.253(b) through (d), 

apply for rental housing projects if the 

participating jurisdiction committed the 

HOME funds for the project, entered 

into the rental assistance contract, or 

entered into an agreement to provide 

security deposit assistance on or after 

February 5, 2025. 

(5) The revisions to the roles of 

community housing development 

organizations in owning, developing, 

and sponsoring affordable housing in 

§ 92.300 only apply if the participating 

jurisdiction committed the community 

housing development organization setaside funds for the project on or after 

February 5, 2025. 

(e) The following table summarizes 

the information provided in this section: 

TABLE 1 TO PARAGRAPH (e)—SUMMARY OF EFFECTIVE DATES AND COMPLIANCE DEADLINES

2025 Rule effective date February 5, 2025 

Applicability ............................................................................................... Rule applies to projects for which HOME funds are committed on or 

after February 5, 2025. 

Compliance Date ...................................................................................... Participating jurisdictions must set compliance date: as early as February 5, 2025, and no later than February 5, 2026. 

Exceptions for Income Determinations .................................................... Participating jurisdictions must set compliance date: as early as February 5, 2025, and no later than February 5, 2026. 


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TABLE 1 TO PARAGRAPH (e)—SUMMARY OF EFFECTIVE DATES AND COMPLIANCE DEADLINES—Continued 

2025 Rule effective date February 5, 2025 

Participating jurisdictions may continue to calculate income in accordance with the provisions that were being implemented by the participating jurisdiction on February 4, 2025 until compliance date set by 

the participating jurisdiction, or longer as determined by HUD. 

Applicability Limitations ............................................................................ Listed provisions are not applicable to commitments made to projects 

prior to February 5, 2025. Participating jurisdictions may not amend 

written agreements of projects with commitments existing prior to 

February 5, 2025 to incorporate any of the following provisions: 

§ 92.206(d)(1) and (2). 

§ 92.250(c). 

§§ 92.252 and 92.254. 

§ 92.253. 

§ 92.300. 

§ 92.50 [Amended] 

■ 7. Amend § 92.50 in paragraph (c)(3) 

by removing the words ‘‘poor 

households’’ and adding in their place 

the words ‘‘households below the 

poverty line’’. 

■ 8. Amend § 92.101 by revising 

paragraphs (a) introductory text and (d) 

and adding paragraph (g) to read as 

follows: 

§ 92.101 Consortia. 

(a) A consortium of geographically 

contiguous units of general local 

government is a unit of general local 

government for purposes of this part if 

the requirements of this section are met. 

A unit of general local government 

separated by a body of water that is only 

accessible by the public through a 

permanent means other than a 

connecting road, bridge, railway, or 

highway may be considered 

geographically contiguous if the 

consortium demonstrates that the unit 

of general local government separated 

by the body of water is part of the same 

housing market and local commuting 

area as one or more members of the 

consortium. A local commuting area is 

the geographic area that encompasses 

neighborhoods where people live and 

are reasonably expected to routinely 

travel back and forth to a common 

employment hub, population center, or 

worksite. 

* * * * * 

(d) If the representative unit of general 

local government distributes HOME 

funds to member units of general local 

government, the representative unit is 

responsible for applying to the member 

units of general local government the 

same requirements as are applicable to 

subrecipients, including the written 

agreement requirements in 

§ 92.504(c)(2). 

* * * * * 

(g) If a consortium changes its 

representative unit of general local 

government but retains the same 

membership, the consortium shall still 

be considered the same unit of general 

local government for purposes of this 

part. If the representative unit of general 

local government changes and the 

composition of the consortium changes, 

either by adding or removing individual 

members, then the consortium shall be 

a new unit of general local government 

for purposes of this part and shall be 

required to comply with all applicable 

consolidated plan requirements in 24 

CFR part 91. 

■ 9. Amend § 92.201 by: 

■ a. Adding a sentence to the end of 

paragraph (a)(2); 

■ b. Removing the last sentence of 

paragraph (b)(2); and 

■ c. Removing the word ‘‘ensure’’ and 

adding in its place the word ‘‘require’’ 

in paragraph (b)(3)(i). 

The addition reads as follows: 

§ 92.201 Distribution of assistance. 

(a) * * * 

(2) * * * A participating jurisdiction 

may not commit HOME funds to a 

project outside its jurisdiction and 

within the boundaries of a contiguous 

local jurisdiction until it has secured the 

financial contribution of the jurisdiction 

in which the project is located. 

* * * * * 

■ 10. Amend § 92.203 by: 

■ a. Revising the section heading and 

paragraph (a) introductory text; 

■ b. Removing the words ‘‘must accept’’ 

and adding in their place the words 

‘‘may accept’’ in paragraph (a)(1); 

■ c. Redesignating paragraph (a)(3) as 

paragraph (a)(4); 

■ d. Adding a new paragraph (a)(3); 

■ e. Revising the paragraph (b) heading; 

■ f. Removing the word ‘‘any’’, adding 

the word ‘‘two’’ after the phrase ‘‘one of 

the following’’, and removing 

‘‘§ 92.252(h)’’ and adding in its place 

‘‘§ 92.252(g)’’ in paragraph (b)(1) 

introductory text; 

■ g. Revising paragraph (b)(1)(ii); 

■ h Removing paragraph (b)(1)(iii); 

■ i. Revising paragraph (b)(2); 

■ j. Adding paragraph (b)(3); 

■ k. Revising the paragraph (c) heading; 

■ l. Removing ‘‘§§ 5.609(a) and (b) of 

this title’’ and adding in its place ‘‘24 

CFR 5.609(a) and (b)’’ in paragraph 

(c)(1); 

■ m. Revising paragraph (d); 

■ n. In paragraph (e)(1), removing 

‘‘§ 5.618 of this title’’ wherever it 

appears and adding in its place ‘‘24 CFR 

5.618’’ and removing ‘‘§ 5.609(a)(2) of 

this title’’ and adding in its place ‘‘24 

CFR 5.609(a)(2)’’; 

■ o. Revising paragraph (e)(2); 

■ p. Removing ‘‘§ 5.617 of this title’’ and 

adding in its place ‘‘24 CFR 5.617’’ in 

paragraph (e)(3); 

■ q. In paragraph (f)(1)(i), removing 

‘‘§ 5.611(a) of this title’’ and adding in 

its place ‘‘24 CFR 5.611(a)’’ and 

removing ‘‘§§ 5.611(c) through (e) of this 

title’’ and adding in its place ‘‘24 CFR 

5.611(c) through (e)’’; 

■ r. In paragraph (f)(1)(ii), removing 

‘‘§ 92.252(b)(2)(i)’’ wherever it appears 

and adding in its place 

‘‘§ 92.252(a)(2)(ii)’’, removing 

‘‘§ 5.611(a) of this title’’ and adding in 

its place ‘‘24 CFR 5.611(a)’’, and 

removing ‘‘§§ 5.611(c) through (e) of this 

title’’ and adding in its place ‘‘24 CFR 

5.611(c) through (e)’’; 

■ s. In paragraph (f)(1)(iii), removing 

‘‘§ 92.252(i)(2)’’ and adding in its place 

‘‘§ 92.252(h)(2)’’ and removing 

‘‘§ 5.611(a) of this title’’ and adding in 

its place ‘‘24 CFR 5.611(a)’’; and 

■ t. Revising paragraph (f)(2). 

The revisions and additions read as 

follows: 

§ 92.203 Income determinations. 

(a) Income eligibility. To determine a 

family is income eligible, the 

participating jurisdiction must 

determine the family’s income as 

follows: 

* * * * * 


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(3) If a family is applying, renewing, 

or entering into a new rental assistance 

contract for tenant-based rental 

assistance pursuant to § 92.209, or 

applying for or living in a HOMEassisted rental unit in accordance with 

§ 92.252, and the family is assisted by a 

form of Federal, State, or local public 

assistance (e.g., TANF, Medicaid, 

LIHTC, local rental subsidy programs, 

etc.) which examines the annual income 

of the family each year, then a 

participating jurisdiction may accept a 

written statement from a Federal or nonFederal entity administering the 

assistance. The statement must indicate 

the tenant’s family size and state the 

amount of the family’s annual income. 

When accepting the statement from a 

government administrator, the 

participating jurisdiction must still 

adjust income in accordance with 

paragraph (f) of this section. The 

statement must be for an income 

determination made within the previous 

12-month period. 

* * * * * 

(b) Determining and documenting 

annual income. 

(1) * * * 

(ii) Obtain from the family a written 

statement or, where needed due to 

disability, a statement in another format, 

of the amount of the family’s annual 

income and family size, along with a 

certification that the information is 

complete and accurate. The certification 

must state that the family will provide 

source documents upon request. If there 

is evidence that a tenant’s statement and 

certification provided in accordance 

with this paragraph (b)(1)(ii) failed to 

completely and accurately state 

information about the family’s size or 

income, a tenant’s income must be reexamined in accordance with paragraph 

(b)(1)(i) of this section. 

(2) For families applying for HOME 

homeownership activities (i.e., 

homeowners receiving rehabilitation 

assistance, homebuyers), the 

participating jurisdiction must 

determine annual income by examining 

at least 2 months of source documents 

evidencing annual income (e.g., wage 

statement, interest statement, 

unemployment compensation 

statement) for the family. 

(3) For families applying for or 

receiving tenant-based rental assistance, 

the participating jurisdiction may 

determine annual income for the family 

in accordance with either paragraph 

(a)(3) or (b)(1)(i) of this section, as 

applicable. Income must be calculated 

at the times described in § 92.209(e)(3). 

(c) Definitions of ‘‘annual income.’’ 

* * * 

* * * * * 

(d) Use of income definitions. A 

participating jurisdiction may use either 

of the definitions of ‘‘annual income’’ in 

paragraph (c) of this section, however, 

the participating jurisdiction may use 

only one definition of ‘‘annual income’’ 

for each HOME-assisted program (e.g., 

homeownership assistance program) 

that it administers and only one 

definition for each rental housing 

project. For rental housing projects 

containing units assisted by a Federal or 

State project-based rental subsidy 

program or tenants receiving Federal 

tenant-based rental assistance, where a 

participating jurisdiction is accepting a 

public housing agency, owner, or rental 

assistance provider’s determination of 

annual and adjusted income, the 

participating jurisdiction must calculate 

annual income in accordance with 

paragraph (c)(1) of this section so that 

only one definition of annual income is 

used in the rental housing project. 

(e) * * * 

(2) The participating jurisdiction is 

not required to redetermine the family’s 

income eligibility at the time the HOME 

assistance (i.e., homeownership 

assistance and tenant-based rental 

assistance) is provided, unless more 

than six months has elapsed since the 

participating jurisdiction determined 

that the family is income eligible. 

* * * * * 

(f) * * * 

(2) If a unit is assisted by a Federal or 

State project-based rental subsidy 

program, then a participating 

jurisdiction may accept the public 

housing agency, owner, or rental 

subsidy provider’s determination of the 

family’s adjusted income under that 

program’s rules. 

■ 11. Amend § 92.205 by: 

■ a. Revising paragraph (a)(2); 

■ b. Removing the last sentence of 

paragraph (b)(1); 

■ c. Adding paragraph (b)(3); and 

■ d. Revising the first sentence of 

paragraph (e)(2). 

The revisions and addition read as 

follows: 

§ 92.205 Eligible activities: General. 

(a) * * * 

(2) Acquisition of vacant land or 

demolition may only be undertaken for 

a project that will provide affordable 

housing and meets the requirements for 

a specific local project in paragraph 

(2)(i) of the definition of ‘‘commitment’’ 

in § 92.2. 

* * * * * 

(b) * * * 

(3) The participating jurisdiction must 

establish the terms of assistance, subject 

to the requirements of this part. 

* * * * * 

(e) * * * 

(2) If project completion, as defined in 

§ 92.2, does not occur within 4 years of 

the date of commitment of funds for a 

specific local project, the project is 

considered to be terminated, and the 

participating jurisdiction must repay all 

funds invested in the project to the 

participating jurisdiction’s HOME 

Investment Trust Fund in accordance 

with § 92.503(b). * * * 

■ 12. Amend § 92.206 by: 

■ a. Removing ‘‘§ 92.251’’ and adding in 

its place ‘‘§ 92.251(a)’’ in paragraph 

(a)(1); 

■ b. Removing ‘‘§ 92.251’’ and adding in 

its place ‘‘§ 92.251(b)’’ in paragraph 

(a)(2); 

■ c. Removing the word ‘‘single-family’’ 

and adding in its place the words 

‘‘single family’’ in paragraph (b)(1); 

■ d. Removing the words ‘‘affordability 

period’’ and adding in their place the 

words ‘‘period of affordability’’ in 

paragraph (b)(2) introductory text; 

■ e. Revising paragraphs (b)(2)(ii), (c), 

and (d)(1), (2), and (8). 

The revisions read as follows: 

§ 92.206 Eligible project costs. 

* * * * * 

(b) * * * 

(2) * * * 

(ii) Require a review of management 

practices to demonstrate that 

disinvestment in the property has not 

occurred, that the long-term needs of the 

project can be met, and that the 

feasibility of serving the targeted 

population over the minimum period of 

affordability of 15 years can be 

demonstrated; 

* * * * * 

(c) Acquisition costs. Costs of 

acquiring improved or unimproved real 

property and costs for a long-term 

ground lease, including costs of 

acquisition by homebuyers. 

(d) * * * 

(1) Architectural, engineering, or 

related professional services required to 

prepare plans, drawings, specifications, 

work write-ups; for HUD environmental 

reviews or other environmental studies, 

assessments, or fees; and for certain 

costs to process and settle the financing 

for a project, such as private lender 

origination fees, credit reports, fees for 

title evidence, legal fees, accounting 

fees, filing fees for zoning or planning 

review and approval, private appraisal 

fees, fees for independent cost 

estimates, and other lender required 

third-party reporting fees. The costs may 


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be paid if they were incurred not more 

than 24 months before the date that 

HOME funds are committed to the 

project and the participating jurisdiction 

expressly permits HOME funds to be 

used to pay the costs in the written 

agreement committing the funds. 

(2) Fees for recordation and filing of 

legal documents, building permits, and 

builders or developers fees. 

* * * * * 

(8) Cost of property insurance during 

development. 

* * * * * 

§ 92.207 [Amended] 

■ 13. Amend § 92.207 in paragraph (e) 

by removing the words ‘‘under a cost 

allocation plan prepared’’. 

■ 14. Amend § 92.208 by adding 

paragraph (c) to read as follows: 

§ 92.208 Eligible community housing 

development organization (CHDO) 

operating expense and capacity building 

costs. 

* * * * * 

(c) An organization that meets the 

definition of ‘‘community housing 

development organization’’ in § 92.2, 

except for the requirements in 

paragraph (9) of the definition, may 

receive HOME funds for operating 

expenses in accordance with paragraph 

(a) of this section in order to develop 

demonstrated capacity and qualify as a 

community housing development 

organization. 

■ 15. Amend § 92.209 by: 

■ a. Removing the last sentence of 

paragraph (c)(1); 

■ b. Revising paragraphs (c)(2)(iv), 

(c)(3), (e), (g), (h)(2), (h)(3)(ii), and (i); 

■ c. Removing the word ‘‘dwelling’’ and 

adding, in its place, the word ‘‘housing’’ 

in paragraph (j)(1); 

■ d. Revising paragraph (j)(5); 

■ e. Adding paragraph (j)(6); 

■ f. Revising paragraph (k); and 

■ g. Removing paragraph (l). 

The revisions and addition read as 

follows: 

§ 92.209 Tenant-based rental assistance: 

Eligible costs and requirements. 

* * * * * 

(c) * * * 

(2) * * * 

(iv) Homebuyer program. HOME 

tenant-based rental assistance may assist 

a tenant who has been identified as a 

potential low-income homebuyer 

through a lease-purchase agreement, 

with monthly rental assistance 

payments for a period up to 36 months 

(i.e., 24 months, with a 12-month 

renewal in accordance with paragraph 

(e) of this section). The HOME tenantbased rental assistance payment may 

not be used to accumulate a 

downpayment or closing costs for the 

purchase; however, all or a portion of 

the homebuyer-tenant’s monthly 

contribution toward rent may be set 

aside for this purpose, in accordance 

with the lease-purchase agreement. If a 

participating jurisdiction determines 

that the tenant has met the leasepurchase criteria and is ready to assume 

ownership, HOME funds may be 

provided for homeownership assistance 

in accordance with the requirements of 

this part. 

* * * * * 

(3) Existing tenants in projects that 

will receive HOME assistance. A 

participating jurisdiction may select 

low-income families currently residing 

in housing units that will be 

rehabilitated or acquired with HOME 

funds under the participating 

jurisdiction’s HOME program. 

Participating jurisdictions using HOME 

funds for tenant-based rental assistance 

programs may establish local 

preferences for the provision of this 

assistance. Families so selected may use 

the tenant-based rental assistance in the 

rehabilitated or acquired housing unit or 

in other qualified housing. 

* * * * * 

(e) Rental assistance contract—(1) 

Parties to the rental assistance contract. 

A participating jurisdiction must enter 

into a rental assistance contract with the 

owner and the family. A participating 

jurisdiction may have one agreement 

with the owner and a separate 

agreement with the family, or one triparty agreement with the participating 

jurisdiction, the owner, and the family. 

(2) Term of the rental assistance 

contract. The term of the rental 

assistance contract providing assistance 

with HOME funds may not exceed 24 

months, but the rental assistance 

contract may be amended or renewed, 

subject to the availability of HOME 

funds. The term of the rental assistance 

contract must begin on the first day of 

the term of the lease or the beginning of 

the first month in which tenant-based 

rental assistance is provided. 

(3) Amending or renewing a rental 

assistance contract. (i) A rental 

assistance contract within its term may 

only be amended through the consent of 

all parties. A rental assistance contract 

may be amended: 

(A) Because the lease between the 

family and owner has been amended or 

renewed, if the lease term or amount 

charged under the lease are the only 

terms of the contract being changed. 

(B) To extend its term up to 24 

months from the original date of 

execution. 

(C) When a tenant changes units 

within the same building or 

development if the parties to the lease, 

the family size, and the number of 

bedrooms in the housing remain the 

same. 

(ii) Subject to the availability of 

HOME funds, a rental assistance 

contract may be renewed after the 

expiration of its initial term. 

(iii) In all other instances, the 

participating jurisdiction must enter 

into a new rental assistance contract 

with the family and the owner in 

accordance with this paragraph (e). 

(4) Initial and subsequent income 

determinations. (i) Before the 

participating jurisdiction enters into an 

initial or new rental assistance contract 

with the family, the participating 

jurisdiction must determine that the 

family is income eligible in accordance 

with § 92.203. 

(ii) When a rental assistance contract 

is amended, the participating 

jurisdiction will not be required to 

perform a new income examination in 

accordance with § 92.203. 

(iii) Before a rental assistance contract 

is renewed, the participating 

jurisdiction must determine that the 

family is income eligible in accordance 

with § 92.203. 

(iv) If a family is participating in a 

HOME lease-purchase program and 

receiving tenant-based rental assistance, 

then the participating jurisdiction is 

only required to determine the family’s 

income at the time that the family enters 

into the lease-purchase agreement and 

does not need to engage in further 

income examination during the term of 

the lease-purchase agreement. 

* * * * * 

(g) Tenant protections. The tenant 

must have a lease that complies with the 

requirements in § 92.253. Upon 

termination of the rental assistance 

contract, the HOME tenant-based rental 

assistance tenancy addendum shall 

automatically terminate. 

(h) * * * 

(2) The participating jurisdiction must 

establish a minimum tenant 

contribution to rent, except that the 

participating jurisdiction may establish 

conditions in its written policies under 

which a tenant would be relieved of all 

or a portion of the minimum 

contribution due to financial hardship. 

(3) * * * 

(ii) The Section 8 Housing Choice 

Voucher Program payment standard as 

determined in accordance with 24 CFR 

982.503(a) through (c). 

(i) Housing standards. The 

participating jurisdiction must require 

the housing occupied by a family 


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receiving tenant-based rental assistance 

under this section to meet the 

participating jurisdiction’s property 

standards under § 92.251. Initially and 

annually thereafter, the participating 

jurisdiction must determine the housing 

complies with its property standards 

and is decent, safe, sanitary, and in good 

repair in accordance with § 92.251(f). 

(j) * * * 

(5) Paragraphs (b), (c), (d), (f), (g), and 

(i) of this section are applicable when 

HOME funds are provided for security 

deposit assistance, except that income 

determinations pursuant to paragraph 

(c)(1) of this section and inspections 

pursuant to paragraph (i) of this section 

are required only at the time the 

security deposit assistance is provided. 

(6) Surety bonds, security deposit 

insurance, or instruments similar to 

surety bonds or security deposit 

insurance may not be used in lieu of or 

in addition to a security deposit in units 

occupied by tenants receiving tenantbased rental assistance. 

(k) Program operation. A tenant-based 

rental assistance program must be 

operated consistent with the 

requirements of this section. The 

participating jurisdiction may operate 

the program itself or may contract with 

a PHA or other entity with the capacity 

to operate a rental assistance program. 

The tenant-based rental assistance may 

be provided through a rental assistance 

contract in accordance with paragraph 

(e) of this section. The participating 

jurisdiction (or entity operating the 

program) must approve the lease. 

■ 16. Revise § 92.210 to read as follows: 

§ 92.210 Troubled HOME-assisted rental 

housing projects. 

(a) The provisions of this section 

apply only to an existing HOMEassisted rental project that, within the 

HOME period of affordability, is no 

longer financially viable or its physical 

viability has substantively deteriorated 

due to unforeseen circumstances. 

(1) For purposes of this section, a 

HOME-assisted rental project is no 

longer financially viable through the 

period of affordability if: 

(i) The project’s operating costs 

exceed its operating revenue, 

considering project reserves; 

(ii) The owner is unable to pay for 

necessary capital repair costs or ongoing 

expenses for the project; or 

(iii) The project reserves are 

insufficient to be able to operate the 

project. 

(2) For purposes of this section, 

physical viability means a project’s 

current or future ability to maintain 

affordability based on the physical 

characteristics and factors of the 

project’s site and improvements. 

(3) HUD may approve the actions 

described in paragraphs (b) and (c) of 

this section to strategically preserve the 

affordability of a rental project after 

consideration of market needs, available 

resources, and the likelihood of the 

long-term physical and financial 

viability of the project. 

