[Federal Register Volume 66, Number 114 (Wednesday, June 13, 2001)]
[Proposed Rules]
[Pages 32198-32202]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-14882]



[[Page 32197]]

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Part VIII





Department of Housing and Urban Development





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24 CFR Part 982



Section 8 Homeownership Program; Downpayment Assistance Grants and 
Streamlining Amendments; Proposed Rule

Federal Register / Vol. 66, No. 114 / Wednesday, June 13, 2001 / 
Proposed Rules

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 982

[Docket No. FR-4670-P-01]
RIN 2577-AC28


Section 8 Homeownership Program; Downpayment Assistance Grants 
and Streamlining Amendments

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would implement section 301 of the American 
Homeownership and Economic Opportunity Act of 2000. Section 301 amends 
the statute authorizing the ``homeownership option'' under the Housing 
Choice Voucher Program. Under section 301, a Public Housing Agency 
(PHA) may, in lieu of paying a monthly homeownership assistance payment 
on behalf of a family, provide homeownership assistance for the family 
in the form of a single grant to be used toward the downpayment 
required in connection with the purchase of the home. Implementation of 
these downpayment assistance grants is anticipated for Federal Fiscal 
Year 2002. In addition to implementation of section 301, this proposed 
rule also would clarify and streamline several regulatory requirements 
applicable to both downpayment grants and monthly homeownership 
assistance payments provided under the homeownership option.

DATES: Comments Due Date: August 13, 2001.

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

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

SUPPLEMENTARY INFORMATION:   

I. Background

    On September 12, 2000 (65 FR 55134), HUD published its final rule 
implementing the ``homeownership option'' under section 8(y) of the 
United States Housing Act of 1937 (42 U.S.C. 1437 et seq.), as amended 
by section 555 of the Quality Housing and Work Responsibility Act of 
1998 (title V of the Fiscal Year 1999 HUD Appropriations Act; Public 
Law 105-276, 112 Stat. 2461, 2518, approved October 21, 1998). Under 
the section 8(y) homeownership option, a public housing agency (PHA) 
may choose to provide monthly tenant-based assistance to an eligible 
family that purchases a dwelling unit that will be occupied by the 
family. The September 12, 2000 final rule implemented the section 8(y) 
homeownership option by adding a new ``special housing type'' under 
subpart M of HUD's regulations for the Housing Choice Voucher Program 
at 24 CFR part 982. Subpart M describes program requirements for 
alternatives to the basic Housing Choice Voucher program. The 
regulations for the homeownership option are located in Secs. 982.625-
982.641 of subpart M.
    Section 301 of the American Homeownership and Economic Assistance 
Act of 2000 (Public Law 106-569, 114 Stat. 2944, 2952, approved 
December 27, 2000) amends section 8(y) to authorize an alternative form 
of assistance under the homeownership option--assistance in the form of 
a single downpayment assistance grant. Under section 301, a PHA may, in 
lieu of paying a monthly homeownership assistance payment on behalf of 
a family, provide homeownership assistance for the family in the form 
of a single grant to be used toward the downpayment required in 
connection with the purchase of the home.
    Implementation of these downpayment assistance grants is 
anticipated for Federal Fiscal Year 2002.
    This proposed rule would amend HUD's regulations for the 
homeownership option to implement the downpayment assistance authority 
provided by section 301. In addition to the implementation of section 
301, HUD proposes, through this proposed rule, to clarify and 
streamline several regulatory requirements applicable to both 
downpayment grants and monthly homeownership assistance payments 
provided under the homeownership option.

II. Implementation of Downpayment Assistance Grants

A. General

    This proposed rule would implement section 301 by establishing a 
new Sec. 982.643, which describes the requirements applicable to 
downpayment assistance grants. Conforming changes would also be made to 
Sec. 982.4 (which establishes the definitions applicable to the Housing 
Choice Voucher Program) and Sec. 982.625 (which contains general 
requirements applicable to the homeownership option).

B. Two Types of Homeownership Assistance

    The proposed rule provides that a PHA may provide one of two types 
of homeownership assistance for a family:
    1. Monthly homeownership assistance payments; or
    2. A single downpayment assistance grant.
    If a family receives a downpayment assistance grant, a PHA may not 
make monthly homeownership assistance payments for the family. The PHA 
may choose to offer either or both forms of homeownership assistance 
under its program, or choose not to offer either form of assistance. 
However, the PHA must offer either form of homeownership assistance if 
necessary as a reasonable accommodation for a person with disabilities 
in accordance with Sec. 982.601(b)(3). Either form of homeownership 
assistance may be paid either to a family, or to a mortgage lender on 
behalf of the family.