(b) Notwithstanding § 92.214, a 

participating jurisdiction may request 

and HUD may permit, pursuant to a 

written memorandum of agreement, a 

participating jurisdiction to invest 

additional HOME funds in the existing 

HOME-assisted rental project. The total 

HOME funding for the project (original 

investment plus additional investment) 

must be necessary to improve the 

physical and financial viability of the 

project and may not exceed the per-unit 

subsidy limit in § 92.250(a) in effect at 

the time of the additional investment. 

The use of HOME funds may include, 

but is not limited to, rehabilitation of 

the HOME units and recapitalization of 

project reserves for the HOME units (to 

fund capital costs). If additional HOME 

funds are invested, HUD may impose 

additional conditions, including 

requiring the participating jurisdiction 

to extend the period of affordability, 

increase the number of HOME-assisted 

units, and change the number or 

designation of Low HOME rent and 

High HOME rent units. 

(c) HUD may, through written 

approval, permit the participating 

jurisdiction to reduce the total number 

of HOME-assisted units or change the 

designation of units from Low HOME 

rent units to High HOME rent units 

where there are more than the minimum 

number of Low HOME rent units in the 

project. In determining whether to 

permit a reduction in the number of 

HOME-assisted units, HUD will take 

into account the required period of 

affordability and the amount of HOME 

assistance provided to the project. 

■ 17. Amend § 92.212 by: 

■ a. Removing ‘‘may incur costs’’ and 

adding in its place ‘‘may incur costs 

described in this section’’ in paragraph 

(a); and 

■ b. Revising paragraph (b). 

The revision reads as follows: 

§ 92.212 Pre-award costs. 

* * * * * 

(b) Administrative and planning costs. 

(1) Eligible administrative and planning 

costs may be incurred as of the 

beginning of the participating 

jurisdiction’s consolidated program year 

(see 24 CFR 91.10) or the date HUD 

receives the consolidated plan 

describing the HOME allocation to 

which the costs will be charged, 

whichever is later. 

(2) In any year in which an 

appropriation has not been enacted 90 

days before a participating jurisdiction’s 

program year start date, a participating 

jurisdiction may incur eligible 

administrative and planning costs as of 

the beginning of its program year or the 

date that HUD receives its consolidated 

plan describing the HOME allocation to 

which the costs will be charged, 

whichever is earlier. 

* * * * * 

■ 18. Amend § 92.214 by revising 

paragraphs (a)(6) through (9), adding 

paragraph (a)(10), revising paragraph 

(b)(3), and adding paragraph (b)(4) to 

read as follows. 

§ 92.214 Prohibited activities and fees. 

(a) * * * 

(6) Provide assistance (other than 

tenant-based rental assistance, 

assistance to a homebuyer to acquire 

housing previously assisted with HOME 

funds, assistance permitted under 

§ 92.210, or assistance to preserve 

affordability of homeownership housing 

in accordance with § 92.254(b)) to a 

project previously assisted with HOME 

funds during the period of affordability. 

However, additional HOME funds may 

be committed to a project for up to one 

year after project completion (see 

§ 92.502), but the amount of HOME 

funds in the project may not exceed the 

maximum per-unit subsidy amount 

established under § 92.250 at the time of 

underwriting; 

(7) Pay for the acquisition of property 

owned by the participating jurisdiction, 

unless such property is acquired by the 

participating jurisdiction in anticipation 

of carrying out a HOME project; 

(8) Pay delinquent taxes, fees, or 

charges on properties to be assisted with 

HOME funds; 

(9) Pay for any cost that is not eligible 

under §§ 92.206 through 92.209; or 

(10) Pay for surety bonds, security 

deposit insurance, or instruments 

similar to surety bonds or security 

deposit insurance, in lieu of or in 

addition to a security deposit in units 

occupied by tenants receiving tenantbased rental assistance (including 

assistance in paying security deposits). 

(b) * * * 

(3) The participating jurisdiction must 

prohibit project owners from charging 

for: 

(i) Surety bonds, security deposit 

insurance, or instruments similar to 

surety bonds or security deposit 

insurance, in lieu of or in addition to a 

security deposit in units; 


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(ii) Fees that are not customarily 

charged in rental housing (e.g., laundry 

room access fees); and 

(iii) Fees to inspect units or correct 

deficiencies in the property condition of 

units or common areas of the project 

that were not caused by the tenant or are 

only due to normal wear and tear. 

(4) Rental project owners may charge: 

(i) Reasonable application fees to 

prospective tenants; 

(ii) Parking fees to tenants only if such 

fees are customary for rental housing 

projects in the neighborhood; and 

(iii) Fees for services such as bus 

transportation or meals, as long as the 

services are voluntary and fees are 

charged for services provided. 

§ 92.216 [Amended] 

■ 19. Amend § 92.216 in paragraphs 

(a)(2) and (b)(2) by removing the word 

‘‘dwelling’’ and adding in its place the 

word ‘‘housing’’. 

§ 92.217 [Amended] 

■ 20. Amend § 92.217 by removing the 

word ‘‘dwelling’’ and adding in its place 

the word ‘‘housing’’. 

■ 21. Amend § 92.219 by: 

■ a. Removing the word ‘‘dwelling’’ and 

adding in its place the word ‘‘housing’’ 

in paragraph (a)(4); 

■ b. Revising the first sentences of 

paragraphs (b)(2)(ii) and (iii); 

The revisions read as follows: 

§ 92.219 Recognition of matching 

contribution. 

* * * * * 

(b) * * * 

(2) * * * 

(ii) The participating jurisdiction 

must execute, with the owner of the 

housing (or, if the participating 

jurisdiction is the owner, with the 

manager or developer), a written 

agreement that imposes and enumerates 

all of the requirements applicable to the 

project, including affordability 

requirements in § 92.252 or § 92.254; 

tenant protection requirements in 

§ 92.253; property standards 

requirements in § 92.251; and income 

determination requirements in § 92.203. 

* * * 

(iii) A participating jurisdiction must 

establish a procedure to monitor HOME 

match-eligible housing to ensure 

continued compliance with the 

requirements of § 92.203 (Income 

determinations), § 92.252 (Qualification 

as affordable housing: Rental housing), 

§ 92.253 (Tenant protections), and 

§ 92.254 (Qualification as affordable 

housing: Homeownership). * * * 

* * * * * 

§ 92.220 [Amended] 

■ 22. Amend § 92.220 by removing the 

words ‘‘single-family’’ and adding in 

their place ‘‘single family’’ in paragraph 

(a)(5)(ii). 

■ 23. Amend § 92.221 by adding 

paragraphs (b)(1) and (2) to read as 

follows: 

§ 92.221 Match credit. 

* * * * * 

(b) * * * 

(1) To apply an excess matching 

contribution to a future fiscal year’s 

match liability, the participating 

jurisdiction must have documentation, 

at the time of application, 

demonstrating the matching 

contribution complied with the 

matching requirements at §§ 92.218 

through 92.221 at the time it was made. 

Documentation must include project 

records of the type and amount of the 

matching contribution. 

(2) A participating jurisdiction must 

maintain the records in paragraph (b)(1) 

of this section for five years from the 

date of application of the excess 

matching contribution to the liability. 

* * * * * 

■ 24. Amend § 92.250 by: 

■ a. Revising paragraphs (a) and 

(b)(3)(i); 

■ b. Removing the words 

‘‘downpayment assistance’’ and in their 

place adding in their place the words 

‘‘homeownership assistance’’ in 

paragraph (b)(4); and 

■ c. Adding paragraph (c). 

The revisions and addition read as 

follows: 

§ 92.250 Maximum per-unit subsidy 

amount, underwriting, and subsidy layering. 

(a) Maximum per-unit subsidy 

amount. The total amount of HOME 

funds that a participating jurisdiction 

may invest on a per-unit basis in 

affordable housing may not exceed the 

per-unit dollar limits established by 

HUD in accordance with section 212(e) 

of the Act. HUD will publish the perunit dollar limits for the area in which 

the housing is located annually. HUD 

will publish its methodology for 

determining maximum per-unit dollar 

limits through a publication in the 

Federal Register with the opportunity 

for comment. 

(b) * * * 

(3) * * * 

(i) An underwriting analysis of the 

homeowner’s ability to repay the 

HOME-funded rehabilitation loan is 

required only if the loan is an 

amortizing loan; and 

* * * * * 

(c) A participating jurisdiction may 

exceed the per-unit dollar limits 

described in paragraph (a) of this 

section by up to 10 percent if the project 

meets one of the green building 

standards identified by HUD and 

published in the Federal Register. 

■ 25. Amend § 92.251 by: 

■ a. Revising the section heading and 

paragraph (a)(2); 

■ b. Adding paragraph (a)(3); 

■ c. Revising paragraph (b)(1)(vi); 

■ d. Adding paragraphs (b)(1)(viii)(A) 

and (B); 

■ e. Adding paragraphs (b)(1)(xi) and 

(xii); 

■ f. Removing the words ‘‘must ensure’’ 

and adding in their place the words 

‘‘must require’’ and by removing the 

words ‘‘The construction documents’’ 

and adding in their place the words 

‘‘The construction contract and 

documents’’ in paragraph (b)(2); 

■ g. Revising paragraph (b)(3), the first 

sentence of paragraph (c)(1), and 

paragraph (c)(3); 

■ h. Adding paragraph (d); 

■ i. Revising the paragraph (f) heading; 

■ j. Removing the words ‘‘affordability 

period’’ and adding in their place the 

words ‘‘period of affordability’’ and by 

removing the words ‘‘each of the 

following’’ and adding in their place the 

words ‘‘all of the following’’ in 

paragraph (f)(1) introductory text; 

■ k. Revising paragraph (f)(1)(i); 

■ l. Adding paragraph (f)(1)(iv); 

■ m. Revising paragraphs (f)(3) through 

(5); and 

■ n. Adding paragraph (g). 

The revisions and additions read as 

follows: 

§ 92.251 Property standards and 

inspections. 

(a) * * * 

(2) Construction progress and final 

inspections. The participating 

jurisdiction must conduct on-site 

progress and final inspections of 

construction to ensure that work is done 

in accordance with the applicable 

codes, the construction contract, and 

construction documents. Before 

completing the project in the 

disbursement and information system 

established by HUD, the participating 

jurisdiction must perform an on-site 

inspection of the project to determine 

that all contracted work has been 

completed and that the project complies 

with the property standards and 

requirements in this paragraph (a). All 

inspections performed by the 

participating jurisdiction must be 

conducted in accordance with the 

participating jurisdiction’s inspection 

procedures. 

(3) HUD requirements. All new 

construction projects must also meet the 

following requirements upon project 


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completion, unless an earlier deadline is 

otherwise required by the applicable 

statute, regulation, or standard: 

(i) Accessibility. The housing must 

meet the accessibility requirements of 

24 CFR part 8, which implements 

section 504 of the Rehabilitation Act of 

1973 (29 U.S.C. 794), and Titles II and 

III of the Americans with Disabilities 

Act (42 U.S.C. 12131–12189) 

implemented at 28 CFR parts 35 and 36, 

as applicable. Covered multifamily 

dwellings, as defined at 24 CFR 100.201, 

must also meet the design and 

construction requirements at 24 CFR 

100.205, which implements the Fair 

Housing Act (42 U.S.C. 3601–3619). 

(ii) Energy efficiency standards. 

Newly constructed housing shall qualify 

as affordable housing under this part 

only if it meets the energy efficiency 

standards promulgated by the Secretary 

in accordance with section 109 of the 

Cranston–Gonzalez National Affordable 

Housing Act (42 U.S.C. 12709). 

(iii) Disaster mitigation. Where 

relevant, the housing must be 

constructed to mitigate the impact of 

future disasters (e.g., earthquakes, 

hurricanes, flooding, and wildfires) in 

accordance with State and local codes, 

ordinances, and requirements, and such 

other requirements that HUD may 

establish. 

(iv) Written cost estimates, 

construction contracts, and construction 

documents. The participating 

jurisdiction must require the 

construction contract(s) and 

construction documents to describe the 

work to be undertaken in adequate 

detail so that inspections can be 

conducted. The participating 

jurisdiction must review and approve 

written cost estimates for construction 

and determine that costs are reasonable. 

(v) Broadband infrastructure. For new 

commitments made after January 19, 

2017, for a new construction housing 

project of a building with more than 4 

rental units, the construction must 

include installation of broadband 

infrastructure, as this term is defined in 

24 CFR 5.100, except where the 

participating jurisdiction determines 

and, in accordance with 

§ 92.508(a)(3)(iv), documents the 

determination that: 

(A) The location of the new 

construction makes installation of 

broadband infrastructure infeasible; or 

(B) The cost of installing the 

infrastructure would result in a 

fundamental alteration in the nature of 

its program or activity or in an undue 

financial burden. 

(vi) Carbon monoxide and smoke 

detection—(A) Carbon monoxide 

detection. A carbon monoxide alarm 

must be installed in the housing unit in 

a manner that meets or exceeds the 

carbon monoxide detection standards 

set by HUD through Federal Register 

publication. 

(B) Smoke detection. (1) A hardwired 

smoke alarm must be installed: 

(i) On each level of each housing unit; 

(ii) In or near each sleeping area in 

each housing unit; 

(iii) In the basement of each housing 

unit and in each common area of a 

project. A hardwired smoke alarm is not 

required in crawl spaces or unfinished 

attics of housing units; 

(iv) Within 21 feet of any door to a 

sleeping area measured along a path of 

travel; and 

(v) Where a smoke alarm installed 

outside a sleeping area is separated from 

an adjacent living area by a door, a 

smoke alarm must also be installed on 

the living area side of the door. 

(2) Each hardwired smoke alarm must 

have an alarm system designed for 

hearing-impaired persons. 

(3) The Secretary may establish 

additional standards through Federal 

Register publication. 

(4) Following the relevant 

specifications of the International Code 

Council (ICC) or the National Fire 

Protection Association Standard (NFPA) 

72 satisfies the requirements of this 

paragraph (a)(3)(vi)(B). 

(vii) Green building standards. If a 

participating jurisdiction exceeds the 

maximum per-unit subsidy limit 

pursuant to § 92.250(c), then upon 

completion, the housing must meet one 

of the green building standards 

established by HUD through Federal 

Register publication. 

(b) * * * 

(1) * * * 

(vi) Disaster mitigation. Where 

relevant, the participating jurisdiction’s 

standards must require the housing to 

be improved to mitigate the impact of 

future disasters (e.g., earthquake, 

hurricanes, flooding, and wildfires) in 

accordance with State and local codes, 

ordinances, and requirements, and such 

other requirements that HUD may 

establish. 

* * * * * 

(viii) * * * 

(A) The participating jurisdiction may 

accept a determination in satisfaction of 

another funding source’s requirements 

that, upon the completion of the 

rehabilitation, the HOME-assisted 

project and units are decent, safe, 

sanitary, and in good repair in an 

inspection conducted under the 

National Standards for the Condition of 

HUD housing (24 CFR part 5, subpart G) 

or an alternative inspection standard, 

which HUD may establish through 

Federal Register publication. 

(B) If a participating jurisdiction is 

accepting a determination pursuant to 

paragraph (b)(1)(viii)(A) of this section, 

then the participating jurisdiction must 

document the determination in 

accordance with § 92.508(a)(3)(iv) and is 

not required to perform a HOME 

inspection of the project and units for 

compliance with 24 CFR 5.703. 

* * * * * 

(xi) Carbon monoxide and smoke 

detection—(A) Carbon monoxide 

detection. A carbon monoxide alarm 

must be installed in the housing unit in 

a manner that meets or exceeds the 

carbon monoxide detection standards 

set by HUD through Federal Register 

publication. 

(B) Smoke detection. (1) A hardwired 

smoke alarm must be installed: 

(i) On each level of each housing unit; 

(ii) In or near each sleeping area in 

each housing unit; 

(iii) In the basement of each housing 

unit, and in each common area of a 

project. A hardwired smoke alarm is not 

required in crawl spaces or unfinished 

attics of housing units; 

(iv) Within 21 feet of any door to a 

sleeping area measured along a path of 

travel; and 

(v) Where a smoke alarm installed 

outside a sleeping area is separated from 

an adjacent living area by a door, a 

smoke alarm must also be installed on 

the living area side of the door. 

(2) Each hardwired smoke alarm must 

have an alarm system designed for 

hearing-impaired persons. 

(3) The Secretary may establish 

additional standards through Federal 

Register publication. 

(4) Where the use of hardwired smoke 

detectors places an undue financial 

burden on the owner or is infeasible, a 

participating jurisdiction may provide a 

written exception to allow the owner to 

install a smoke detector that uses 10- 

year non rechargeable, nonreplaceable 

primary batteries. The smoke detector 

must be sealed, tamper-resistant, 

contain a means to silence the alarm, 

and otherwise comply with the 

requirements of this section. 

(5) Following the relevant 

specification of the International Code 

Council (ICC) or the National Fire 

Protection Association Standard (NFPA) 

72 satisfies the requirements of this 

paragraph (b)(1)(xi)(B). 

(xii) Green building standards. If a 

participating jurisdiction exceeds the 

maximum per-unit subsidy limit 

pursuant to § 92.250(c), then upon 

completion of the rehabilitation the 

housing must meet one of the green 


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building standards established by HUD 

through Federal Register publication. 

* * * * * 

(3) Frequency of inspections. The 

participating jurisdiction must conduct 

an initial property inspection to identify 

the deficiencies that must be addressed 

and must conduct on-site progress and 

final inspections to determine that work 

was done in accordance with the 

construction contract and construction 

documents. Before completing the 

project in the disbursement and 

information system established by HUD, 

the participating jurisdiction must 

perform an on-site inspection of the 

project to determine that all contracted 

work has been completed and that the 

project complies with the property 

standards and requirements in this 

paragraph (b). All inspections 

performed by the participating 

jurisdiction must be conducted in 

accordance with the participating 

jurisdiction’s inspection procedures. 

(c) * * * 

(1) Existing housing that is acquired 

with HOME assistance for rental 

housing, and that was newly 

constructed or rehabilitated less than 12 

months before the date of commitment 

of HOME funds, must meet the property 

standards for new construction in 

paragraph (a) or rehabilitation in 

paragraph (b) of this section, as 

applicable. * * * 

* * * * * 

(3) Existing housing that is acquired 

for homeownership using 

homeownership assistance must be 

decent, safe, sanitary, and in good 

repair. The participating jurisdiction 

must establish standards to determine 

that the housing is decent, safe, sanitary, 

and in good repair. At minimum, the 

standards must provide that the housing 

meets all applicable State and local 

housing quality standards and code 

requirements, and the housing does not 

contain the specific deficiencies 

established by HUD based on the 

applicable standards in 24 CFR 5.703 

and published in the Federal Register 

for HOME-assisted projects and units. 

The housing must also meet or exceed 

the carbon monoxide and smoke 

detection standards contained in the 

participating jurisdiction’s 

rehabilitation standards pursuant to 

paragraph (b) of this section. If the use 

of hardwired smoke detectors places an 

undue financial burden on the 

homebuyer or is infeasible, a 

participating jurisdiction may provide a 

written exception to the homebuyer 

consistent with the requirements 

contained in paragraph (b) of this 

section. 

(i) The participating jurisdiction must 

inspect the housing and document 

compliance with this paragraph (c)(3) 

based upon an inspection that is 

conducted no earlier than 90 days 

before the commitment of HOME 

assistance. If the housing does not meet 

these standards, the housing must be 

rehabilitated to meet the standards of 

this paragraph (c)(3) before the 

acquisition, except as provided in 

paragraph (c)(3)(ii) of this section. 

(ii) If the housing is not rehabilitated 

to meet the standards in this paragraph 

(c)(3) before acquisition, then the 

housing may still be acquired if all of 

the following conditions are satisfied: 

(A) The written agreement between 

the participating jurisdiction and the 

homebuyer requires the property to 

meet the standards within 6 months of 

acquisition with HOME assistance; 

(B) Funding is secured to complete 

the rehabilitation necessary to comply 

with the standards; and 

(C) Unless an extension is provided 

pursuant to paragraph (c)(3)(ii)(D) of 

this section, the participating 

jurisdiction conducts a final inspection 

within six months after acquisition and 

determines that the property meets the 

standards. 

(D) The participating jurisdiction may 

provide the homebuyer with an 

extension of up to 12 months from 

acquisition to meet the standards. If the 

participating jurisdiction provides an 

extension, the participating jurisdiction 

must amend the written agreement to 

reflect the extension and conduct a final 

inspection within 12 months of 

acquisition and determine that the 

property meets the standards. 

(iii) All inspections performed by the 

participating jurisdiction must be 

conducted in accordance with the 

participating jurisdiction’s inspection 

procedures. 

(d) Projects involving a combination 

of rehabilitation and either new 

construction or reconstruction. If a 

project includes both rehabilitation of 

housing units and either new 

construction or reconstruction of 

housing units, then the participating 

jurisdiction must apply the 

rehabilitation standards to the housing 

units that are rehabilitated and the new 

construction requirements to housing 

that is either newly constructed or 

reconstructed. 

* * * * * 

(f) Ongoing property condition 

standards and inspections: Rental 

housing and housing occupied by 

tenants receiving HOME tenant-based 

rental assistance. * * * 

(1) * * * 

(i) Compliance with State and local 

codes, ordinances, and requirements. 

The participating jurisdiction’s 

standards must require the housing to 

meet all applicable State and local code 

requirements and ordinances. In the 

absence of existing applicable State or 

local code requirements and ordinances, 

at a minimum, the participating 

jurisdiction’s ongoing property 

standards must provide that the 

property does not contain the specific 

deficiencies established by HUD based 

on the applicable standards in 24 CFR 

5.703 and published in the Federal 

Register for HOME rental housing 

(including manufactured housing) and 

housing occupied by tenants receiving 

HOME tenant-based rental assistance, 

except that the carbon monoxide 

detection requirements at 24 CFR 

5.703(b)(2) and (d)(6) shall not apply. 

The participating jurisdiction’s property 

standards are not required to comply 

with 24 CFR 5.705 through 5.713. 

* * * * * 

(iv) Carbon monoxide and smoke 

detection—(A) Carbon monoxide 

detection. A carbon monoxide alarm 

must be installed in the housing unit in 

a manner that meets or exceeds the 

carbon monoxide detection standards 

set by HUD through Federal Register 

publication. 

(B) Smoke detection. The 

participating jurisdiction’s standards 

must require housing to contain smoke 

detectors in accordance with the 

requirements contained in 24 CFR 

5.703(b) and (d). 

* * * * * 

(3) Ongoing inspections of HOMEassisted rental housing. During the 

period of affordability, the participating 

jurisdiction must perform on-site 

inspections of HOME-assisted rental 

housing to determine compliance with 

the property standards in paragraph 

(f)(1) of this section and to verify the 

information submitted by owners in 

accordance with the requirements of 

§ 92.252. The participating jurisdiction 

must perform inspections in accordance 

with its established inspection 

procedures. These procedures, at 

minimum, must include the following 

requirements: 

(i) Frequency of inspections. The 

participating jurisdiction must perform 

an on-site inspection within 12 months 

after project completion and complete 

one of the following every 3 years 

during the period of affordability: 

(A) Perform an on-site inspection in 

accordance with the participating 

jurisdiction’s inspection procedures to 

determine compliance with the property 

standards; or 


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(B) Accept a determination made 

within the past 12 months in 

satisfaction of another funding source’s 

requirements, that the HOME-assisted 

project and units are decent, safe, 

sanitary, and in good repair in an 

inspection conducted under the 

National Standards for the Condition of 

HUD housing (24 CFR part 5, subpart G) 

or an alternative inspection standard, 

which HUD may establish through 

Federal Register publication. If a 

participating jurisdiction is accepting a 

determination, then the participating 

jurisdiction must document the 

determination in accordance with 

§ 92.508(a)(3)(iv) and is not required to 

perform an on-site HOME inspection of 

the project and the units for compliance 

with 24 CFR 5.703. 

(ii) Annual certification. The owner 

must annually certify to the 

participating jurisdiction that each 

building and all HOME-assisted units in 

the project are suitable for occupancy, 

taking into account State and local 

health, safety, and other applicable 

codes, ordinances, and requirements, 

and the ongoing property standards 

established by the participating 

jurisdiction. 

(iii) Units inspected. Inspections must 

be based on a random sample of the 

HOME-assisted units in the project with 

a mix of unit sizes (e.g., a mix of onebedroom, two-bedroom, and threebedroom units) in accordance with the 

chart contained in this paragraph. All 

inspections must include the 

inspectable areas for each building 

containing HOME-assisted units. For 

projects with one-to-four HOMEassisted units, the participating 

jurisdiction must inspect 100 percent of 

the HOME-assisted units and the 

inspectable areas for each building with 

HOME-assisted units. 

TABLE 1 TO PARAGRAPH (f)(3)(iii)— 

MINIMUM INSPECTION SAMPLE SIZE

FOR HOME RENTAL HOUSING

PROJECTS

Number of HOME-assisted 

units in the HOME project 

Number of 

units that must 

be selected in 

the random 

sample (i.e., 

minimum unit 

sample size) 

1–20 ...................................... 4 

21–25 .................................... 5 

26–30 .................................... 6 

31–35 .................................... 7 

36–40 .................................... 8 

41–45 .................................... 9 

46–50 .................................... 10 

51–55 .................................... 11 

56–60 .................................... 12 

61–65 .................................... 13 

TABLE 1 TO PARAGRAPH (f)(3)(iii)— 

MINIMUM INSPECTION SAMPLE SIZE

FOR HOME RENTAL HOUSING

PROJECTS—Continued 

Number of HOME-assisted 

units in the HOME project 

Number of 

units that must 

be selected in 

the random 

sample (i.e., 

minimum unit 

sample size) 

66–70 .................................... 14 

71–75 .................................... 15 

76–80 .................................... 16 

81–85 .................................... 17 

86–90 .................................... 18 

91–95 .................................... 19 

96–100 .................................. 20 

101–105 ................................ 21 

106–110 ................................ 22 

111–115 ................................ 23 

116–120 ................................ 24 

121–125 ................................ 25 

126–130 ................................ 26 

131–166 ................................ 27 

167–214 ................................ 28 

215–295 ................................ 29 

296–455 ................................ 30 

456–920 ................................ 31 

921+ ...................................... 32 

(iv) Financial oversight. During the 

period of affordability, the participating 

jurisdiction must at least annually 

examine the financial condition of 

projects with 10 or more HOME-assisted 

units to determine the continued 

financial viability of the housing and 

must take actions to correct problems, to 

the extent feasible. 

(4) Annual inspections for housing 

with tenants receiving HOME tenantbased rental assistance. All housing 

occupied by tenants receiving HOME 

tenant-based rental assistance must 

meet the property standards of 

paragraph (f)(1) of this section. The 

participating jurisdiction must annually 

determine that the housing is decent, 

safe, sanitary, and in good repair 

through one of the following methods: 

(i) An annual on-site inspection in 

accordance with its inspection 

procedures for annual inspections to 

determine the housing meets the 

property standards in paragraph (f)(1) of 

this section; or 

(ii) An inspection conducted within 

the past 3 months in satisfaction of 

another funding source’s requirements 

under the National Standards for the 

Condition of HUD housing (24 CFR part 

5, subpart G) or an alternative 

inspection standard, which HUD may 

establish through Federal Register 

publication. A participating jurisdiction 

may move its inspection cycle to align 

with an inspection covered by this 

paragraph. If a participating jurisdiction 

is accepting an inspection pursuant to 

this paragraph, then the participating 

jurisdiction must document the 

inspection’s determination that the 

housing is decent, safe, sanitary, and in 

good repair in accordance with 

§ 92.508(a)(3)(iv) and is not required to 

perform a HOME inspection of the 

project and units for compliance with 

24 CFR 5.703. 

(5) Corrective and remedial actions. 

The participating jurisdiction must have 

procedures for requiring that timely 

corrective and remedial actions are 

taken by the owner to address identified 

deficiencies. 

(i) Health and safety deficiencies. 

Health and safety deficiencies must be 

corrected immediately. Except for smallscale housing, the participating 

jurisdiction must adopt a more frequent 

inspection schedule for properties that 

have been found to have health and 

safety deficiencies. For small-scale 

housing, the participating jurisdiction 

may adopt a more frequent inspection 

schedule if the small-scale housing is 

found to have health and safety 

deficiencies, as described in its 

inspection procedures. 

(ii) Other deficiencies. If there are 

observed deficiencies for any of the 

inspectable areas in the property 

standards established by the 

participating jurisdiction, in accordance 

with the inspection procedures, a 

follow-up on-site inspection to verify 

that deficiencies are corrected must 

occur within 12 months. The 

participating jurisdiction may establish 

a list of non-hazardous deficiencies for 

which correction can be verified by 

third party documentation (e.g., paid 

invoice for work order) rather than reinspection. 

(g) Inspection procedures. The 

participating jurisdiction must establish 

written inspection procedures. The 

procedures must include detailed 

inspection checklists, a description of 

how and by whom inspections will be 

carried out, and procedures for training 

and certifying qualified inspectors. For 

ongoing property inspections, the 

procedures must also describe how 

frequently the property will be 

inspected, consistent with this section 

and § 92.209. 

■ 26. Revise § 92.252 to read as follows: 

§ 92.252 Qualification as affordable 

housing: Rental housing. 

The HOME-assisted units in a rental 

housing project must be occupied by 

households that are eligible as lowincome families and must meet the 

requirements of this section to qualify as 

affordable housing. If the housing is not 

occupied by eligible tenants within six 

months following the date of project 


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completion, the participating 

jurisdiction must revise its marketing 

plan to enable the project to reach 

required occupancy. The participating 

jurisdiction must repay HOME funds 

invested in any housing unit that has 

not been rented to eligible tenants 

within 18 months after the date of 

project completion. The affordability 

requirements in this section also apply 

to the HOME-assisted non-owneroccupied units in single family housing 

purchased with HOME funds in 

accordance with § 92.254. A tenant must 

have a written lease that complies with 

§ 92.253. 

(a) HOME rent limits. The rent for a 

HOME-assisted unit must not exceed 

the rent limits in this section. HUD will 

publish the HOME rent limits on an 

annual basis, with adjustments for 

number of bedrooms in the unit. The 

rent limits do not apply to any rental 

assistance or subsidy payment provided 

under a Federal, State, or local rental 

assistance or subsidy program. 

Regardless of changes in fair market 

rents and in median income over time, 

the rents for a project are not required 

to be lower than the HOME rent limits 

for the project in effect at the time of 

project commitment. The participating 

jurisdiction may designate (in its 

written agreement with the owner) more 

than the minimum HOME units in a 

rental housing project, regardless of 

project size. The rent limits apply to the 

rent plus the utilities or utility 

allowance. 

(1) High HOME rent limits. If a lowincome family is participating in a 

program where the family pays as a 

contribution toward rent no more than 

30 percent of the family’s monthly 

adjusted income or 10 percent of the 

family’s monthly income, then the 

maximum rent due from the family is 

the family’s contribution. For all other 

cases, the rent does not exceed the 

lesser of: 

(i) The fair market rent for existing 

housing for comparable units in the area 

as established by HUD under 24 CFR 

888.111; or 

(ii) 30 percent of the adjusted income 

of a family whose annual income equals 

65 percent of the median income for the 

area, as determined by HUD. 

(2) Low HOME rent limits. In rental 

projects with five or more HOMEassisted rental units, at least 20 percent 

of the HOME-assisted units must be 

occupied by very low-income families. 

If a very low-income family is 

participating in a program where the 

family pays as a contribution toward 

rent no more than 30 percent of the 

family’s monthly adjusted income or 10 

percent of the family’s monthly income, 

then the maximum rent due from the 

family is the family’s contribution. All 

other Low HOME Rent units must have 

rent that meet one of the following 

requirements: 

(i) The rent does not exceed 30 

percent of the annual income of a family 

whose income equals 50 percent of the 

median income for the area, as 

determined by HUD. If the rent 

determined under this paragraph is 

higher than the fair market rent under 

paragraph (a)(1)(i) of this section, then 

the maximum rent for units under this 

paragraph is the fair market rent under 

paragraph (a)(1)(i); 

(ii) The rent contribution of the family 

is not more than 30 percent of the 

family’s adjusted income; or 

(iii) The unit is a LIHTC unit and has 

rents not greater than the gross rent for 

rent-restricted residential units as 

determined under 26 U.S.C. 42(g)(2). 

(3) HOME rent limits for SRO projects. 

(i) For SRO units that have both sanitary 

and food preparation facilities, the rent 

limit is the zero-bedroom fair market 

rent as established by HUD under 24 

CFR part 888. The project must meet the 

requirements of paragraphs (a)(1) and 

(2) of this section. 

(ii) For SRO units that have no 

sanitary or food preparation facilities or 

only one of the two, the rent limit is 75 

percent of the zero-bedroom fair market 

rent as established by HUD under 24 

CFR part 888. The project must be 

occupied by very low-income tenants. 

(b) Utility allowances. The 

participating jurisdiction must establish 

maximum monthly allowances for 

utilities and services (excluding 

telephone, cable, and broadband) and 

update the allowances annually. The 

participating jurisdiction may determine 

the utility allowance for the project 

based on the type of utilities and 

services paid by the tenant, including 

any energy efficiency measures. The 

participating jurisdiction may use any of 

the following for its maximum monthly 

allowances: the HUD Utility Schedule 

Model, the utility allowance established 

by the applicable local public housing 

authority, or another method approved 

by HUD. 

(c) Review and approval of rents. The 

participating jurisdiction must review 

and approve rents proposed by the 

owner for units, subject to the rent 

limits in paragraph (a) of this section. 

For all units subject to the rent limits in 

paragraph (a) for which the tenant is 

paying utilities and services, the 

participating jurisdiction must require 

that the rents do not exceed the rent 

limits in paragraph (a) minus the 

monthly allowances for utilities and 

services in paragraph (b) of this section. 

(d) Period of affordability. The 

HOME-assisted units must meet 

requirements under this part for the 

applicable period specified in the table 

in this paragraph (d), beginning from 

project completion. 

(1) The affordability requirements, 

including the applicable rent limits, 

period of affordability, and income 

requirements: 

(i) Apply without regard to the term 

of any loan or mortgage, repayment of 

the HOME investment, or the transfer of 

ownership; 

(ii) Must be imposed by a deed or use 

restriction, lien on real property, a 

covenant running with the land, a 

recorded agreement restricting the use 

of the property, or other mechanisms 

approved by HUD in writing, under 

which the participating jurisdiction has 

the right to require specific performance 

(except that the participating 

jurisdiction may provide that the 

affordability requirements may 

terminate upon foreclosure or transfer in 

lieu of foreclosure); and 

(iii) Must be recorded in accordance 

with State recordation laws. 

(2) The participating jurisdiction may 

use purchase options, rights of first 

refusal, or other preemptive rights to 

purchase the housing before foreclosure 

or deed in lieu of foreclosure in order 

to preserve affordability. 

(3) The affordability restrictions shall 

be revived according to the original 

terms if, during the original period of 

affordability, the owner of record before 

the foreclosure, or deed in lieu of 

foreclosure, or any entity that includes 

the former owner or those with whom 

the former owner has or had family or 

business ties, obtains an ownership 

interest in the project or property. 

(4) The termination of the 

affordability requirements on the project 

does not terminate the participating 

jurisdiction’s repayment obligation 

under § 92.503(b). 

TABLE 1 TO PARAGRAPH (d)(4)—MINIMUM PERIOD OF AFFORDABILITY

FOR RENTAL HOUSING

Rental housing activity 

Minimum 

period of 

affordability 

in years 

Rehabilitation or acquisition 

of existing housing per-unit 

amount of HOME funds: 

Under $25,000 .................. 5 

$25,000 to $50,000 ........... 10 

Over $50,000 or rehabilitation involving refinancing 15 


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TABLE 1 TO PARAGRAPH (d)(4)—MINIMUM PERIOD OF AFFORDABILITY

FOR RENTAL HOUSING—Continued 

Rental housing activity 

Minimum 

period of 

affordability 

in years 

New construction or acquisition of newly constructed housing ............ 20 

(e) Subsequent rents during the period 

of affordability. (1) The HOME rent 

limits are recalculated on a periodic 

basis after HUD determines fair market 

rents and median incomes. HUD then 

publishes the updated HOME rent 

limits. 

(2) The participating jurisdiction must 

provide project owners with 

information on updated HOME rent 

limits so that rents may be adjusted (not 

to exceed the rent limits in paragraph (a) 

of this section) in accordance with the 

written agreement between the 

participating jurisdiction and the owner. 

Owners must annually provide the 

participating jurisdiction with 

information on rents and occupancy of 

HOME-assisted units to demonstrate 

compliance with this section. The 

participating jurisdiction must review 

rents for compliance and approve or 

disapprove them every year. 

(3) Any increase in rents for HOMEassisted units is subject to the 

provisions of outstanding leases, and in 

any event, the owner must provide 

tenants of those units not less than 60 

days prior written notice before 

implementing any increase in rents. 

(f) Adjustment of HOME rent limits 

for an existing project. (1) Changes in 

fair market rents and in median income 

over time should be sufficient to 

maintain the financial viability of a 

project within the HOME rent limits in 

this section. 

(2) HUD may adjust the HOME rent 

limits for a project, only if HUD finds 

that an adjustment is necessary to 

support the continued financial viability 

of the project and only by an amount 

that HUD determines is necessary to 

maintain continued financial viability of 

the project. HUD expects that this 

authority will be used sparingly. 

(g) Tenant Income. The income of 

each tenant must be determined initially 

in accordance with § 92.203(b)(1)(i) 

unless the participating jurisdiction 

accepts an annual income determination 

pursuant to § 92.203(a)(1), (2), or (3) or 

determines income in accordance with 

§ 92.203(b)(3). In addition, each year 

during the period of affordability, the 

participating jurisdiction must require 

the project owner to re-examine each 

tenant’s annual income in accordance 

with the option in § 92.203(b)(1) 

selected by the participating jurisdiction 

and included in the written agreement, 

except as follows: 

(1) A participating jurisdiction may 

permit an owner of small-scale housing 

to re-examine each tenant’s annual 

income in accordance with the chart in 

this paragraph (g)(1), instead of 

annually, during the period of 

affordability. 

TABLE 2 TO PARAGRAPH (g)(1)—ALTERNATIVE INCOME EXAMINATION CYCLE FOR SMALL-SCALE RENTAL HOUSING

PROJECTS

Initial Examination ...............................................

(All Projects) .......................................................

The income of each tenant must be determined initially in accordance with § 92.203(b)(1)(i) 

unless the participating jurisdiction accepts an annual income determination pursuant to 

§ 92.203(a)(1), § 92.203(a)(2), or § 92.203(a)(3), or determines income in accordance with 

§ 92.203(b)(3). 

Year 3 ................................................................. The income of each tenant must be examined in accordance with the option selected by the 

participating jurisdiction in § 92.203(b)(1) and included in the written agreement between the 

owner and the participating jurisdiction pursuant to § 92.504(c)(3). 

Year 6 .................................................................

(Projects with a period of affordability of greater 

than 5 years).

The income of each tenant must be examined in accordance with § 92.203(b)(1)(i). 

Year 9 .................................................................

(Projects with a period of affordability of greater 

than 5 years).

The income of each tenant must be examined in accordance with the option selected by the 

participating jurisdiction in § 92.203(b)(1) and included in the written agreement between the 

owner and the participating jurisdiction pursuant to § 92.504(c)(3). 

Year 12 ...............................................................

(Projects with a period of affordability of greater 

than 10 years).

The income of each tenant must be examined in accordance with § 92.203(b)(1)(i). 

Year 15 ...............................................................

(Projects with a period of affordability of 20 

years).

The income of each tenant must be examined in accordance with the option selected by the 

participating jurisdiction in § 92.203(b)(1) and included in the written agreement between the 

owner and the participating jurisdiction pursuant to § 92.504(c)(3). 

Year 18 ...............................................................

(Projects with a period of affordability of 20 

years).

The income of each tenant must be examined in accordance with § 92.203(b)(1)(i). 

(2) A participating jurisdiction that 

permits an owner of a rental project 

(including small-scale housing projects) 

with a period of affordability of ten 

years or more to re-examine a tenant’s 

annual income through a statement and 

certification in accordance with 

§ 92.203(b)(1)(ii), must require the 

owner to re-examine the income of each 

tenant, in accordance with 

§ 92.203(b)(1)(i), at minimum, every 

sixth year during the period of 

affordability; and, 

(3) If the participating jurisdiction 

accepts an annual income determination 

pursuant to § 92.203(a)(1), (2), or (3), an 

owner is not required to re-examine a 

tenant’s annual income in accordance 

with § 92.203(b) for HOME. 

(h) Over-income tenants. (1) HOMEassisted units continue to qualify as 

affordable housing despite a temporary 

noncompliance caused by increases in 

the incomes of existing tenants if 

actions satisfactory to HUD are being 

taken to ensure that all vacancies are 

filled in accordance with this section 

until the noncompliance is corrected. 

(2) A tenant who no longer qualifies 

as low-income must pay a rent amount 

equal to the lesser of the amount 

payable by the tenant under State or 

local law or 30 percent of the family’s 

adjusted income, except that: 

(i) A tenant of a HOME-assisted unit 

subject to rent restrictions under section 

42 of the Internal Revenue Code of 1986 

(26 U.S.C. 42) must pay a rent amount 

that complies with that section; 

(ii) A tenant in a HOME-assisted unit 

designated as floating pursuant to 

paragraph (j) of this section shall pay a 

rent amount no greater than the fair 

market rent for comparable, unassisted 

units in the neighborhood; and 


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(iii) The rent limits do not apply to 

any rental assistance or subsidy 

payment provided under a Federal, 

State, or local rental assistance or 

subsidy program. 

(i) Surety bonds. Surety bonds, 

security deposit insurance, or 

instruments similar to surety bonds and 

security deposit insurance may not be 

used in lieu of or in addition to a 

security deposit in HOME-assisted 

units. 

(j) Fixed and floating HOME units. In 

a project containing HOME-assisted and 

other units, the participating 

jurisdiction may designate fixed or 

floating HOME units. This designation 

must be made at the time of project 

commitment in the written agreement 

between the participating jurisdiction 

and the owner, and the HOME units 

must be identified not later than the 

time of initial unit occupancy. Fixed 

units remain the same throughout the 

period of affordability. Floating units 

are changed to maintain conformity 

with the requirements of this section 

during the period of affordability so that 

the total number of housing units 

meeting the requirements of this section 

remains the same, and each substituted 

unit is comparable in terms of size, 

features, and number of bedrooms to the 

originally designated HOME-assisted 

unit. 

(k) Tenant selection. The tenants must 

be selected in accordance with 

§ 92.253(e). 

(l) Ongoing responsibilities. The 

participating jurisdiction’s 

responsibilities for on-site inspections 

and financial oversight of rental projects 

are set forth in § 92.251(f). 

■ 27. Revise § 92.253 to read as follows: 

§ 92.253 Tenant protections and selection. 

(a) Lease contents. (1) For rental 

housing assisted with HOME funds and 

tenant-based rental assistance, there 

must be a written lease between the 

tenant and the owner that is for a period 

of not less than 1 year, unless by mutual 

agreement between the tenant and the 

owner, a shorter period is specified. 

Any changes to the lease must be in 

writing. The owner must provide the 

participating jurisdiction with a written 

lease or a revision to a written lease 

before it is executed. The lease shall 

contain: 

(i) More than one convenient and 

accessible method to communicate 

directly with the owner or the property 

management staff, including in person, 

by telephone, email, or through a web 

portal; 

(ii) The participating jurisdiction’s 

contact information for the HOME 

program; 

(iii) The VAWA lease term/addendum 

required under § 92.359(e), except as 

otherwise provided by § 92.359(b); and 

(iv)(A) For rental housing, the HOME 

rental housing tenancy addendum 

described in paragraph (b) of this 

section; 

(B) For tenant-based rental assistance, 

the HOME tenant-based rental 

assistance tenancy addendum described 

in paragraph (c) of this section. 

(2) For tenants receiving security 

deposit assistance only, there must be a 

written lease between the tenant and the 

owner that is for a period of not less 

than 1 year, unless by mutual agreement 

between the tenant and the owner, a 

shorter period is specified. The owner 

must provide the participating 

jurisdiction with a copy of the written 

lease before security deposit assistance 

is provided. The lease shall contain the 

HOME security deposit assistance 

tenancy addendum in paragraph (d) of 

this section. 

(b) HOME rental housing tenancy 

addendum. The terms of the HOME 

rental housing tenancy addendum shall 

prevail over any conflicting provisions 

of the lease. The terms and conditions 

of the written lease, the HOME rental 

housing tenancy addendum, the VAWA 

addendum listed in paragraph (a) of this 

section, and any addendum required by 

another Federal, State, or local 

affordable housing program shall 

constitute and contain the sole and 

entire agreement between the owner and 

the tenant and no prior or 

contemporaneous oral or written 

representation or agreement between the 

owner or tenant shall have legal effect. 

The HOME rental housing tenancy 

addendum shall contain the following 

minimum requirements: 

(1) Physical condition of unit and 

project. (i) The owner shall maintain the 

physical condition of the unit and 

project so that it meets the participating 

jurisdiction’s property standards and 

State and local code requirements in 

accordance with § 92.251(f); 

(ii) With respect to maintenance and 

repairs to a housing unit, the owner 

shall: 

(A) Provide tenants with written 

expected time frames for maintaining or 

repairing units as soon as practicable; 

(B) Professionally maintain and repair 

units and the common areas of the 

project in accordance with the 

participating jurisdiction’s property 

standards as soon as practicable; and 

(C) Not charge a tenant for normal 

wear and tear or damage to the unit or 

common areas of a project unless due to 

negligence, recklessness, or intentional 

acts by the tenant. 

(iii) If the owner is required to repair 

a life-threatening deficiency impacting 

the tenant, and the repairs cannot be 

completed on the day the lifethreatening deficiency is identified, the 

tenant shall promptly be relocated into 

housing that is decent, safe, sanitary, 

and in good repair and that provides the 

same or a greater level of accessibility, 

or other physically suitable lodging, at 

no additional cost to the tenant, until 

the repairs are completed and where it 

may be necessary, reasonable 

accommodations must continue to be 

provided during the relocation; 

(iv) The owner shall provide tenants 

with continued, uninterrupted utility 

service in projects with ownercontrolled utility services unless the 

interruption is not within the control of 

the owner (e.g., a general power outage). 

(2) Use and occupancy of the unit and 

project. (i) Subject to applicable 

occupancy requirements under Federal, 

State or local law, a family may reside 

in the unit with a foster child, foster 

adult, and/or live-in aide; 

(ii) Except for shared housing, the 

tenant’s household shall have the right 

to exclusive use and occupancy of the 

leased unit; 

(iii) The owner may only enter the 

housing unit: 

(A) When the owner provides 

reasonable advance notification to the 

tenant and enters during reasonable 

hours for the purpose of performing 

routine inspections and maintenance, 

for making improvement or repairs, or 

to show the housing unit for re-leasing. 

A written statement specifying the 

purpose of the owner’s entry delivered 

to the housing unit at least 2 days before 

such entry is reasonable advance 

notification; 

(B) At any time without advance 

notification when there is reasonable 

cause to believe that an emergency 

requiring entry to the unit exists; and 

(C) The owner shall provide the 

tenant a written statement specifying 

the date, time, and purpose of entry if 

the tenant and all adult members of the 

household are absent from the housing 

unit at the time of entry or if the owner 

is entering the housing unit pursuant to 

paragraph (b)(2)(iii)(B) of this section. 

(iv) The tenant’s household shall have 

reasonable access to and use of the 

common areas of the project; 

(v) Tenants shall be able to organize, 

create tenant associations, convene 

meetings, distribute literature, and post 

information; and 

(vi) A tenant may not be required to 

accept supportive services that are 

offered unless the tenant is living in 

transitional housing and such 

supportive services are required in 


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connection with the transitional 

housing. 

(3) Notice. (i) Before an owner may 

take an adverse action against a tenant, 

the tenant must be notified in writing, 

or where necessary to accommodate an 

individual with a disability or language 

access needs, must be provided a 

statement that is accessible and 

understandable to the tenant, of the 

specific grounds for any proposed 

adverse action by the owner. Such 

notice should be provided in a 

translated format when needed to 

ensure meaningful access for limited 

English proficient (LEP) persons. Such 

adverse action includes, but is not 

limited to, imposition of charges for 

damages that require maintenance and 

repair; 

(ii) An owner must notify tenants 

about changes affecting property 

ownership and management as follows: 

(A) 30 calendar days before a sale or 

foreclosure, tenants must be notified of 

the impending sale or foreclosure of the 

property; 

(B) Within 5 business days of any 

changes of ownership, tenants must be 

notified of the change in ownership; 

(C) Within 5 business days of any 

change in the property management 

company managing the property, 

tenants must be notified of the change 

in management company; and 

(iii) The owner may not institute a 

lawsuit against the tenant without 

providing notice to the tenant. 

(4) A tenant’s rights to available legal 

proceedings and remedies. (i) The 

tenant shall not be required by the 

owner to agree to be sued, to admit 

guilt, or agree to a judgment in favor of 

the owner in a lawsuit brought in 

connection with the lease; 

(ii) The owner may not take, hold, or 

sell personal property of a household 

member without notice to the tenant 

and a court decision on the rights of the 

parties. This prohibition, however, does 

not apply to an agreement by the tenant 

concerning disposition of personal 

property remaining in the housing unit 

after the tenant has moved out of the 

unit. The owner may dispose of this 

personal property in accordance with 

State law; 

(iii) The tenant may hold the owner 

or the owner’s agents legally responsible 

for any action or failure to act, whether 

intentional or negligent; 

(iv) In any legal proceedings involving 

tenant and owner, the owner and tenant 

agree that the tenant shall be able to 

exercise the tenant’s right to: 

(A) Obtain independent legal 

representation in any legal proceedings 

in connection with the lease, including 

in any non-binding arbitration or 

alternative dispute resolution process; 

(B) Have a trial by jury where such 

right is available to a tenant under 

Federal, State, or local law; and 

(C) Appeal, or to otherwise challenge 

in court, a court decision in connection 

with the lease where such right is 

available to the tenant under Federal, 

State, or local law; 

(v) The tenant may only be required 

to pay the owner’s attorney’s fees or 

other legal costs if the tenant loses in a 

court proceeding between the owner 

and the tenant and the court so orders. 

(5) Protection against unreasonable 

interference or retaliation. (i) An owner 

may not unreasonably interfere with the 

tenant’s safety or peaceful enjoyment of 

a rental housing unit or the common 

areas of the rental housing project. 

(ii) An owner may not retaliate against 

a tenant for taking any action allowable 

under the lease and applicable law. 

(iii) Actions that evidence 

unreasonable interference or retaliation 

against a tenant include actions taken 

for the purpose of causing the housing 

to become vacant or otherwise, 

including but not limited to: 

(A) Recovery of, or attempt to recover, 

possession of the housing unit in a 

manner that is not in accordance with 

paragraph (b)(10) of this section; 

(B) Decreasing services to the housing 

unit (e.g., trash removal, maintenance) 

or increasing the obligations of a tenant 

(e.g., new or increased monetary 

obligations, etc.) in a manner that is not 

in accordance with the requirements of 

this part; 

(C) Interfering with a tenant’s right to 

privacy under applicable State or local 

law; 

(D) Harassing a household or their 

lawful guests; and 

(E) Refusing to honor the terms of the 

lease. 

(iv) If an owner unreasonably 

interferes or retaliates against a tenant, 

then this shall constitute a material 

breach under the lease, a violation of 

HOME program requirements, and a 

breach of the written agreement between 

the owner and the participating 

jurisdiction. A tenant may use evidence 

of such unreasonable interference or 

retaliation in a court of law, and the 

participating jurisdiction must take 

reasonable actions to address any 

violation in accordance with the 

participating jurisdiction’s 

responsibilities under § 92.504(a) and 

(c). 

(6) Exercise of rights under tenancy. A 

tenant may exercise any right of tenancy 

and assert any protection under their 

lease and any applicable Federal, State, 

local tenant protections including but 

not limited to: 

(i) Reporting inadequate housing 

conditions of the housing unit or project 

to the owner, the participating 

jurisdiction, code enforcement officials, 

or HUD; 

(ii) Reporting lease violations and 

requesting enforcement of the written 

lease or any protections guaranteed 

under this part; and 

(iii) Requesting or obtaining 

enforcement of any applicable 

protections under Federal, State, or 

local law. 

(7) Confidentiality. An owner will 

keep all records containing personally 

identifying information of any 

individual or family who applies for or 

lives in a HOME-assisted rental unit 

secure and confidential. 

(8) Prohibition on discrimination. The 

owner shall operate housing assisted 

under this part in accordance with all 

applicable nondiscrimination and equal 

opportunity requirements pursuant to 

§ 92.350 and the Violence Against 

Women Act (VAWA) requirements at 

§ 92.359; 

(9) Security deposits. Security 

deposits must be refundable and no 

greater than two months’ rent. Surety 

bonds, security deposit insurance, and 

instruments similar to surety bonds and 

security deposit insurance may not be 

used in lieu of or in addition to a 

security deposit. Upon termination of 

tenancy by the owner or tenant, if the 

owner charges any amount against a 

tenant’s security deposit, the owner 

must give the tenant a list of all items 

charged against the security deposit and 

the amount of each item. After 

deducting the amount, if any, used to 

reimburse the owner, the owner must 

promptly refund the full amount of the 

unused balance to the tenant. 

(10) Termination of tenancy. (i) An 

owner may not terminate the tenancy of 

any tenant or household member or 

refuse to renew the lease of a tenant of 

rental housing assisted with HOME 

funds, except for serious or repeated 

violation of the material terms and 

conditions of the lease; for violation of 

applicable Federal, State, or local law; 

for completion of the tenancy period for 

transitional housing or failure to follow 

any required transitional housing 

supportive services plan; or for other 

good cause. The owner is permitted to 

terminate the tenancy of any tenant or 

household member or refuse to renew 

the lease of a tenant of rental housing 

assisted with HOME funds if the owner 

is permitted to do so pursuant to the 

provisions contained in 24 CFR part 5, 

subpart I; 24 CFR 882.511; or 24 CFR 

982.310. 


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(A) Other good cause does not include 

a change in the tenant’s income or assets 

or the amount or type of income or 

assets the tenant possesses. Good cause 

does not include refusal of the tenant to 

purchase the housing unless the tenant 

is refusing to purchase the housing 

pursuant to their lease-purchase 

agreement. 

(B) Other good cause includes: 

(1) When a tenant or household 

member is a direct threat to the safety 

of the tenants or employees of the 

housing or an imminent and serious 

threat to the property; 

(2) When a tenant unreasonably 

refuses to provide the owner access to 

the unit to allow the owner to repair the 

unit; 

(3) When an owner must terminate a 

tenancy to comply with an order issued 

by a governmental entity or court that 

requires the tenant vacate the project or 

unit; 

(4) When an owner must terminate a 

tenancy to comply with a local 

ordinance that necessitates vacating the 

project or unit; or 

(5) When a tenant fails to purchase a 

housing unit within the timeframes 

listed within the tenant’s lease-purchase 

agreement. 

(C) An owner may establish good 

cause for a violation of an applicable 

Federal, State, or local law through a 

record of conviction of a crime that 

directly threatens the health, safety, or 

right to peaceful enjoyment of the 

premises by other tenants in the project. 

The owner shall not use a record of 

arrest, parole or probation, or current 

indictment to establish such a violation. 

(ii) To terminate or refuse to renew 

tenancy, the owner must serve written 

notice upon the tenant specifying the 

grounds for the action at least 30 days 

before the termination of tenancy and 

provide a copy of the notice to vacate 

to the participating jurisdiction within 5 

business days of issuing notice to the 

tenant. The minimum 30-day period is 

not required if the termination of 

tenancy or refusal to renew is due to a 

direct threat to the safety of the tenants 

or employees of the housing or an 

imminent and serious threat to the 

property and the termination of tenancy 

or refusal to renew is in accordance 

with the requirements of 

§ 92.253(b)(10)(iii). 

(iii) The termination of tenancy or 

refusal to renew must be in accordance 

with Federal, State, local law, and the 

requirements of this part, including but 

not limited to requirements regarding 

fair housing, nondiscrimination, and 

VAWA; 

(iv) An owner may not terminate the 

tenancy or evict the tenant or household 

members without instituting a civil 

court proceeding in which the tenant or 

household member has the opportunity 

to present a defense, or before a court 

decision on the rights of the parties; and 

(v) An owner may not perform a 

constructive eviction such as locking a 

tenant out of their unit or stopping 

service on utilities servicing the tenant’s 

unit. An owner may not create a hostile 

living environment or refuse to provide 

a reasonable accommodation in order to 

cause a tenant to terminate their tenancy 

in a HOME-assisted unit. 

(c) HOME tenant-based rental 

assistance tenancy addendum. The 

terms of the HOME tenant-based rental 

assistance tenancy addendum shall 

prevail over any conflicting provisions 

of the lease. The terms and conditions 

of the written lease, the HOME tenantbased rental assistance tenancy 

addendum, the VAWA addendum listed 

in paragraph (a) of this section, and any 

addendum required by another Federal, 

State, or local affordable housing 

program shall constitute and contain the 

sole and entire agreement between the 

owner and the tenant and no prior or 

contemporaneous oral or written 

representation or agreement between the 

owner or tenant shall have legal effect. 

The terms of the HOME tenant-based 

rental assistance tenancy addendum 

shall terminate upon termination of the 

rental assistance contract. The HOME 

tenant-based rental assistance tenancy 

addendum shall contain the following 

minimum requirements: 

(1) Physical condition of unit and 

project. (i) The owner shall maintain the 

physical condition of the unit and 

property so that it meets the 

participating jurisdiction’s property 

standards and State and local code 

requirements in accordance with 

§ 92.251(f); 

(ii) With respect to maintenance and 

repairs to a housing unit, the owner 

shall: 

(A) Provide the tenant with written 

expected time frames for maintaining or 

repairing units as soon as practicable; 

(B) Professionally maintain and repair 

units in accordance with the 

participating jurisdiction’s property 

standards as soon as practicable; and 

(C) Not charge the tenant for normal 

wear and tear or damage to the unit or 

common areas of the property unless 

due to negligence, recklessness, or 

intentional acts by the tenant. 

(iii) The owner shall provide the 

tenant with continued, uninterrupted 

utility service in a property with ownercontrolled utility services unless the 

interruption is not within the control of 

the owner (e.g., a general power outage). 

(2) Use and occupancy of the unit and 

property. (i) Subject to applicable 

occupancy requirements under Federal, 

State or local law, a family may reside 

in the unit with a foster child, foster 

adult, and/or live-in aide; 

(ii) Except for shared housing, the 

tenant’s household shall have the right 

to exclusive use and occupancy of the 

leased unit; 

(iii) The owner may only enter the 

housing unit: 

(A) When the owner provides 

reasonable advance notification to the 

tenant and enters during reasonable 

hours for the purpose of performing 

routine inspections and maintenance, 

for making improvement or repairs, or 

to show the housing unit for re-leasing. 

A written statement specifying the 

purpose of the owner’s entry delivered 

to the housing unit at least 2 days before 

such entry is reasonable advance 

notification; 

(B) At any time without advance 

notification when there is reasonable 

cause to believe that an emergency 

requiring entry to the unit exists; and 

(C) The owner shall provide the 

tenant a written statement specifying 

the date, time, and purpose of entry if 

the tenant and all adult members of the 

household are absent from the housing 

unit at the time of entry or if the owner 

is entering the housing unit pursuant to 

paragraph (c)(2)(iii)(B) of this section; 

(iv) The tenant’s household shall have 

reasonable access to and use of the 

common areas of the property; and 

(v) A tenant may not be required to 

accept supportive services that are 

offered unless the tenant is living in 

transitional housing and such 

supportive services are required in 

connection with the transitional 

housing. 

(3) Notice. (i) Before an owner may 

take an adverse action against the 

tenant, the tenant must be notified in 

writing, or where necessary to 

accommodate an individual with a 

disability or language access needs, 

must be provided a statement that is 

accessible and understandable to the 

tenant, of the specific grounds for any 

proposed adverse action by the owner. 

Such notice should be provided in a 

translated format when needed to 

ensure meaningful access for limited 

English proficient (LEP) persons. Such 

adverse action includes, but is not 

limited to, imposition of charges for 

damages that require maintenance and 

repair; 

(ii) An owner must notify the tenant 

about changes affecting property 

ownership and management as follows: 

(A) Thirty (30) calendar days before a 

sale or foreclosure, tenants must be 


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notified of the impending sale or 

foreclosure of the property; 

(B) Within 5 business days of any 

changes of ownership, tenants must be 

notified of the change in ownership; 

(C) Within 5 business days of any 

change in the property management 

company managing the property, 

tenants must be notified of the change 

in management company; and 

(iii) The owner may not institute a 

lawsuit against the tenant without 

providing notice to the tenant. 

(4) A Tenant’s rights to available legal 

proceedings and remedies. (i) The 

tenant shall not be required by the 

owner to agree to be sued, to admit 

guilt, or agree to a judgment in favor of 

the owner in a lawsuit brought in 

connection with the lease; 

(ii) The owner may not take, hold, or 

sell personal property of a household 

member without notice to the tenant 

and a court decision on the rights of the 

parties. This prohibition, however, does 

not apply to an agreement by the tenant 

concerning disposition of personal 

property remaining in the housing unit 

after the tenant has moved out of the 

unit. The owner may dispose of this 

personal property in accordance with 

State law; 

(iii) The tenant may hold the owner 

or the owner’s agents legally responsible 

for any action or failure to act, whether 

intentional or negligent; 

(iv) In any legal proceedings involving 

tenant and owner, the owner and tenant 

agree that the tenant shall be able to 

exercise the tenant’s right to: 

(A) Obtain independent legal 

representation in any legal proceedings 

in connection with the lease, including 

in any non-binding arbitration or 

alternative dispute resolution process; 

(B) Have a trial by jury where such 

right is available to a tenant under 

Federal, State, or local law; and 

(C) Appeal, or to otherwise challenge 

in court, a court decision in connection 

with the lease where such right is 

available to the tenant under Federal, 

State, or local law; 

(v) The tenant may only be required 

to pay the owner’s attorney’s fees or 

other legal costs if the tenant loses in a 

court proceeding between the owner 

and the tenant and the court so orders. 

(5) Protection against unreasonable 

interference or retaliation. (i) An owner 

may not unreasonably interfere with the 

tenant’s safety or peaceful enjoyment of 

a rental unit or the common areas of the 

property. 

(ii) An owner may not retaliate against 

a tenant for taking any action allowable 

under the lease and applicable law. 

(iii) Actions that evidence 

unreasonable interference or retaliation 

against a tenant include actions taken 

for the purpose of causing the housing 

to become vacant or otherwise, 

including but not limited to: 

(A) Recovery of, or attempt to recover, 

possession of the housing unit in a 

manner that is not in accordance with 

paragraph (c)(10) of this section; 

(B) Decreasing services to the housing 

unit (e.g., trash removal, maintenance) 

or increasing the obligations of a tenant 

(e.g., new or increased monetary 

obligations, etc.) in a manner that is not 

in accordance with the requirements of 

this part; 

(C) Interfering with a tenant’s right to 

privacy under applicable State or local 

law; 

(D) Harassing a household or their 

lawful guests; and 

(E) Refusing to honor the terms of the 

lease. 

(iv) If an owner unreasonably 

interferes or retaliates against a tenant, 

then this shall constitute a material 

breach under the lease, a violation of 

HOME program requirements, and a 

breach of the written agreement between 

the owner and the participating 

jurisdiction. A tenant may use evidence 

of such unreasonable interference or 

retaliation in a court of law, and the 

participating jurisdiction must take 

reasonable actions to address any 

violation in accordance with the 

participating jurisdiction’s 

responsibilities under § 92.504(a) and 

(c). 

(6) Exercise of rights under tenancy. A 

tenant may exercise any right of tenancy 

and assert any protection under their 

lease and any applicable Federal, State, 

or local tenant protections including but 

not limited to: 

(i) Reporting inadequate housing 

conditions of the housing unit or 

property to the owner, the participating 

jurisdiction, code enforcement officials, 

or HUD; 

(ii) Reporting lease violations and 

requesting enforcement of the written 

lease or any protections guaranteed 

under this part; and 

(iii) Requesting or obtaining 

enforcement of any applicable 

protections under Federal, State, or 

local law. 

(7) Confidentiality. An owner will 

keep all records containing personally 

identifying information of any family 

who is assisted with tenant-based rental 

assistance secure and confidential. 

(8) Prohibition on discrimination. The 

owner shall operate housing assisted 

under this part in accordance with all 

applicable nondiscrimination and equal 

opportunity requirements pursuant to 

§ 92.350 and the VAWA requirements at 

§ 92.359; 

(9) Security deposits. (i) Security 

deposits must be refundable and no 

greater than two months’ rent. Surety 

bonds, security deposit insurance, and 

instruments similar to surety bonds or 

security deposit insurance may not be 

used in lieu of or in addition to a 

security deposit. Upon termination of 

tenancy by the owner or tenant, if the 

owner charges any amount against a 

tenant’s security deposit, the owner 

must give the tenant a list of all items 

charged against the security deposit and 

the amount of each item. After 

deducting the amount, if any, used to 

reimburse the owner, the owner must 

promptly refund the full amount of the 

unused balance to the tenant. 

(ii) For tenants that are already under 

a lease and have already fulfilled the 

security deposit requirements under the 

lease before entering into a rental 

assistance contract to receive tenantbased rental assistance, the provisions 

of paragraph (c)(9)(i) of this section do 

not apply. 

(10) Termination of tenancy. (i) An 

owner may not terminate the tenancy of 

any tenant or household member or 

refuse to renew the lease of a tenant 

with tenant-based rental assistance, 

except for serious or repeated violation 

of the material terms and conditions of 

the lease; for violation of applicable 

Federal, State, or local law; for 

completion of the tenancy period for 

transitional housing or failure to follow 

any required transitional housing 

supportive services plan; or for other 

good cause. 

(A) Other good cause does not include 

a change in the tenant’s income or assets 

or the amount or type of income or 

assets the tenant possesses. Good cause 

does not include refusal of the tenant to 

purchase the housing unless the tenant 

is refusing to purchase the housing 

pursuant to their lease-purchase 

agreement. 

(B) Good cause includes: 

(1) When a tenant or household 

member is a direct threat to the safety 

of the tenants or employees of the 

housing or an imminent and serious 

threat to the property; 

(2) Serious or repeated violation of the 

terms and conditions of the lease; 

(3) Violation of applicable Federal, 

State, or local law through a tenant’s 

record of conviction of a crime that 

directly threatens the health, safety, or 

right to peaceful enjoyment of the 

premises by other tenants in the 

property. The owner shall not use a 

record of arrest, parole or probation, or 

current indictment to establish such a 

violation; 

(4) When a tenant unreasonably 

refuses to provide the owner access to 


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the unit to allow the owner to repair the 

unit; 

(5) When an owner intends to 

withdraw the unit from the rental 

market to occupy the unit; allow an 

owner’s family member to occupy the 

unit; or demolish or substantially 

rehabilitate the unit; 

(6) When an owner must terminate a 

tenancy to comply with an order issued 

by a governmental entity or court that 

requires the tenant vacate the project or 

unit; 

(7) When an owner must terminate a 

tenancy to comply with a local 

ordinance that necessitates vacating the 

residential real property; or 

(8) When a tenant fails to purchase a 

housing unit within the timeframes 

listed within the tenant’s lease-purchase 

agreement. 

(ii) To terminate or refuse to renew 

tenancy, the owner must serve a written 

notice to vacate upon the tenant 

specifying the grounds for the action at 

least 30 days before the termination of 

tenancy and provide a copy of the 

notice to vacate to the participating 

jurisdiction in accordance with the 

rental assistance contract or the 

participating jurisdiction’s policies and 

procedures. The minimum 30-day 

period is not required if the termination 

of tenancy or refusal to renew is due to 

a direct threat to the safety of the 

tenants or employees of the housing or 

an imminent and serious threat to the 

property and the termination of tenancy 

or refusal to renew is in accordance 

with the requirements of 

§ 92.253(c)(10)(iii). 

(iii) The termination of tenancy or 

refusal to renew must be in accordance 

with Federal, State, local law, and the 

requirements of this part, including but 

not limited to requirements regarding 

fair housing, nondiscrimination, and 

VAWA. 

(iv) An owner may not perform a 

constructive eviction such as locking a 

tenant out of their unit or stopping 

service on utilities servicing the tenant’s 

unit. An owner may not create a hostile 

living environment or refuse to provide 

a reasonable accommodation in order to 

cause a tenant to terminate their tenancy 

in a HOME-assisted unit. 

(d) HOME security deposit assistance 

tenancy addendum. The terms of the 

HOME security deposit assistance 

tenancy addendum shall prevail over 

any conflicting provisions of the lease. 

The terms and conditions of the written 

lease, the HOME security deposit 

assistance tenancy addendum, and any 

addendum required by another Federal, 

State, or local affordable housing 

program shall constitute and contain the 

sole and entire agreement between the 

owner and the tenant and no prior or 

contemporaneous oral or written 

representation or agreement between the 

owner or tenant shall have legal effect. 

The lease for a tenant receiving security 

deposit assistance shall contain a 

security deposit tenancy addendum that 

prohibits the following terms from being 

present in the lease: 

(1) Agreement to be sued. Agreement 

by the tenant to be sued, to admit guilt, 

or to a judgment in favor of the owner 

in a lawsuit brought in connection with 

the lease; 

(2) Treatment of property. Agreement 

by the tenant that the owner may take, 

hold, or sell personal property of 

household members without notice to 

the tenant and a court decision on the 

rights of the parties. This prohibition, 

however, does not apply to an 

agreement by the tenant concerning 

disposition of personal property 

remaining in the housing unit after the 

tenant has moved out of the unit. The 

owner may dispose of this personal 

property in accordance with State law; 

(3) Excusing owner from 

responsibility. Agreement by the tenant 

not to hold the owner or the owner’s 

agents legally responsible for any action 

or failure to act, whether intentional or 

negligent; 

(4) Waiver of notice. Agreement of the 

tenant that the owner may institute a 

lawsuit without notice to the tenant; 

(5) Waiver of legal proceedings. 

Agreement by the tenant that the owner 

may evict the tenant or household 

members without instituting a civil 

court proceeding in which the tenant 

has the opportunity to present a 

defense, or before a court decision on 

the rights of the parties; 

(6) Waiver of a jury trial. Agreement 

by the tenant to waive any right to a trial 

by jury; 

(7) Waiver of right to appeal court 

decision. Agreement by the tenant to 

waive the tenant’s right to appeal, or to 

otherwise challenge in court, a court 

decision in connection with the lease; 

(8) Tenant chargeable with cost of 

legal actions regardless of outcome. 

Agreement by the tenant to pay 

attorney’s fees or other legal costs even 

if the tenant wins in a court proceeding 

by the owner against the tenant. The 

tenant, however, may be obligated to 

pay costs if the tenant loses and the 

court so orders; and 

(9) Mandatory supportive services. 

Agreement by the tenant (other than a 

tenant in transitional housing) to accept 

supportive services that are offered. 

(e) Tenant selection. An owner of 

rental housing assisted with HOME 

funds must comply with the affirmative 

marketing requirements established by 

the participating jurisdiction pursuant 

to § 92.351(a). The owner must adopt 

and follow written tenant selection 

policies and criteria that: 

(1) Limit the housing to very lowincome and low-income families; 

(2) Are reasonably related to the 

applicants’ ability to perform the 

obligations of the lease (i.e., to pay the 

rent, not to damage the housing; not to 

interfere with the rights and quiet 

enjoyment of other tenants); 

(3) Limit eligibility or give a 

preference to a particular segment of the 

population if permitted in its written 

agreement with the participating 

jurisdiction (and only if the limitation 

or preference is described in the 

participating jurisdiction’s consolidated 

plan). 

(i) Any limitation or preference must 

not violate nondiscrimination 

requirements in § 92.350. A limitation 

or preference does not violate 

nondiscrimination requirements if the 

housing also receives funding from a 

Federal program that limits eligibility to 

a particular segment of the population 

(e.g., the Housing Opportunity for 

Persons with AIDS program under 24 

CFR part 574, the Shelter Plus Care 

program under 24 CFR part 582, the 

Supportive Housing program under 24 

CFR part 583, supportive housing for 

the elderly or persons with disabilities 

under 24 CFR part 891), and the limit 

or preference is tailored to serve that 

segment of the population. 

(ii) If a project does not receive 

funding from a Federal program that 

limits eligibility to a particular segment 

of the population, the project may have 

a limitation or preference for persons 

with disabilities who need services 

offered at a project only if: 

(A) The limitation or preference is 

limited to the population of families 

(including individuals) with disabilities 

that significantly interfere with their 

ability to obtain and maintain housing; 

(B) Such families will not be able to 

obtain or maintain themselves in 

housing without appropriate supportive 

services; and 

(C) The families must not be required 

to accept the services offered at the 

project. The owner may advertise the 

project as offering various supportive 

services, including a description of the 

specific supportive services available. 

The project must be open to all eligible 

persons with disabilities. 

(4) Do not exclude an applicant with 

Federal, State, or local tenant-based 

rental assistance, such as an applicant 

with a voucher under the Housing 

Choice Voucher Program (24 CFR part 

982) or an applicant participating in a 

HOME tenant-based rental assistance 


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program, because of the status of 

applicant as a holder of such type of 

assistance; 

(5) Except for small-scale housing, 

provide for the selection of tenants from 

a written waiting list in the 

chronological order of their application, 

insofar as is practicable. The 

participating jurisdiction may establish 

alternative procedures to a written 

waiting list for the selection of tenants 

in small-scale housing; 

(6) Give prompt written notification to 

any rejected applicant of the grounds for 

any rejection; 

(7) Comply with the VAWA 

requirements prescribed in § 92.359; 

and 

(8) Comply with the 

nondiscrimination requirements 

prescribed in § 92.350. 

(f) Health and safety. In addition to 

the requirements in § 92.355, if a 

participating jurisdiction has actual 

knowledge of an environmental, health, 

or safety hazard affecting a project, unit, 

or HOME tenants, the participating 

jurisdiction must contact the affected 

owner and tenants in writing and 

provide them with a summary of the 

nature, date, and scope of such hazards. 

If an owner has actual knowledge of an 

environmental, health, or safety hazard 

affecting their project, units within their 

project, or tenants residing within their 

projects, the owner must inform the 

participating jurisdiction and HOMEassisted tenants in writing and provide 

them with a summary of the nature, 

date, and scope of such hazards. This 

notification requirement only applies to 

environmental, health, and safety 

hazards that are discovered after an 

environmental review performed 

pursuant to § 92.352 has already taken 

place. When either the participating 

jurisdiction or the owner notifies the 

tenants of the housing, this satisfies the 

requirement for the other party. 

■ 28. Amend § 92.254 by: 

■ a. Revising paragraph (a)(2)(iii); 

■ b. Adding paragraph (a)(2)(iv); 

■ c. Revising paragraphs (a)(3) and (4), 

(a)(5)(i) and (ii), and (a)(6) through (8); 

■ d. Redesignating paragraphs (b) 

through (f) as paragraphs (c) through (g) 

and redesignating paragraph (a)(9) as 

paragraph (b); 

■ e. Revising newly redesignated 

paragraph (b); and 

■ f. Revising newly redesignated 

paragraphs (f) introductory text and 

(g)(1) and (3), 

The revisions and additions read as 

follows: 

§ 92.254 Qualification as affordable 

housing: Homeownership. 

(a) * * * 

(2) * * * 

(iii) If a participating jurisdiction 

intends to use HOME funds for 

homebuyer assistance or for the 

rehabilitation of owner-occupied single 

family properties, the participating 

jurisdiction must use the HOME 

affordable homeownership limits 

provided by HUD for newly constructed 

housing and for existing housing. 

(A) HUD will provide limits for 

affordable newly constructed housing 

based on 95 percent of the median 

purchase price for the area using 

Federal Housing Administration (FHA) 

single family mortgage program data for 

newly constructed housing, with a 

minimum limit based on 95 percent of 

the U.S. median purchase price for new 

construction for nonmetropolitan areas. 

(B) HUD will provide limits for 

affordable existing housing based on 95 

percent of the median area purchase 

price for the area using FHA single 

family mortgage program data for 

existing housing and other appropriate 

data that are available Nation-wide for 

purchase of existing housing, with a 

minimum limit based on 95 percent of 

the State-wide nonmetropolitan area 

median area purchase price using this 

data. 

(iv) In lieu of the limits provided by 

HUD, the participating jurisdiction may 

determine 95 percent of the median area 

purchase price for single family housing 

in the jurisdiction annually, as follows: 

(A) The participating jurisdiction 

must set forth the limits for single 

family housing of one, two, three, and 

four units, for the jurisdiction. The 

participating jurisdiction may determine 

separate limits for existing housing and 

newly constructed housing. 

(B) For the limits on housing located 

outside of metropolitan areas, a State 

may aggregate sales data from more than 

one county if the counties are 

contiguous and similarly situated. 

(C) The participating jurisdiction 

must include the following information 

in the annual action plan of the 

Consolidated Plan submitted to HUD for 

review and must update the information 

in each action plan. 

(1) The 95 percent of median area 

purchase price must be established in 

accordance with a market analysis that 

ensured that a sufficient number of 

recent housing sales are included in the 

survey; 

(2) Sales must cover the requisite 

number of months based on volume: For 

500 or more sales per month, a 1-month 

reporting period; for 250 through 499 

sales per month, a 2-month reporting 

period; for less than 250 sales per 

month, at least a 3-month reporting 

period. The data must be listed in 

ascending order of purchase price; 

(3) The address of the listed 

properties must include the location 

within the participating jurisdiction. 

Lot, square, and subdivision data may 

be substituted for the street address; 

(4) The housing sales data must reflect 

all, or nearly all, of the single family 

housing sales in the entire participating 

jurisdiction; and. 

(5) To determine the median area 

purchase price, a participating 

jurisdiction must take the middle sale 

on the list if an odd number of sales, 

and if an even number, take the higher 

of the middle numbers and consider it 

the median. After identifying the 

median area purchase price, the amount 

should be multiplied by 0.95 to 

determine the 95 percent of the median 

area purchase price. 

(3) The housing must be acquired by 

a homebuyer whose family qualifies as 

a low-income family, and the housing 

must be the principal residence of the 

family throughout the period described 

in paragraph (a)(4) of this section. If 

there is no ratified sales contract with 

an eligible homebuyer for the housing 

within 12 months of the date of 

completion of construction or 

rehabilitation, the housing must be 

rented to an eligible tenant as affordable 

rental housing and must comply with 

the requirements in § 92.252, including 

the period of affordability in § 92.252(d). 

In determining the income eligibility of 

the family, the participating jurisdiction 

must include the income of all persons 

living in the housing. The homebuyer 

must receive housing counseling. If 

housing is being purchased by an inplace tenant pursuant to § 92.255, then 

the housing may be acquired if the 

homebuyer’s family was low-income at 

the time the homebuyer’s family began 

occupying the HOME rental housing 

unit. If the housing does not meet the 

participating jurisdiction’s property 

standards in § 92.251 at the time of 

acquisition, then the housing may still 

be acquired if the written agreement 

between the participating jurisdiction 

and the homebuyer requires the 

property to meet the standards within 

the period specified in § 92.251(c)(3)(ii) 

and funding is secured to complete the 

rehabilitation necessary to comply with 

the standards. 

(4) Periods of affordability. The 

HOME-assisted housing must meet the 

affordability requirements for not less 

than the applicable period specified in 

the following table, beginning after 

execution of the instrument that 

requires the recapture of the HOME 

investment or recordation of the resale 

restrictions for sale to the next 


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homebuyer. Execution of the instrument 

that requires the recapture of the HOME 

investment or recordation of the resale 

restrictions for sale to the next 

homebuyer may only occur after the 

housing meets the participating 

jurisdiction’s property standards in 

accordance with § 92.251(c)(3) and the 

property title is transferred to the 

homebuyer. The per unit amount of 

HOME funds and the period of 

affordability that they trigger are 

described more fully in paragraphs 

(a)(5)(i) (resale) and (ii) (recapture) of 

this section. The period of affordability 

is based on the total amount of HOME 

funds invested in the housing. 

TABLE 1 TO PARAGRAPH (a)(4) 

Homeownership assistance 

HOME amount per-unit 

Minimum 

period of 

affordability in 

years 

Under $25,000 ...................... 5 

$25,000 to $50,000 .............. 10 

Over $50,000 ........................ 15 

(5) * * * 

(i) Resale. Resale requirements must 

ensure, if the housing does not continue 

to be the principal residence of the 

family for the duration of the period of 

affordability, that the housing is made 

available for subsequent purchase only 

to a buyer whose family qualifies as a 

low-income family and will use the 

property as the family’s principal 

residence. The resale requirement must 

also ensure that the price at resale 

provides the HOME-assisted 

homeowner a fair return on investment 

(including the homeowner’s investment 

and any improvements) and ensure the 

housing will remain affordable to a 

reasonable range of low-income 

homebuyers. The resale price is the fair 

return on investment added to the 

original sales price of the property, 

subject to market conditions. The 

participating jurisdiction must 

specifically define ‘‘fair return on 

investment’’ and ‘‘affordability to a 

reasonable range of low-income 

homebuyers,’’ and specifically address 

how it will make the housing affordable 

to a low-income homebuyer in the event 

that the resale price necessary to 

provide a fair return is not affordable to 

the subsequent homebuyer. The period 

of affordability is based on the total 

amount of HOME funds invested in the 

housing. 

(A) Permissible methods of 

determining fair return and the resale 

price include but are not limited to the 

following: 

(1) Itemized formula. To determine 

fair return on investment and resale 

price, the participating jurisdiction may 

use an itemized formula to add or 

subtract common, clearly defined 

factors that increase or decrease the 

value of a homeowner’s investment in 

the property over the term of ownership. 

This formula must include the value of 

capital improvements and the sum of 

the downpayment and all principal 

payments by the homeowner on the 

loan secured by the property. The 

formula may depreciate the value of the 

capital improvements and may take into 

consideration any reduction in value 

due to property damage or delayed or 

deferred maintenance of the property 

condition. The fair return on a 

homeowner’s investment under this 

formula is calculated by taking the sum 

of the defined factors for the 

homeowner’s investment in the 

property over the term of ownership and 

multiplying this amount by a clearly 

defined, publicly accessible index or 

standard. 

Formula 1 to Paragraph (a)(5)(i)(A)(1) 

(2) Appraisal formula. The 

participating jurisdiction may use an 

appraisal formula to determine fair 

return on investment and resale price 

based on the amount of market 

appreciation, if any, over the term of 

ownership. Under this method, the 

appraisals must be conducted by a State 

licensed or certified third-party 

appraiser. The amount of market 

appreciation over the term of ownership 

is determined by subtracting the 

appraised value at the time of initial 

purchase from the appraised value of 

the property at the time of resale. The 

fair return on a homeowner’s 

investment under this formula is 

calculated by multiplying a clearly 

defined, publicly accessible standard or 

index by the amount of market 

appreciation over the term of 

homeownership. 

Formula 2 to Paragraph (a)(5)(i)(A)(2) 

(3) Index formula. The participating 

jurisdiction may use an index formula 

to determine fair return on investment 

and resale price based on the change in 

value of a homeowner’s investment over 

the term of ownership. Index formulas 

adjust the value of the homeowner’s 

investment in proportion to changes in 

an index, such as the change in median 

household income. To determine the 

homeowner’s fair return using this 

model, the sum of the property’s 

original purchase price and the value of 

any capital improvements to the 

property is multiplied by the change in 

the specified index during the term of 

ownership. The formula may also 

depreciate the value of the capital 

improvements and may take into 

consideration any reduction in value 

due to property damage or delayed or 


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deferred maintenance of the property 

condition. 

Formula 3 to Paragraph (a)(5)(i)(A)(3) 

(4) Fixed-rate formula. The 

participating jurisdiction may use a 

fixed-rate formula to determine the 

homeowner’s fair return on investment. 

Fixed-rate formulas adjust the value of 

the homeowner’s investment by a fixed 

percentage (rate) per year (e.g., 3.5 

percent). To determine the fair return on 

investment using this model, the fixed 

rate is multiplied by the number of 

years the homeowner owned and 

occupied the home (e.g., 3.5 percent × 

10 years = 35%). The resulting rate is 

then multiplied by the sum of the 

original purchase price of the home and 

the value of any capital improvements 

to the property to calculate the fair 

return to the homeowner. The formula 

may also depreciate the value of the 

capital improvements and may take into 

consideration any reduction in value 

due to property damage or delayed or 

deferred maintenance of the property 

condition. 

Formula 4 to Paragraph (a)(5)(i)(A)(4) 

(B) Except as provided in paragraph 

(a)(5)(i)(C) of this section, deed or use 

restrictions, a recorded agreement 

restricting the use of the property, liens 

on real property, covenants running 

with the land, or other similar 

mechanisms approved by HUD in 

writing must be used to impose the 

resale requirements. 

(C) The affordability restrictions may 

terminate upon occurrence of any of the 

following termination events: 

foreclosure, transfer in lieu of 

foreclosure, or assignment of an FHAinsured mortgage to HUD. If the owner 

of record before the termination event 

obtains an ownership interest in the 

property after the termination event, 

then the affordability restrictions shall 

be revived under the same terms prior 

to the termination event, including a 

minimum period of affordability equal 

to the terminated period of affordability. 

(D) Certain housing may be presumed 

to meet the resale restrictions (i.e., the 

housing will be available and affordable 

to a reasonable range of low-income 

homebuyers; a low-income homebuyer 

will occupy the housing as the family’s 

principal residence; and the original 

owner will be afforded a fair return on 

investment) during the period of 

affordability without the imposition of 

enforcement mechanisms by the 

participating jurisdiction. The 

presumption must be based upon a 

market analysis of the neighborhood in 

which the housing is located. The 

market analysis must include an 

evaluation of the location and 

characteristics of the housing and 

residents in the neighborhood (e.g., sale 

prices, age and amenities of the housing 

stock, incomes of residents, percentage 

of owner-occupants) in relation to 

housing and incomes in the housing 

market area. An analysis of the current 

and projected incomes of neighborhood 

residents for an average period of 

affordability for homebuyers in the 

neighborhood must support the 

conclusion that a reasonable range of 

low-income families will continue to 

qualify for mortgage financing. For 

example, an analysis shows that the 

housing is modestly priced within the 

housing market area and that families 

with incomes of 65 percent to 80 

percent of the area median income can 

afford monthly payments under average 

FHA terms without other government 

assistance and housing will remain 

affordable at least during the next five 

to seven years compared to other 

housing in the market area; the size and 

amenities of the housing are modest and 

substantial rehabilitation will not 

significantly increase the market value; 

the neighborhood has housing that is 

not currently owned by the occupants, 

but the participating jurisdiction is 

encouraging homeownership in the 

neighborhood by providing 

homeownership assistance and by 

making improvements to the streets, 

sidewalks, and other public facilities 

and services. If a participating 

jurisdiction in preparing a 

neighborhood revitalization strategy 

under § 91.215(e)(2) of its Consolidated 

Plan has incorporated the type of market 

data described above, that submission 

may serve as the required analysis 

under this section. If the participating 

jurisdiction continues to provide 

homeownership assistance for housing 

in the neighborhood, it must 


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periodically update the market analysis 

to verify the original presumption of 

continued affordability. 

(ii) Recapture. (A) Recapture 

provisions must require that the 

participating jurisdiction recoups all or 

a portion of the HOME assistance 

provided to the homebuyers if the 

housing does not continue to be the 

principal residence of the family for the 

duration of the period of affordability. 

The participating jurisdiction may 

structure its recapture provisions based 

on its program design and market 

conditions. The period of affordability is 

based upon the amount of HOME funds 

that directly assisted the homebuyer to 

buy the housing unit. This amount 

includes any HOME assistance that 

assisted the homebuyer to purchase the 

housing or reduced the purchase price 

paid by the homebuyer from fair market 

value to an affordable price but excludes 

the amount of HOME assistance 

provided to develop the unit that does 

not assist the homebuyer or reduce the 

purchase price paid by the homebuyer. 

Recapture provisions may permit the 

subsequent homebuyer to assume the 

HOME assistance (subject to the HOME 

requirements for the remainder of the 

period of affordability) if the subsequent 

homebuyer is low-income and no 

additional HOME assistance is 

provided. 

(B) The following options for 

recapture requirements are acceptable to 

HUD. The participating jurisdiction may 

adopt, modify, or develop its own 

recapture requirements for HUD 

approval. In establishing its recapture 

requirements, the participating 

jurisdiction is subject to the limitation 

that when the recapture requirement is 

triggered by a sale (voluntary or 

involuntary) of the housing unit, the 

amount recaptured cannot exceed the 

net proceeds, if any. The net proceeds 

are the sales price minus superior loan 

repayment (other than HOME funds) 

and any closing costs. 

(1) Recapture entire amount. The 

participating jurisdiction may recapture 

the entire amount of the HOME 

investment from the homeowner. 

(2) Reduction during period of 

affordability. The participating 

jurisdiction may reduce the HOME 

investment amount to be recaptured on 

a pro rata basis for the time the 

homeowner has owned and occupied 

the housing measured against the 

required period of affordability. 

(3) Shared net proceeds. If the net 

proceeds are not sufficient to recapture 

the full HOME investment (or a reduced 

amount as provided for in paragraph 

(a)(5)(ii)(A)(2) of this section) plus 

enable the homeowner to recover the 

amount of the homeowner’s 

downpayment and any capital 

improvement investment made by the 

owner since purchase, the participating 

jurisdiction may share the net proceeds. 

The net proceeds are the sales price 

minus loan repayment (other than 

HOME funds) and closing costs. The net 

proceeds may be divided proportionally 

as set forth in the following 

mathematical formulas: 

Formula 5 to Paragraph (a)(5)(ii)(A)(2) 

(4) Owner investment returned first. 

The participating jurisdiction may 

permit the homebuyer to recover the 

homebuyer’s entire investment 

(downpayment and capital 

improvements made by the owner since 

purchase) before recapturing the HOME 

investment. 

(5) Amount subject to recapture. The 

HOME investment subject to recapture 

is the amount of HOME funds that 

directly assisted the homebuyer to buy 

the housing. This includes the amount 

that assisted the homebuyer to purchase 

the housing or reduced the purchase 

price paid by the homebuyer from fair 

market value to an affordable price but 

excludes the amount of HOME 

assistance provided to develop the unit 

that did not assist the homebuyer or 

reduce the purchase price paid by the 

homebuyer. The recaptured funds must 

be used to carry out HOME-eligible 

activities in accordance with the 

requirements of this part. If the HOME 

assistance is only used for the 

development subsidy and therefore not 

subject to recapture, the resale option 

must be used. 

(6) Special considerations for single 

family properties with more than one 

unit. If the HOME funds are only used 

to assist a low-income homebuyer to 

acquire one unit in single family 

housing containing more than one unit 

and the assisted unit will be the 

principal residence of the homebuyer, 

the affordability requirements of this 

section apply only to the assisted unit. 

If HOME funds are also used to assist 

the low-income homebuyer to acquire 

one or more rental units in the singlefamily housing, the affordability 

requirements of § 92.252 apply to the 

assisted rental units, except that the 

participating jurisdiction may impose 

resale or recapture restrictions on all 

assisted units (owner-occupied and 

rental units) in the single-family 

housing. If resale restrictions are used, 

the affordability requirements on all 

assisted units continue for the period of 

affordability. If recapture restrictions are 

used, the affordability requirements on 

the assisted rental units may be 

terminated, at the discretion of the 

participating jurisdiction, upon 

recapture of the HOME investment. If 

HOME funds are used to assist only the 

rental units in a single-family property, 

then the requirements of § 92.252 would 

apply and the owner-occupied unit 

would not be subject to the income 

targeting or affordability provisions of 

§ 92.254. 

(7) Lease-purchases in the HOME 

program. A homeownership project may 

consist of acquisition, rehabilitation, or 

new construction of housing to be sold 

to an eligible low-income homebuyer 

through a lease-purchase program. 

(i) The homebuyer must qualify as a 

low-income family at the time of signing 

the lease-purchase agreement. In 

determining the income eligibility of the 

family, the participating jurisdiction 

must include the income of all persons 

living in the housing. If a family is also 

receiving HOME tenant-based rental 

assistance, the participating jurisdiction 

is not required to reexamine the family’s 

income during the term of the leasepurchase agreement. 

(ii) The owner and homebuyer must 

execute a lease-purchase agreement 

under an existing lease-purchase 

program prior to occupancy of the unit. 

The lease-purchase agreement must 

require the purchase of the housing 

within 36 months of execution. Owners 

and homebuyers that have entered into 

a lease-purchase agreement pursuant to 

the requirements in this paragraph are 


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subject to the affordability requirements 

in this section unless the housing is not 

purchased within the required 

timeframes in this paragraph in 

accordance with the lease-purchase 

agreement. 

(iii) If the first homebuyer does not 

acquire the housing in accordance with 

the lease-purchase agreement, the owner 

must sell the housing to another eligible 

low-income homebuyer within 48 

months from the execution of the 

original lease-purchase agreement. The 

next homebuyer is eligible for 

homeownership assistance from the 

participating jurisdiction. The owner is 

not permitted to sell the unit through 

another lease-purchase agreement. 

When the next homebuyer purchases 

the housing, the homebuyer shall be 

subject to the affordability requirements 

in this section. 

(iv) If the owner is unable to sell the 

unit within 48 months from the 

execution of the lease-purchase 

agreement, the housing is subject to the 

requirements for affordable rental 

housing in § 92.252. 

(8) Contract to purchase. If HOME 

funds are used to assist a homebuyer 

who has entered into a contract to 

purchase housing to be constructed, the 

homebuyer must qualify as a lowincome family at the time the contract 

is signed. 

(b) Preserving affordability of housing 

assisted with HOME funds. When there 

is a termination event for affordability 

restrictions, a participating jurisdiction 

may take the following actions to 

preserve the affordability of the 

property: 

(1) The participating jurisdiction may 

exercise purchase options, rights of first 

refusal, or other preemptive rights to 

obtain ownership of the housing before 

foreclosure to preserve affordability, 

subject to the following requirements: 

(i) The housing must be sold to an 

eligible homebuyer in accordance with 

paragraph (a)(3) of this section within 

12 months of the date the participating 

jurisdiction obtains ownership; 

(ii) The period of affordability for the 

eligible homebuyer must be equal to the 

remaining period of affordability of the 

former homeowner unless additional 

HOME funds are used to directly assist 

the eligible homebuyer (i.e., 

homeownership assistance); 

(iii) If the participating jurisdiction 

directly assists the eligible homebuyer 

with additional HOME funds, then the 

period of affordability must be 

recalculated in accordance with the 

table in § 92.254(a)(4) based on the total 

amount of additional HOME funds 

invested. The additional investment 

must be treated as a new project; and 

(iv) The total HOME funds for a 

project (original investment plus 

additional investment) must not exceed 

the per-unit subsidy limit in § 92.250(a) 

in effect at the time of the additional 

investment, subject to HUD approval. 

(2) The participating jurisdiction may 

use additional HOME funds for the 

following costs: 

(i) The cost for the participating 

jurisdiction to obtain ownership of the 

HOME-assisted housing through a 

purchase option, right of first refusal, or 

other preemptive right before 

foreclosure or at the foreclosure sale. 

This cost must be treated as an 

amendment to the original project. The 

foreclosure costs to acquire housing 

with a HOME loan in default is an 

eligible cost; however, HOME funds 

may not be used to repay a loan made 

with HOME funds. 

(ii) The cost of the participating 

jurisdiction to undertake any necessary 

rehabilitation for the housing acquired. 

This includes the rehabilitation required 

for the housing to meet applicable 

property standards in § 92.251. This cost 

must be treated as an amendment to the 

original project. 

(iii) The cost to the participating 

jurisdiction of owning the housing 

pending resale to another homebuyer. 

This cost must be treated as an 

amendment to the original project. 

(iv) The cost to assist an eligible 

homebuyer in purchasing the housing. 

This cost must be treated as a cost for 

a new project and not as an amendment 

to the original project. 

(v) As an alternative to charging costs 

to the HOME program under § 92.206, 

the participating jurisdiction may 

charge the costs to the HOME program 

under § 92.207 as a reasonable 

administrative cost of its HOME 

program. To the extent administrative 

funds are used, they may be reimbursed, 

in whole or in part, when the housing 

is sold to a new eligible homebuyer. If 

the housing is sold for more than the 

amount of administrative funds that the 

participating jurisdiction expended to 

preserve the affordability, then the 

excess sale proceeds shall be program 

income. 

(3) The participating jurisdiction may 

permit the Community Land Trust, as 

defined in § 92.2, that originally 

developed the HOME-assisted housing, 

to exercise a purchase option, right of 

first refusal, or other preemptive right to 

obtain ownership of the housing to 

preserve affordability, including but not 

limited to the right to purchase the 

housing in lieu of foreclosure, under the 

following conditions: 

(i) The Community Land Trust 

obtains ownership of the housing, 

subject to existing HOME affordability 

restrictions; 

(ii) The housing must be resold to an 

eligible homebuyer in accordance with 

paragraph (a)(3) of this section within 

12 months; 

(iii) The period of affordability for the 

eligible homebuyer is equal to the 

remaining period of affordability of the 

former homeowner, unless the 

participating jurisdiction provides 

additional HOME funds to directly 

assist the eligible homebuyer in 

accordance with subparagraph (b)(3)(iv) 

below (i.e., homeownership assistance); 

and, 

(iv) The participating jurisdiction may 

not provide additional HOME funds to 

the Community Land Trust to obtain 

ownership, rehabilitate the housing, 

own/hold the housing pending resale to 

the next homebuyer, or provide 

homeownership assistance to the next 

eligible homebuyer. The participating 

jurisdiction may provide 

homeownership assistance to the next 

eligible homebuyer and the period of 

affordability shall be based upon the 

homeownership assistance provided to 

the homebuyer, in accordance with 

subparagraphs (b)(1)(iii) and (b)(1)(iv) of 

this section. 

* * * * * 

(f) Providing homeownership 

assistance through lenders. Subject to 

the requirements of paragraph (f) of this 

section, the participating jurisdiction 

may provide homeownership assistance 

through a lending institution that is a 

contractor or nonprofit lending 

institution that is a subrecipient that 

also provides the first mortgage loan to 

a low-income family. 

* * * * * 

(g) * * * 

(1) Underwriting standards for 

homeownership assistance to determine 

the amount of assistance necessary to 

achieve sustainable homeownership. 

These standards must evaluate the 

projected overall debt of the family after 

the purchase of the housing, the 

maximum amount that a participating 

jurisdiction may provide a family, the 

appropriateness of the amount of 

assistance, assets available to a family to 

acquire the housing, and financial 

resources to sustain homeownership. A 

participating jurisdiction may not 

provide a single, fixed amount of 

assistance to each homebuyer that 

participates in the participating 

jurisdiction’s homebuyer program; 

* * * * * 

(3) Refinancing loans to which HOME 

loans are subordinated to require that 

the terms of the new loan are 

reasonable. 


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■ 29. Revise § 92.255 to read as follows: 

§ 92.255 Purchase of HOME units by inplace tenants. 

(a) During a HOME-assisted rental 

unit’s period of affordability, the 

participating jurisdiction may permit an 

owner to sell or otherwise convey a 

HOME-assisted rental unit to an existing 

tenant in accordance with the 

requirements of § 92.254. However, 

refusal by the tenant to purchase the 

housing does not constitute good cause 

for termination of tenancy or failure to 

renew the lease. The participating 

jurisdiction may not permit the use of 

a lease-purchase program under this 

section. 

(b) If no additional HOME funds are 

used to enable the tenants to become 

homeowners, the homeownership units 

are subject to a period of affordability 

equal to the remaining period of 

affordability if the units continued as 

rental units. The participating 

jurisdiction must impose resale 

requirements that comply with 

§ 92.254(a) for the required period of 

affordability. The period of affordability 

and resale restrictions must be applied 

to the property regardless of the income 

of the family at purchase. If the tenant’s 

family is no longer low-income at the 

time of the purchase, then the family 

must occupy the housing as a principal 

residence in accordance with 

§ 92.254(a)(3) and must agree to the 

imposition of resale restrictions on the 

housing, in accordance with 

§ 92.254(a)(5), for the period of 

affordability specified in this paragraph 

(b). 

(c) If additional HOME funds are used 

to directly assist the tenants to become 

homeowners, the period of affordability 

is the remaining period of affordability 

if the unit had remained a rental unit or 

the required period under § 92.254(a)(4) 

for the amount of direct homeownership 

assistance provided, whichever is 

longer. No additional HOME funds may 

be provided to an in-place tenant to 

become a homebuyer if the tenant’s 

family is no longer low-income at the 

time of the purchase. 

§ 92.258 [Amended] 

■ 30. Amend § 92.258 by: 

■ a. Removing the words ‘‘single-family 

dwelling’’ and adding in their place the 

words ‘‘single family housing units’’ in 

paragraph (a); 

■ b. Removing the word ‘‘single-family’’ 

and adding in their place the words 

‘‘single family’’ paragraph (b)(1); and 

■ c. Removing the words ‘‘affordability 

period’’ and adding in their place the 

words ‘‘period of affordability’’ 

paragraphs (c) and (d)(3) introductory 

text; and 

■ d. Removing ‘‘§ 92.252(e)’’ and adding 

in its place ‘‘§ 92.252(d)’’ in paragraph 

(d)(3) introductory text. 

■ 31. Amend § 92.300 by: 

■ a. Removing the words ‘‘developed or 

sponsored’’ and adding in their place 

the words ‘‘developed, or sponsored’’ in 

the first sentence of paragraph (a) 

introductory text; 

■ b. Revise paragraphs (a)(2) through (4) 

and (a)(5) introductory text; 

■ c. Removing the word ‘‘nonprofit’’ 

and adding in its place the words 

‘‘private nonprofit’’ in paragraph 

(a)(5)(iii) introductory text; 

■ d. Removing ‘‘community 

development housing organization’’ and 

adding in its place ‘‘community housing 

development organization’’ and by 

removing the word ‘‘new’’ in paragraph 

(a)(6) introductory text; 

■ e. Revising paragraphs (a)(6)(i), 

(a)(6)(ii)(A), and (a)(7) and the last 

sentence of paragraph (b); 

■ f. Removing the words ‘‘developed or 

sponsored’’ and adding in their place 

the words ‘‘developed, or sponsored’’ 

and by removing the words ‘‘and 

specifies’’ and adding in their place the 

words ‘‘and must specify’’ in paragraph 

(e); and 

■ g. Revising the first sentence of 

paragraph (f). 

The revisions read as follows: 

§ 92.300 Set-aside for community housing 

development organizations (CHDOs). 

(a) * * * 

(2) Rental housing is ‘‘owned’’ by the 

community housing development 

organization if the community housing 

development organization is the owner 

in fee simple absolute of rental housing 

(or has a long term ground lease running 

for the full period of affordability in 

§ 92.252) leased to low-income families 

in accordance with § 92.252. If the 

housing is to be rehabilitated or 

constructed, the community housing 

development organization hires and 

oversees the developer that rehabilitates 

or constructs the housing. The 

community housing development 

organization must oversee or hire and 

contract with an experienced project 

manager to oversee all aspects of the 

development, including obtaining 

zoning, securing non-HOME financing, 

selecting a developer or general 

contractor, overseeing the progress of 

the work, and determining the 

reasonableness of costs. The community 

housing development organization must 

own the rental housing during 

development and for a period at least 

equal to the period of affordability in 

§ 92.252. If the CHDO acquires housing 

that meets the property standards in 

§ 92.251, the CHDO must own the rental 

housing for a period at least equal to the 

period of affordability in § 92.252. 

(3) Rental housing is ‘‘developed’’ by 

the community housing development 

organization if the community housing 

development organization is the owner 

in fee simple absolute (or has a long 

term ground lease running for the full 

period of affordability in § 92.252) and 

the developer of new housing that will 

be constructed or existing substandard 

housing that will be rehabilitated for 

rent to low-income families in 

accordance with § 92.252. To be the 

‘‘developer,’’ the community housing 

development organization may share 

developer responsibilities with another 

entity but must be in charge of all 

aspects of the development process, 

including selecting the site, obtaining 

permit approvals and all project 

financing, selecting architects, 

engineers, and general contractors, 

overseeing project progress, and 

determining the reasonableness of costs. 

The requirement that a community 

housing development organization is in 

charge of all aspects of the development 

process must be enforceable through a 

written agreement (e.g., a joint venture 

agreement or master development 

agreement). At a minimum, the 

community housing development 

organization must own the housing 

during development and for a period at 

least equal to the period of affordability 

in § 92.252. The participating 

jurisdiction may permit the community 

housing development organization to 

sell or otherwise convey the housing to 

a nonprofit organization other than a 

community housing development 

organization, subject to all applicable 

requirements of this part, if the 

participating jurisdiction determines 

and documents that the community 

housing development organization no 

longer has the capacity to own and 

manage the housing for the full period 

of affordability and there are no other 

community housing development 

organizations within the jurisdiction 

with capacity to own and manage the 

project for the full period of 

affordability. 

(4) Rental housing is ‘‘sponsored’’ by 

the community housing development 

organization if it is rental housing 

‘‘owned’’ or ‘‘developed’’ in accordance 

with paragraph (a)(2) or (3) of this 

section, as applicable, by a subsidiary of 

a community housing development 

organization, a limited partnership of 

which the community housing 

development organization or its 

subsidiary is the managing general 

partner, or a limited liability company 


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of which the community housing 

development organization or its 

subsidiary is the managing member. 

(i) The subsidiary of the community 

housing development organization may 

be a for-profit or nonprofit organization 

and must be wholly owned by the 

community housing development 

organization. If the limited partnership 

or limited liability company agreement 

permits the community housing 

development organization or its 

subsidiary to be removed as the 

managing general partner or managing 

member, the agreement must provide 

that the removal must be for cause and 

that the community housing 

development organization must be 

replaced with another community 

housing development organization. 

(ii) The HOME funds must be 

provided by the participating 

jurisdiction directly to the entity that 

owns the project. 

(5) HOME-assisted rental housing is 

also ‘‘sponsored’’ by a community 

housing development organization if the 

community housing development 

organization ‘‘developed’’ the rental 

housing project in accordance with 

paragraph (a)(3) of this section and 

agrees to convey the project to an 

identified private nonprofit organization 

at a predetermined time after 

completion of the project. Sponsored 

rental housing, as provided in this 

paragraph (a)(5), is subject to the 

following requirements: 

* * * * * 

(6) * * * 

(i) To be the ‘‘developer,’’ the 

community housing development 

organization may share the developer 

role with another entity but must be in 

charge of all aspects of the development 

process, including selecting the site, 

obtaining permit approvals and all 

project financing, selecting architects, 

engineers, and general contractors, 

overseeing project progress, determining 

the reasonableness of costs, identifying 

eligible homebuyers, and overseeing the 

sale of homeownership units. The 

community housing development 

organization may provide direct 

homeownership assistance (e.g., 

assistance with a downpayment, 

payment of closing costs, mortgage rate 

buy-downs, etc.) when it sells the 

housing to low-income families and the 

community housing development 

organization will not be considered a 

subrecipient. The HOME funds for 

homeownership assistance shall not be 

greater than 10 percent of the amount of 

HOME funds for development of the 

housing. 

(ii) * * * 

(A) While proceeds retained by the 

community housing development 

organization are not subject to the 

requirements of this part, the 

participating jurisdiction must specify 

in the written agreement with the 

community housing development 

organization whether the proceeds are 

to be used for HOME-eligible activities 

or other housing activities to benefit 

low-income families. 

* * * * * 

(7) The participating jurisdiction must 

determine the form of assistance (e.g., 

grant or loan) in accordance with 

§ 92.205(b) that it will provide to the 

community housing development 

organization for a rental housing project 

under paragraph (a)(4) of this section 

and must provide the assistance directly 

to the entity that owns the project. 

(b) * * * If during the first 24 months 

of its participation in the HOME 

Program a participating jurisdiction 

cannot identify a sufficient number of 

capable community housing 

development organizations, up to 20 

percent of the minimum community 

housing development organization set 

aside specified in paragraph (a) of this 

section (but not more than $150,000 

during the 24 month period) may be 

committed to an organization that meets 

the definition of ‘‘community housing 

development organization’’ in § 92.2, 

except for the requirements in 

paragraph (9) of the definition, in order 

to develop demonstrated capacity and 

qualify as a community housing 

development organization in the 

jurisdiction. 

* * * * * 

(f) The participating jurisdiction must 

ensure that a community housing 

development organization does not 

receive HOME funding for any fiscal 

year in an amount that provides more 

than $50,000 or 50 percent of the 

community housing development 

organization’s total operating expenses 

in that fiscal year, whichever is greater. 

* * * 

■ 32. Revise § 92.302 to read as follows: 

§ 92.302 Housing education and 

organizational support. 

HUD is authorized to provide 

education and organizational support 

assistance, in conjunction with HOME 

funds made available to community 

housing development organizations in 

accordance with section 233 of the Act. 

(a) HUD will issue a publication in 

the Federal Register announcing the 

availability of funding under this 

section, as appropriate. The publication 

need not include funding for each of the 

eligible activities but may target funding 

from among the eligible activities. 

(b) Notwithstanding the definition of 

‘‘community land trust’’ in § 92.2, HUD 

may provide housing education and 

organizational support assistance under 

this section to a community land trust 

only if the following requirements are 

met: 

(1) The community land trust meets 

the definition of a ‘‘community housing 

development organization’’ at § 92.2, 

except for the requirements in 

paragraphs (9) and (10) of the definition. 

(2) The community land trust is 

established to complete the activities in 

paragraph (b)(3) of this section. 

(3) The community land trust: 

(i) Acquires land to hold in perpetuity 

and primarily for conveyance under 

long-term ground leases; 

(ii) Transfers ownership of any 

structural improvements located on 

such leased land 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; 

(4) The community land trust’s 

corporate membership is open to 

residents of a particular geographic area, 

as specified in the organization’s 

bylaws; and 

(5) The board of directors: 

(i) Includes a majority of members 

who are elected by the corporate 

membership; and 

(ii) Is composed of equal numbers of 

lessees pursuant to paragraph (b)(2)(ii), 

members who are not lessees, and any 

other category of persons described in 

the organization’s bylaws. 

§ 92.351 [Amended] 

■ 33. Amend § 92.351 by removing the 

words ‘‘downpayment assistance’’ and 

adding in their place the words 

‘‘homeownership assistance’’ and 

removing the words ‘‘If participating’’ 

and adding in their place the words ‘‘If 

the participating’’, and by removing the 

citation ‘‘§ 92.253(d)(3)’’ and adding in 

its place the citation ‘‘§ 92.253(e)(3)’’ in 

in paragraph (a)(1). 

§ 92.352 [Amended] 

■ 34. Amend § 92.352 by: 

■ a. Removing the words ‘‘the cost’’ and 

adding in their place the word ‘‘cost’’ in 

paragraph (a); and 

■ b. Removing the word 

‘‘decisionmaking’’ and adding in its 

place the words ‘‘decision making’’ in 

paragraph (b)(1). 

■ 35. Amend § 92.353 by: 

■ a. Removing the words ‘‘preceded by 

at least 30 days advance written notice 


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to the tenant specifying the grounds for 

the action’’ and adding in their place the 

words ‘‘in accordance with § 92.253’’ in 

paragraph (c)(2)(ii)(A); and 

■ b. Revising paragraph (c)(2)(ii)(C). 

The revision reads as follows: 

§ 92.353 Displacement, relocation, and 

acquisition. 

* * * * * 

(c) * * * 

(2) * * * 

(ii) * * * 

(C) For purposes of the URA, the 

person meets the definition of ‘‘persons 

not displaced’’ as defined in 49 CFR 

24.2; or 

* * * * * 

§ 92.354 [Amended] 

■ 36. Amend § 92.354 in paragraph 

(a)(2) by removing the word ‘‘singlefamily’’ and adding in its place the 

words ‘‘single family’’. 

■ 37. Amend § 92.356 by: 

■ a. Revising paragraph (d)(1); 

■ b. Redesignating paragraphs (e)(2) 

through (6) as paragraphs (e)(3) through 

(7), respectively; 

■ c. Adding new paragraph (e)(2); and 

■ d. Removing the citation ‘‘§ 92.252(e)’’ 

and adding in its place the citation 

‘‘§ 92.252(d)’’ in paragraph (f)(1). 

The revisions and additions read as 

follows: 

§ 92.356 Conflict of interest. 

* * * * * 

(d) * * * 

(1) A disclosure of the nature of the 

conflict, accompanied by an assurance 

that there has been public disclosure of 

the conflict (public disclosure is 

considered a combination of at least two 

of the following: publication on the 

recipient’s website, including social 

media; electronic mailings; media 

advertisements; public service 

announcements; and display in public 

areas such as libraries, grocery store 

bulletin boards, and neighborhood 

centers), evidence of the public 

disclosure, and a description of how the 

public disclosure was made; and 

* * * * * 

(e) * * * 

(2) Whether an opportunity was 

provided for open competitive bidding 

or negotiation; 

* * * * * 

§ 92.359 [Amended] 

■ 38. Amend § 92.359 in paragraph (f) 

by removing the words ‘‘affordability 

period’’ and adding in their place the 

words ‘‘period of affordability’’. 

■ 39. Amend § 92.454 by: 

■ a. Removing the word ‘‘and’’ in 

paragraph (a)(3); 

■ b. Removing the text ‘‘participating 

jurisdiction.’’ and adding in its place the 

text ‘‘participating jurisdiction; and’’ in 

paragraph (a)(4); 

■ c. Adding paragraph (a)(5); and 

■ d. Removing the words ‘‘participating 

jurisdictions that’’ and adding in their 

place the words ‘‘participating 

jurisdictions whose funds were reduced 

under § 92.551 or that’’ in paragraph (b). 

The addition reads as follows: 

§ 92.454 Reallocations by formula. 

(a) * * * 

(5) Any HOME funds available for 

reallocation as a result of any reductions 

under 24 CFR 92.551 or 92.552. 

* * * * * 

■ 40. Amend § 92.500 by revising 

paragraph (c)(2)(ii) to read as follows: 

§ 92.500 The HOME Investment Trust 

Fund. 

* * * * * 

(c) * * * 

(2) * * * 

(ii) The statute or local ordinance 

requires repayments from its own 

affordable housing trust fund to be made 

to the local account; 

* * * * * 

■ 41. Amend § 92.502 by: 

■ a. Revising paragraph (b); 

■ b. Removing the words ‘‘set-up’’ in 

paragraph (c)(1); and 

■ c. Revising paragraphs (d)(1) and (2). 

The revisions read as follows: 

§ 92.502 Program disbursement and 

information system. 

* * * * * 

(b) Project funding. After the 

participating jurisdiction executes the 

HOME Investment Partnership 

Agreement, submits the applicable 

banking and security documents, 

complies with the environmental 

requirements under 24 CFR part 58 for 

release of funds, and commits funds to 

a specific local project, the participating 

jurisdiction may provide funding to an 

activity by identifying specific 

investments in the disbursement and 

information system. The participating 

jurisdiction is required to enter 

complete project set-up information 

before providing funding to the project. 

* * * * * 

(d) * * * 

(1) Complete project completion 

information must be entered into the 

disbursement and information system, 

or otherwise provided to HUD. 

(2) Additional HOME funds may be 

committed to a project up to one year 

after project completion, but the amount 

of HOME funds in the project may not 

exceed the maximum per-unit subsidy 

amount established under § 92.250 at 

the time of underwriting. 

* * * * * 

■ 42. Amend § 92.504 by: 

■ a. Revising the section heading and 

paragraph (b) and revising and 

republishing paragraph (c); and 

■ b. Removing paragraph (d). 

The revisions and republication read 

as follows: 

§ 92.504 Participating jurisdiction 

responsibilities; written agreements. 

* * * * * 

(b) Executing a written agreement. 

Before disbursing any HOME funds to 

any entity, the participating jurisdiction 

must enter into a legally binding written 

agreement with that entity. Before 

disbursing any HOME funds to any 

entity, a State recipient, subrecipient, or 

contractor that is administering all or a 

part of the HOME program on behalf of 

the participating jurisdiction, must also 

enter into a legally binding written 

agreement with that entity. The written 

agreement must ensure compliance with 

the requirements of this part and be a 

separate agreement from project 

financing documents (e.g., mortgage or 

deed of trust, regulatory agreement, or 

promissory note). 

(c) Provisions in written agreements. 

The contents of the agreement may vary 

depending upon the role the entity is 

asked to assume or the type of project 

undertaken. This section details basic 

requirements and the minimum 

provisions by role and type of entity 

that must be included in a written 

agreement. 

(1) State recipient. The provisions in 

the written agreement between the State 

and a State recipient will depend on the 

program functions that the State 

specifies the State recipient will carry 

out in accordance with § 92.201(b). In 

accordance with § 92.201, the written 

agreement must either require the State 

recipient to comply with the 

requirements established by the State or 

require the State recipient to establish 

its own requirements to comply with 

this part, including requirements for 

income determinations and 

underwriting subsidy layering 

guidelines, rehabilitation standards, 

refinancing guidelines, homebuyer 

program policies, and affordability. 

(i) Use of the HOME funds. The 

agreement must describe the amount 

and use of the HOME funds to 

administer one or more programs to 

produce affordable housing, provide 

homeownership assistance, or provide 

tenant-based rental assistance, including 

the anticipated type and number of 

housing projects to be funded (e.g., the 

number of single family homeowner 


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loans to be made or number of 

homebuyers to receive homeownership 

assistance), tasks to be performed, a 

schedule for completing the tasks 

(including a schedule for committing 

funds to projects that meet the deadlines 

established by this part), a budget for 

each program, and any requirement for 

matching contributions. These items 

must be in sufficient detail to provide a 

sound basis for the State to effectively 

monitor performance under the 

agreement. 

(ii) Affordability. The agreement must 

require housing assisted with HOME 

funds to meet the affordability 

requirements of § 92.252 or § 92.254, as 

applicable, and must require repayment 

of the funds if the housing does not 

meet the affordability requirements for 

the period of affordability. The 

agreement must require a means of 

enforcement of the affordability 

requirements by the State participating 

jurisdiction or, if the State recipient will 

be the owner at project completion of 

the affordable housing, the intended 

beneficiaries. The means of enforcement 

may include liens on real property, deed 

or use restrictions, a recorded agreement 

restricting the use of the property, 

covenants running with the land, or 

other mechanisms approved by HUD in 

writing, under which the participating 

jurisdiction has the right to require 

specific performance. The agreement 

must establish whether repayment of 

HOME funds must be remitted to the 

State or retained by the State recipient 

for additional eligible activities. 

(iii) Program income. The agreement 

must state whether program income is 

to be remitted to the State or retained by 

the State recipient for additional eligible 

activities. 

(iv) Uniform administrative 

requirements. The agreement must 

require the State recipient to comply 

with applicable uniform administrative 

requirements, as described in § 92.505. 

(v) Project requirements. The 

agreement must require compliance 

with project requirements in subpart F 

of this part, as applicable in accordance 

with the type of project assisted. For any 

projects involving HOME rental 

housing, tenant-based rental assistance, 

or security deposit assistance, the 

agreement must require that the 

applicable HOME tenancy addendum is 

used in accordance with § 92.253 for all 

HOME-assisted units or tenants. 

(vi) Other program requirements. The 

agreement must require the State 

recipient to carry out each activity in 

compliance with all Federal laws and 

regulations described in subpart H of 

this part, except that the State recipient 

does not assume the State’s 

responsibilities for release of funds 

under § 92.352 and the 

intergovernmental review process in 

§ 92.357 does not apply to the State 

recipient. If HOME funds are provided 

for development of rental housing or 

provision of tenant-based rental 

assistance, the agreement must set forth 

all obligations the State imposes on the 

State recipient in order to meet the 

Violence Against Women Act (VAWA) 

requirements under § 92.359, including 

notice obligations and any obligations 

with respect to the emergency transfer 

plan (including whether the State 

recipient must develop its own plan or 

follow the State’s plan). 

(vii) Affirmative marketing. The 

agreement must specify the State 

recipient’s affirmative marketing 

responsibilities in accordance with 

§ 92.351. 

(viii) Requests for disbursement of 

funds. The agreement must specify that 

the State recipient may not request 

disbursement of HOME funds under this 

agreement until the funds are needed for 

payment of eligible costs. The amount of 

each request must be limited to the 

amount needed. Program income must 

be disbursed before the State recipient 

requests funds from the State. 

(ix) Records and reports. The 

agreement must specify the particular 

records that must be maintained and the 

information or reports that must be 

submitted in order to assist the State in 

meeting its recordkeeping and reporting 

requirements. 

(x) Enforcement of the written 

agreement. The agreement must specify 

remedies for breach of the provisions of 

the written agreement. The agreement 

must specify that, in accordance with 2 

CFR 200.339, suspension or termination 

may occur if the State recipient 

materially fails to comply with any term 

of the agreement. The State may permit 

the agreement to be terminated in whole 

or in part in accordance with 2 CFR 

200.340. 

(xi) Written agreement. Before 

providing HOME funds to any owner, 

community housing development 

organization, subrecipient, homeowner, 

homebuyer, tenant (or landlord) 

receiving tenant-based rental assistance, 

or contractor providing services to or on 

behalf of the State recipient, the State 

recipient must have a fully executed 

written agreement with such person or 

entity that meets the requirements of 

this section. For affordable housing 

assisted with HOME funds, the State 

recipient must provide HOME funds 

directly to the owner under the terms 

and conditions of the written agreement. 

The agreement must establish that any 

repayment on any form of assistance of 

HOME funds must be remitted to the 

State or, if permitted by the State, 

retained by the State recipient for 

additional eligible activities. 

(xii) Duration of the agreement. The 

duration of the agreement will depend 

on which functions the State recipient 

performs (e.g., whether the State 

recipient or the State has responsibility 

for monitoring rental projects for the 

period of affordability) and which 

activities are funded under the 

agreement. 

(xiii) Fees. The agreement must 

prohibit the State recipient and its 

subrecipients and community housing 

development organizations from 

charging for any of the prohibited costs 

listed in § 92.214, including but not 

limited to servicing, origination, 

processing, inspection, or other fees for 

the costs of administering a HOME 

program. 

(2) Subrecipient. The agreement must 

set forth and require the subrecipient to 

follow the participating jurisdiction’s 

requirements, including requirements 

for income determinations, 

underwriting and subsidy layering 

guidelines, rehabilitation standards, 

refinancing guidelines, homebuyer 

program policies, and affordability 

requirements. The agreement between 

the participating jurisdiction and the 

subrecipient must include the 

following: 

(i) Use of the HOME funds. The 

agreement must describe the amount 

and use of the HOME funds for one or 

more programs, including the 

anticipated type and number of housing 

projects to be funded (e.g., the number 

of single family homeowner loans to be 

made or the number of homebuyers to 

receive homeownership assistance), 

tasks to be performed, a schedule for 

completing the tasks (including a 

schedule for committing funds to 

projects in accordance with deadlines 

established by this part), a budget, any 

requirement for matching contributions, 

and the period of the agreement. These 

items must be in sufficient detail to 

provide a sound basis for the 

participating jurisdiction to effectively 

monitor performance under the 

agreement. 

(ii) Program income. The agreement 

must state if program income is to be 

remitted to the participating jurisdiction 

or retained by the subrecipient for 

additional eligible activities. 

(iii) Uniform administrative 

requirements. The agreement must 

require the subrecipient to comply with 

applicable uniform administrative 

requirements, as described in § 92.505. 

(iv) Other program requirements. The 

agreement must require the subrecipient 


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to carry out each activity in compliance 

with all Federal laws and regulations 

described in subpart H of this part, 

except that the subrecipient does not 

assume the participating jurisdiction’s 

responsibilities for environmental 

review under § 92.352 and the 

intergovernmental review process in 

§ 92.357 does not apply. The agreement 

must set forth the requirements the 

subrecipient must follow to enable the 

participating jurisdiction to carry out 

environmental review responsibilities 

before HOME funds are committed to a 

project. If the subrecipient is 

administering a HOME rental housing 

program or tenant-based rental 

assistance program on behalf of the 

participating jurisdiction, the 

participating jurisdiction must set forth 

in the written agreement all obligations 

of the subrecipient to meet the VAWA 

requirements under § 92.359, including 

notice obligations and obligations under 

the emergency transfer plan. 

(v) Affirmative marketing. The 

agreement must specify the 

subrecipient’s affirmative marketing 

responsibilities in accordance with 

§ 92.351. 

(vi) Requests for disbursement of 

funds. The agreement must specify that 

the subrecipient may not request 

disbursement of funds under the 

agreement until the funds are needed for 

payment of eligible costs. The amount of 

each request must be limited to the 

amount needed. Program income must 

be disbursed before the subrecipient 

requests funds from the participating 

jurisdiction. 

(vii) Reversion of assets. The 

agreement must specify that upon 

expiration of the agreement, the 

subrecipient must transfer to the 

participating jurisdiction any HOME 

funds on hand at the time of expiration 

and any accounts receivable attributable 

to the use of HOME funds. 

(viii) Records and reports. The 

agreement must specify the particular 

records that must be maintained and the 

information or reports that must be 

submitted in order to assist the 

participating jurisdiction in meeting its 

recordkeeping and reporting 

requirements. 

(ix) Enforcement of the written 

agreement. The agreement must specify 

remedies for breach of the provisions of 

the written agreement. The agreement 

must specify that, in accordance with 2 

CFR 200.339, suspension or termination 

may occur if the subrecipient materially 

fails to comply with any term of the 

agreement. The participating 

jurisdiction may permit the agreement 

to be terminated in whole or in part in 

accordance with 2 CFR 200.340. 

(x) Written agreement. Before the 

subrecipient provides HOME funds to 

any owner, community housing 

development organization, subrecipient, 

homeowner, homebuyer, tenant (or 

landlord) receiving tenant-based rental 

assistance, or contractor providing 

services to or on behalf of the 

subrecipient, the subrecipient must 

have a fully executed written agreement 

with such entity that meets the 

requirements of this section. For 

housing projects assisted with HOME 

funds, the subrecipient must provide 

HOME funds directly to the owner 

under the terms and conditions of the 

written agreement. The agreement must 

establish whether repayment of HOME 

funds must be remitted to the 

participating jurisdiction or may be 

retained by the subrecipient for 

additional eligible activities. 

(xi) Fees. The agreement must 

prohibit the subrecipient from charging 

for any of the prohibited costs listed in 

§ 92.214, including but not limited to 

servicing, origination, or other fees for 

the costs of administering the HOME 

program. 

(xii) Project requirements. The 

agreement must require enforcement of 

project requirements in subpart F of this 

part, as applicable in accordance with 

the type of project assisted. For any 

projects involving HOME rental 

housing, tenant-based rental assistance, 

or security deposit assistance, the 

agreement must require that the 

applicable HOME tenancy addendum is 

used in accordance with § 92.253 for all 

HOME-assisted units or tenants. 

(3) For-profit or nonprofit housing 

owner (other than a community housing 

development organization or single 

family owner-occupant). The 

participating jurisdiction may 

preliminarily award HOME funds for a 

proposed project, contingent on 

conditions such as obtaining other 

financing for the project. This 

preliminary award is not a commitment 

to a project. The written agreement 

committing the HOME funds to the 

project must meet the requirements of 

‘‘commit to a specific local project’’ in 

the definition of ‘‘commitment’’ in 

§ 92.2. The HOME assistance must be 

provided directly to the owner under 

the terms and conditions of a written 

agreement that complies with the 

requirements of this part and contains 

the following: 

(i) Use of the HOME funds. The 

agreement between the participating 

jurisdiction and a for-profit or nonprofit 

housing owner must include the address 

of the project or the legal description of 

the property if a street address has not 

been assigned to the property, the 

specific amount and use of the HOME 

funds and other funds for the project, 

including the tasks to be performed for 

the project, a schedule for completing 

the tasks and the project, and a 

complete budget. These items must be 

in sufficient detail to provide a sound 

basis for the participating jurisdiction to 

effectively monitor performance under 

the agreement to achieve project 

completion and compliance with the 

HOME requirements. If HOME funds are 

being used to reimburse costs incurred 

not more than 24 months before the date 

that the HOME funds are committed to 

the project, the written agreement must 

explicitly permit the use of HOME 

funds for costs described in 

§ 92.206(d)(1). The agreement must state 

that any and all repayments made by the 

owner on HOME assistance (e.g., grants 

or loans) must be remitted to the 

participating jurisdiction, unless the 

participating jurisdiction permits a 

subrecipient or State recipient to retain 

the funds. 

(ii) Affordability. The agreement must 

require housing assisted with HOME 

funds to meet the affordability 

requirements of § 92.252 or § 92.254, as 

applicable, and must require repayment 

of the funds if the housing does not 

meet the affordability requirements for 

the specified period of affordability. The 

agreement must require a means of 

enforcement of the affordability 

requirements by the participating 

jurisdiction and the intended 

beneficiaries. The means of enforcement 

may include liens on real property, deed 

or use restrictions, a recorded agreement 

restricting the use of the property, 

covenants running with the land, or 

other mechanisms approved by HUD in 

writing, under which the participating 

jurisdiction has the right to require 

specific performance. 

(A) If an owner is undertaking a rental 

project, the agreement must establish 

the initial rents, the procedures for rent 

increases pursuant to § 92.252(e)(2), the 

number of HOME units, the size of the 

HOME units, the designation of the 

HOME units as fixed or floating, and 

include the requirement that the owner 

provide the address (e.g., street address 

and apartment number) of each HOME 

unit no later than the time of initial 

occupancy. In accordance with 

§ 92.252(g), the written agreement must 

specify the option in § 92.203(b)(1) that 

the participating jurisdiction selected 

for calculating annual income. 

(B) If the owner is undertaking a 

homeownership project for sale to 

homebuyers in accordance with 

§ 92.254(a), the agreement must set forth 

the resale or recapture requirements that 

must be imposed on the housing, the 


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sales price or the basis upon which the 

sales price will be determined, and the 

disposition of the sales proceeds. 

Recaptured funds must be returned to 

the participating jurisdiction. If the 

owner is a Community Land Trust, as 

defined in § 92.2, the Community Land 

Trust may preserve affordability in 

accordance with § 92.254. 

(iii) Project requirements. As 

applicable and in accordance with the 

type of project assisted, the agreement 

must require compliance with the 

project requirements in subpart F of this 

part, including compliance with tenant 

protections in 24 CFR 92.253. The 

agreement may permit the owner to 

limit eligibility or give a preference to 

a particular segment of the population 

in accordance with § 92.253(e). 

(iv) Property standards. The 

agreement must require the housing to 

meet the property requirements as 

specified in § 92.251. The agreement 

must also require owners of rental 

housing assisted with HOME funds to 

maintain the housing in compliance 

with § 92.251 for the duration of the 

period of affordability. 

(v) Other program requirements. The 

agreement must require the owner to 

carry out each project in compliance 

with the following requirements of 

subpart H of this part: 

(A) The agreement must specify the 

owner’s affirmative marketing 

responsibilities as enumerated by the 

participating jurisdiction in accordance 

with § 92.351. 

(B) The Federal and 

nondiscrimination requirements in 

§ 92.350. 

(C) Any displacement, relocation, and 

acquisition requirements imposed by 

the participating jurisdiction consistent 

with § 92.353. 

(D) The labor requirements in 

§ 92.354. 

(E) The conflict of interest provisions 

prescribed in § 92.356(f). 

(F) If HOME funds are being provided 

to develop rental housing, the 

agreement must set forth all obligations 

the participating jurisdiction imposes 

on the owner in order to meet the 

VAWA requirements under § 92.359, 

including the owner’s notice obligations 

and owner obligations under the 

emergency transfer plan. 

(vi) Records and reports. The 

agreement must specify the particular 

records that must be maintained and the 

information or reports that must be 

submitted in order to assist the 

participating jurisdiction in meeting its 

recordkeeping and reporting 

requirements. The written agreement 

must require the owner of rental 

housing to annually provide the 

participating jurisdiction with 

information on rents (including rental 

amounts charged to the tenant), and 

occupancy of HOME-assisted units to 

demonstrate compliance with § 92.252. 

If the rental housing project has floating 

HOME units, the written agreement 

must require that the owner provide the 

participating jurisdiction with 

information regarding unit substitution 

and filling vacancies so that the project 

remains in compliance with § 92.252. 

The agreement must specify the 

reporting requirements (including 

copies of financial statements) to enable 

the participating jurisdiction to 

determine the financial condition (and 

continued financial viability) of the 

rental project. 

(vii) Enforcement of the written 

agreement. The agreement must specify 

remedies for breach of the provisions of 

the written agreement. The agreement 

must require a means of enforcement of 

the affordability requirements by the 

participating jurisdiction and the 

intended beneficiaries. The means of 

enforcement may include liens on real 

property, deed or use restrictions, a 

recorded agreement restricting the use 

of the property, covenants running with 

the land, or other mechanisms approved 

by HUD in writing, under which the 

participating jurisdiction has the right to 

require specific performance. 

(viii) Requests for disbursement of 

funds. The agreement must specify that 

the owner may not request 

disbursement of funds under the 

agreement until the funds are needed for 

payment of eligible costs. The amount of 

each request must be limited to the 

amount needed. 

(ix) Duration of the agreement. The 

agreement must specify the duration of 

the agreement. If the housing assisted 

under this agreement is rental housing, 

the agreement must be in effect through 

the period of affordability required by 

the participating jurisdiction under 

§ 92.252. If the housing assisted under 

this agreement is homeownership 

housing, the agreement must be in effect 

at least until completion of the project 

and ownership by the low-income 

family. 

(x) Fees. The agreement must state the 

fees that may be charged by the owner 

in accordance with § 92.214(b)(4) and 

prohibit owners from charging tenants 

for any of the prohibited charges listed 

in § 92.214(b), including but not limited 

to fees that are not customarily charged 

in rental housing, such as laundry room 

access fees. The agreement must also 

prohibit the owner undertaking a 

homeownership project from charging 

servicing, origination, processing, 

inspection, or other fees for the costs of 

providing homeownership assistance. 

(4) Contractor. The participating 

jurisdiction selects a contractor through 

applicable procurement procedures and 

requirements. The contractor provides 

goods or services in accordance with a 

written agreement (the contract). For 

contractors who are administering any 

of the participating jurisdiction’s HOME 

programs or specific services for one or 

more programs, the contract must 

include at a minimum the following 

provisions: 

(i) Use of the HOME funds. The 

agreement must describe the use of the 

HOME funds, including the tasks to be 

performed, a schedule for completing 

the tasks, and budget. 

(ii) Program requirements. The 

agreement must provide that the 

contractor is subject to the requirements 

in this part that are applicable to the 

participating jurisdiction, except for 

§§ 92.505 and 92.506, and the contractor 

cannot assume the participating 

jurisdiction responsibilities for 

environmental review, decision making, 

and action under § 92.352. The 

agreement must provide that the 

requirements at 2 CFR part 200 

applicable to a contractor apply. The 

agreement must list the requirements 

applicable to the activities the 

contractor is administering. If applicable 

to the work under the contract, the 

agreement must set forth all obligations 

the participating jurisdiction imposes 

on the contractor in order to meet the 

VAWA requirements under § 92.359, 

including any notice obligations and 

any obligations under the emergency 

transfer plan. 

(iii) Duration of agreement. The 

agreement must specify the duration of 

the contract. 

(5) Homebuyer, homeowner, tenant, 

or owner receiving tenant-based rental 

or security deposit assistance. When a 

participating jurisdiction provides 

assistance to a homebuyer, homeowner, 

tenant, or owner for tenant-based rental 

assistance, the written agreement may 

take many forms depending upon the 

nature of assistance. At minimum, it 

must include the following: 

(i) For homebuyers, the agreement 

must contain the requirements in 

§ 92.254(a), the value of the property, 

principal residence, lease-purchase, if 

applicable, and the resale or recapture 

provisions. 

(A) The agreement must specify the 

amount of HOME funds, the form of 

assistance, (e.g., grant, amortizing loan, 

deferred payment loan), the use of the 

funds (e.g., downpayment, closing costs, 

rehabilitation), and the time by which 

the housing must be acquired. 


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(B) For existing housing that is 

acquired for homeownership, the 

agreement must require the 

participating jurisdiction to inspect the 

housing to determine that the project 

meets the property standards in § 92.251 

and require compliance with the 

requirements in § 92.251(c)(3). 

(ii) For homeowners, the agreement 

must contain the requirements in 

§ 92.254(b) and specify the amount and 

form of HOME assistance, rehabilitation 

work to be undertaken, date for 

completion, and property standards to 

be met. 

(iii) For tenants or owners receiving 

payments under a HOME tenant-based 

rental assistance program, the rental 

assistance contract or the security 

deposit assistance contract must meet 

the requirements in § 92.209 and 

applicable requirements in § 92.253. 

(6) Community housing development 

organization. When HOME funds are 

provided to a community housing 

development organization, the 

requirements in the written agreement 

depend upon the type of HOME 

assistance. At minimum, the agreement 

must comply with the following 

requirements for the type of HOME 

assistance: 

(i) Using set-aside funds under 

§ 92.300 for affordable housing. The 

written agreement must contain the 

requirements described in paragraph 

(c)(3) of this section and the following 

additional requirements: 

(A) Role of community housing 

development organization. The 

agreement must state whether the 

community housing development 

organization will own, develop, or 

sponsor rental housing, as described in 

§ 92.300(a)(2) through (5), and require 

the community housing development 

organization to comply with the 

applicable requirements in § 92.300(a), 

based on its role. 

(B) Developer of homeownership 

housing—(1) Retaining proceeds and 

recaptured funds. If the community 

development organization is a 

‘‘developer’’ of homeownership 

housing, as defined in § 92.300(a)(6), the 

agreement must specify whether the 

organization may retain proceeds from 

the sale of the housing and whether the 

proceeds are to be used for HOMEeligible or other housing activities to 

benefit low-income families. A 

participating jurisdiction may permit a 

community housing development 

organization to retain recaptured funds 

for additional HOME projects pursuant 

to the written agreement required under 

this paragraph. 

(2) Providing homeownership 

assistance. If a community housing 

development organization is providing 

homeownership assistance, then the 

agreement between the participating 

jurisdiction and the community housing 

development organization must describe 

the amount and use of the HOME funds 

for homeownership assistance, the 

number of homebuyers to receive 

homeownership assistance, any 

requirement for matching contributions, 

and the period of the agreement. The 

HOME funds for homeownership 

assistance shall not be greater than 10 

percent of the amount of HOME funds 

for development of the housing. The 

community housing development 

organization must enter into agreements 

with homebuyers that meet the 

requirements in paragraph (c)(5)(i) of 

this section. 

(C) Sharing of developer 

responsibilities. If the community 

housing development organization will 

share developer responsibilities with 

another entity pursuant to § 92.300(a)(3) 

or (6), the participating jurisdiction 

must enter into a written agreement 

only with the community housing 

development organization. The written 

agreement must require the community 

housing development organization to 

enter into a separate agreement with the 

co-developer. At minimum, the 

agreement between the community 

housing development organization and 

its co-developer must contain the 

following: 

(1) The responsibilities of the 

community housing development 

organization and co-developer with 

descriptions of the responsibilities in 

sufficient detail to demonstrate 

compliance with § 92.300(a)(3) or (a)(6), 

as applicable; 

(2) A description of the amount of 

developer fee and other compensation, 

if any, to be paid to the co-developer; 

(3) A description of any ownership 

interest in the community housing 

development organization and, if 

applicable, any membership or 

partnership interest in the owner held 

by the co-developer; and 

(4) A provision that the agreement’s 

terms and conditions are subject to 

review by the participating jurisdiction 

and if such terms and conditions affect 

a project’s compliance with HOME 

requirements, the terms and conditions 

are subject to approval by the 

participating jurisdiction. 

(ii) Receiving assistance for operating 

expenses. The agreement must describe 

the use of HOME funds for operating 

expenses (e.g., salaries, wages, and other 

employee compensation and benefits); 

employee education, training, and 

travel; rent; utilities; communication 

costs; taxes; insurance; equipment; and 

materials and supplies. If the 

community housing development 

organization is not also receiving funds 

for a housing project to be developed, 

sponsored, or owned by the community 

housing development organization, the 

agreement must provide that the 

community housing development 

organization is expected to receive 

funds for a project within 24 months of 

the date of receiving the funds for 

operating expenses, and must specify 

the terms and conditions upon which 

this expectation is based and the 

consequences of failure to receive 

funding for a project. If the community 

housing development organization is 

also receiving funds for a project, there 

must be a separate written agreement 

that complies with this section for the 

use of HOME funds for the project and 

the agreement must contain the 

applicable requirements in paragraph 

(c)(6)(i) of this section. 

(iii) Receiving assistance for projectspecific technical assistance and site 

control loans or project-specific seed 

money loans. The agreement must 

identify the specific site or sites and 

describe the amount and use of the 

HOME funds (in accordance with 

§ 92.301), including a budget for work, 

a period of performance, and a schedule 

for completion. The agreement must 

also set forth the basis upon which the 

participating jurisdiction may waive 

repayment of the loans, consistent with 

§ 92.301, if applicable. 

(7) Technical assistance provider to 

develop the capacity of community 

housing development organizations in 

the jurisdiction. The agreement must 

identify the specific nonprofit 

organization(s) to receive capacity 

building assistance. The agreement must 

describe the amount and use (scope of 

work) of the HOME funds, including a 

budget, a period of performance, and a 

schedule for completion. 

■ 43. Amend § 92.505 by revising the 

first sentence to read as follows: 

§ 92.505 Applicability of uniform 

administrative requirements. 

The requirements of 2 CFR part 200 

apply to participating jurisdictions, 

State recipients, and subrecipients 

receiving HOME funds, except for the 

following provisions: §§ 200.306, 

200.307, 200.308 (not applicable to 

participating jurisdictions), 200.311 

(except as provided in § 92.257), 

200.312, 200.328, 200.330, 200.334, 

200.335, and 200.344 (except as 

provided in § 92.507). * * * 

■ 44. Revise § 92.507 to read as follows: 


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§ 92.507 Closeout. 

This section specifies the procedure 

and actions that must be completed by 

a participating jurisdiction and HUD to 

closeout a grant. The requirements of 2 

CFR 200.344 apply to closeouts, except 

to the extent that such requirements 

conflict with the following: 

(a) Closeout process. (1) HUD will 

close out a grant after the period of 

performance has ended. A participating 

jurisdiction must complete all required 

activities and closeout actions for the 

grant, as required by HUD. If the 

participating jurisdiction fails to 

complete the requirements in 

accordance with this section, HUD may 

close out the Federal award with the 

information available. HUD may close 

out individual grants or multiple grants 

simultaneously. 

(2) To prepare for closeout, before the 

end of the budget period of the grant, 

the participating jurisdiction shall. 

review all eligible activities under the 

grant and reconcile its accounts as 

follows: 

(i) For any eligible costs incurred 

under the grant and not yet drawn down 

from the U.S. Treasury account, the 

grantee must draw down those funds in 

a timely manner. 

(ii) The participating jurisdiction 

must promptly refund to the proper 

accounts any previously disbursed 

balances of unobligated cash paid in 

advance. All such refunds must be 

completed prior to submission of the 

information and reports required in 

paragraph (b) of this section. 

(3) At the end of the grant budget 

period, no additional eligible activities 

may be undertaken by the participating 

jurisdiction using the grant funds and 

no additional eligible costs incurred 

after the budget period may be 

submitted by the participating 

jurisdiction. Unused funds remaining 

on the grant will be returned to the U.S. 

Treasury by HUD. The participating 

jurisdiction must promptly refund any 

unused grant funds not authorized to be 

retained, consistent with HUD’s 

instructions. 

(4) HUD will initiate closeout actions 

in the computerized disbursement and 

information system when the 

participating jurisdiction has met the 

requirements established in paragraph 

(b) of this section. 

(i) If the participating jurisdiction 

does not submit and enter all required 

data, information, and reports or 

complete the actions described in 

paragraph (b) of this section, HUD will 

proceed to close out the grant with the 

information available within one year of 

the period of performance end date. 

(ii) HUD may report the participating 

jurisdiction’s material failure to comply 

with the terms and conditions of the 

award or requirements or the 

requirements of this section in SAM.gov. 

HUD may also pursue other 

enforcement actions in 2 CFR 200.339. 

(5) A participating jurisdiction may 

request, and HUD may provide an 

extension of the period of performance 

or closeout deadlines provided good 

cause is demonstrated. 

(b) Actions required for closeout. A 

participating jurisdiction must complete 

the following actions for closeout of the 

grant: 

(1) Submit a complete and final 

Federal Financial Report for the grant to 

HUD within 120 days of the end date of 

the period of performance, as indicated 

in the grant agreement; 

(2) Demonstrate that it has fulfilled all 

programmatic and administrative 

requirements for the project (i.e., 

property inspections, obtaining 

certificates of occupancy, etc.) within 

the period of performance in accordance 

with 2 CFR 200.344(a); 

(3) Enter all data for activities in the 

computerized disbursement and 

information system established by HUD, 

within one year from the end of the 

period of performance, as required by 

the grant agreement; 

(4) Demonstrate that all HOMEassisted units are occupied by eligible 

occupants by entering accurate 

beneficiary data in the computerized 

disbursement and information system 

established by HUD, within one year 

from the end of the period of 

performance, as required by the grant 

agreement; 

(5) Comply with the requirements in 

2 CFR 200.313(e) for the disposition of 

any equipment acquired under one or 

more HOME grants, that is no longer 

needed for the HOME program, or for 

other activities previously supported by 

a Federal agency; 

(6) Resolve and close all HOME 

monitoring findings for the grant (if 

applicable); 

(7) Resolve and close all OIG audit 

findings for the grant (if applicable); 

(8) Resolve and close all Single Audit 

findings for the grant (if applicable); 

(9) Carry out all other responsibilities 

under the grant agreement and 

applicable laws and regulations 

satisfactorily; and 

(10) Complete a closeout certification 

prepared by HUD. The certification 

shall identify the grant being closed out 

and include provisions with respect to 

the following: 

(i) Identification of any unused grant 

funds that were returned to the U.S. 

Treasury by HUD; 

(ii) Compliance with the 

recordkeeping requirements in § 92.508, 

including maintaining program, project, 

financial, program administration, 

community housing development 

organization records, records 

concerning other Federal requirements, 

and such other records as necessary to 

carry out responsibilities for the grant 

by the participating jurisdiction, its 

State recipients, and subrecipients; 

(iii) Monitoring and enforcement of 

the requirements for all HOME-assisted 

units set forth in this part for the period 

specified in the HOME written 

agreement with the property owner; 

(iv) Compliance with use of program 

income, recaptured funds, and 

repayments in accordance with 

§ 92.503. If the jurisdiction is not a 

participating jurisdiction (as a State, 

metropolitan city, urban county, 

consortium, or consortium member) 

when it receives funds, the funds are 

not subject to the requirements of this 

part; 

(v) All actions required in 2 CFR 

200.344 applicable to the grant have 

been taken by the participating 

jurisdiction; 

(vi) All actions required in 2 CFR 

200.344 applicable to the participating 

jurisdiction’s subrecipients have been 

taken; 

(vii) Other provisions appropriate to 

any special circumstances of the grant 

closeout, in modification of or in 

addition to the obligations in paragraphs 

(c)(1) and (2) of this section; 

(viii) Acknowledge future monitoring 

by HUD, including that findings of 

noncompliance may be taken into 

account by HUD as unsatisfactory 

performance of the participating 

jurisdiction and in any risk-based 

assessment of a future grant award 

under this part; and 

(ix) Unless otherwise provided in a 

closeout certification, the Consolidated 

Plan will remain in effect after closeout 

until the expiration of the program year 

covered by the most recent Consolidated 

Plan. 

(c) Post closeout adjustments and 

continuing responsibilities. The closeout 

of a grant does not affect any of the 

obligations required under this part and 

under 2 CFR 200.345, including: 

(1) The right of HUD to disallow costs 

and recover funds on the basis of a later 

audit or other review. HUD must make 

any cost disallowance determination 

and notify the participating jurisdiction 

within the record retention period; 

(2) Compliance with the requirements 

in § 92.508; 

(3) Compliance with the requirements 

in § 92.509; 


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(4) Records retention as required in 2 

CFR 200.345, as applicable; 

(5) Monitoring and enforcement of the 

requirements for all HOME-assisted 

units set forth in this part for the period 

of affordability specified in the HOME 

written agreement with the property 

owner; 

(6) Compliance with use of program 

income, recaptured funds, and 

repayments in accordance with 

§ 92.503. If the jurisdiction is not a 

participating jurisdiction (as a 

metropolitan city, urban county, State, 

consortium, or consortium member) 

when it receives funds, the funds are 

not subject to the requirements of this 

part; 

(7) Compliance with the requirement 

in 2 CFR 200.345(a)(2) that the 

participating jurisdiction return any 

funds due as a result of a later refund, 

corrections, or other transactions 

including final indirect cost rate 

adjustments; and 

(8) Compliance with the audit 

requirements at 2 CFR part 200, subpart 

F). 

■ 45. Amend § 92.508 by: 

■ a. Adding a sentence to the end of 

paragraph (a)(2)(ix); 

■ b. Revising paragraph (a)(3)(iii); 

■ c. Removing the citation ‘‘§ 92.504(d)’’ 

and adding in its place the citation 

‘‘§ 92.251(f)’’ in paragraph (a)(3)(iv); 

■ d. Revising paragraph (a)(3)(vi); 

■ e. Revising the first sentence of 

paragraph (a)(3)(vii); 

■ f. Revising paragraph (a)(3)(ix); 

■ g. Removing the citation to ‘‘2 CFR 

200.302’’ and adding in its place a 

citation to ‘‘2 CFR 200.302 and 200.303’’ 

in paragraph (a)(5)(iv); and 

■ h. Removing the words ‘‘affordability 

period’’ and adding in their place the 

words ‘‘period of affordability’’ in 

paragraphs (c)(1) and (2). 

The revisions and additions read as 

follows: 

§ 92.508 Recordkeeping. 

(a) * * * 

(2) * * * 

(ix) * * * If the participating 

jurisdiction will apply excess matching 

contribution to a future fiscal year’s 

liability, records demonstrating 

compliance with the matching 

requirements of §§ 92.218 through 

92.221 for the excess amount applied, as 

described in § 92.221(b)(1), must be 

provided at the time of application and 

maintained for five years from the date 

of application. 

* * * * * 

(3) * * * 

(iii) Records demonstrating that each 

rental housing or homeownership 

project meets the minimum per-unit 

subsidy amount of § 92.205(c), the 

maximum per-unit subsidy amount in 

accordance with the requirement in 

§ 92.250(a), the subsidy layering and 

underwriting evaluation adopted in 

accordance with § 92.250(b), and, if 

applicable, compliance with a green 

building standard established by HUD 

in accordance with the requirements in 

§ 92.250(c). 

* * * * * 

(vi) Records demonstrating that each 

tenant-based rental assistance project 

meets the written tenant selection 

policies and criteria of § 92.209(c), 

including any targeting requirements, 

the rent reasonableness requirements of 

§ 92.209(f), the maximum subsidy 

provisions of § 92.209(h), housing 

standards of § 92.209(i) (including 

property inspection reports), security 

deposit requirements of § 92.209(j), and 

calculation of the HOME subsidy. 

(vii) Records demonstrating that each 

rental housing project met the 

affordability and income targeting 

requirements of § 92.252 for the 

required period or met the requirements 

in § 92.255 for conversion to 

homeownership for in-place tenants. 

* * * 

* * * * * 

(ix) Records demonstrating that each 

lease for a tenant receiving tenant-based 

rental assistance, security deposit 

assistance, and for an assisted rental 

housing unit complies with the 

applicable tenant and participant 

protections of § 92.253. Records must be 

kept for each family. 

* * * * * 

■ 46. Amend § 92.551 by adding 

paragraph (c)(3) to read as follows: 

§ 92.551 Corrective and remedial actions. 

* * * * * 

(c) * * * 

(3) A participating jurisdiction may 

request HUD reduce grant payments by 

an amount equal to the amount of 

expenditures that did not comply with 

the requirements of this part. The 

amount of a reduction may be for the 

entire grant amount. 

■ 47. Amend § 92.552 by removing the 

period at the end of paragraph (a)(2)(iv) 

and adding in its place a semicolon and 

adding paragraphs (a)(2)(v) through (vii) 

to read as follows: 

§ 92.552 Notice and opportunity for 

hearing; sanctions. 

(a) * * * 

(2) * * * 

(v) Reduce grant amounts paid to the 

participating jurisdiction by an amount 

equal to the amount of any expenditures 

that did not comply with the 

requirements of this part. The amount of 

a reduction may be for the entire grant 

amount; 

(vi) Revoke a jurisdiction’s 

designation as a participating 

jurisdiction; and 

(vii) Terminate the assistance in 

whole or in part in accordance with 2 

CFR 200.340. 

* * * * * 

Subpart M [Removed] 

■ 48. Remove subpart M, consisting of 

§§ 92.600 through 92.618. 

PART 570—COMMUNITY 

DEVELOPMENT BLOCK GRANTS 

■ 49. The authority citation for part 570 

continues to read as follows: 

Authority: 12 U.S.C. 1701x, 1701 x–1; 42 

U.S.C. 3535(d) and 5301–5320. 

■ 50. Amend § 570.200 by adding 

paragraph (h)(3) to read as follows: 

§ 570.200 General policies. 

* * * * * 

(h) * * * 

(3) In a Federal fiscal year when an 

annual appropriation is signed into law 

less than 90 days before a grant 

recipient’s program year start date, the 

effective date of the grant agreement 

will be the earlier of the recipient’s 

program year start date or the date that 

the Consolidated Plan incorporating the 

recipient’s allocation amount for the 

Federal fiscal year is received by HUD. 

* * * * * 

PART 982—SECTION 8 TENANT– 

BASED ASSISTANCE: HOUSING 

CHOICE VOUCHER PROGRAM 

■ 51. The authority citation for part 982 

continues to read as follows: 

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

■ 52. Amend § 982.507 by revising 

paragraphs (c)(2) and (3) to read as 

follows: 

§ 982.507 Rent to owner: Reasonable rent. 

* * * * * 

(c) * * * 

(2) LIHTC. If the rent requested by the 

owner exceeds the LIHTC rents for nonvoucher families, the PHA must 

determine the rent to owner is a 

reasonable rent in accordance with 

paragraph (b) of this section and the rent 

shall not exceed the lesser of the: 

(i) Reasonable rent; and 

(ii) The payment standard established 

by the PHA for the unit size involved. 


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(3) HOME program. If the rent 

requested by the owner exceeds the 

HOME rents for non-voucher families, 

the PHA must determine the rent to 

owner is a reasonable rent in accordance 

with paragraph (b) of this section and 

the rent shall not exceed the lesser of 

the: 

(i) Reasonable rent; and 

(ii) The payment standard established 

by the PHA for the unit size involved. 

* * * * * 

Adrianne R. Todman, 

Deputy Secretary Performing the Duties of 

the Secretary of HUD. 

[FR Doc. 2024–29824 Filed 1–3–25; 8:45 am] 

BILLING CODE 4210–67–P 


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