C. Eligibility for Downpayment Assistance

    To receive a downpayment assistance grant, the proposed rule 
provides that a family must meet all of the eligibility requirements 
for participation in the homeownership option. In addition, the 
proposed rule provides that a family must already have been receiving 
tenant-based voucher rental assistance for a period of at least one-
year to receive a downpayment grant. The House Committee Report on the 
American Homeownership and Economic Opportunity Act provides that the 
homeownership-related amendments to the Housing Choice Voucher Program 
are intended ``to assist those currently receiving rental assistance to 
move toward homeownership'' (see H.R. Rep. No. 553, 106th Cong., 2d. 
Sess. pt. 1, at 60 (2000)) (emphasis added). Restricting eligibility to 
families already receiving voucher assistance will help to ensure that 
downpayment grants are used to

[[Page 32199]]

further the Conferees' objective of helping relatively higher income 
families with vouchers move ``up and out'' and become homeowners, 
freeing up vouchers for other needy renter families. Restricting 
eligibility to current program participants will also help to minimize 
duplication with other downpayment programs that are designed to help 
``new'' families not currently receiving rental assistance and help to 
ensure that the program does not unduly reduce the availability of 
rental assistance.
    HUD specifically invites public comment on whether eligibility for 
downpayment assistance grants should be limited in another way or 
expanded and, if so, how. All public comments will be considered in the 
development of the final rule.

D. Applicability of Other Homeownership Option Requirements

    Proposed Sec. 982.625(e)(4) and (e)(6) would specify those 
regulatory requirements applicable to the basic homeownership option 
that would apply to downpayment assistance grants. A downpayment grant 
is a one-time assistance payment. Accordingly, those regulatory 
provisions that establish ongoing homeownership assistance requirements 
or procedures would not apply to downpayment assistance grants (in 
general, Secs. 982.633 through 982.641). With the exception of those 
requirements specifically noted in proposed Sec. 982.625(e)(4) and 
(e)(6), all requirements applicable to the Housing Choice Voucher 
program apply to downpayment assistance grants.

E. Maximum Downpayment Grant

    Section 301 provides that the maximum downpayment grant ``may not 
exceed the amount that is equal to the sum of the assistance payments 
that would be made during the first year of assistance on behalf of the 
family, based on the income of the family at the time the grant is to 
be made.'' Under Sec. 982.635(a), the monthly homeownership assistance 
payment paid by the PHA on behalf of the family is equal to the lower 
of (1) the payment standard minus the total tenant payment, or (2) the 
family's monthly homeownership expenses minus the total tenant payment. 
The proposed rule provides that the maximum amount of the downpayment 
grant will be calculated using only the first prong of the test 
described in Sec. 982.635(a). Specifically, proposed Sec. 982.643(b) 
provides that a downpayment assistance grant may not exceed twelve 
times the payment standard minus the total tenant payment (as 
calculated in accordance with Sec. 5.628). Homeownership expenses will 
not be considered in making this determination.
    The statutory language of section 301 does not require that 
homeownership expenses be considered in determining the maximum grant 
amount. As noted earlier in this preamble, section 301 provides that 
the maximum downpayment grant must be calculated based on the family's 
income ``at the time the grant is to be made.'' However, many 
homeownership expenses (such as principal and interest on initial 
mortgage debt, the amount of real estate taxes, and the costs of major 
repairs and replacements) cannot be estimated until after the family 
has contracted to purchase the home. Since the family is approved for 
downpayment assistance before it enters into the contract of sale, 
actual homeownership expenses is unknown and, therefore, cannot be 
calculated ``at the time the grant is to be made.''
    Requiring the inclusion of homeownership expenses in the 
calculation of the maximum grant amount might also adversely affect the 
family's ability to obtain suitable financing, and unduly complicate 
program administration. The actual amount of homeownership expenses is 
not known at the time the family applies for financing. Lenders will be 
reluctant to provide a mortgage loan without knowing the actual amount 
that the family will have available for the downpayment. Further, HUD 
expects that, in the majority of cases, homeownership expenses will 
exceed the payment standard. Accordingly, it is likely that the maximum 
grant amount for a family will ultimately be based on the payment 
standard, regardless of whether homeownership expenses are also 
factored into the calculation.
    In the case of a family that purchases a home outside of the 
initial PHA's jurisdiction, the maximum downpayment grant shall be 
calculated using the receiving PHA payment standard and policies.

F. Payment and Use of Downpayment Grant

    The proposed rule provides that the downpayment assistance grant 
must be paid at the closing of the family's purchase of the home. The 
downpayment assistance grant must be applied toward the purchase price 
of the home. No amount of the downpayment grant may be used for payment 
of other fees and charges related to the acquisition of the home (such 
as closing costs).

G. Administrative Fee

    For each downpayment assistance grant made by the PHA, HUD would 
pay the PHA a one-time administrative fee in accordance with 
Sec. 982.152. Specifically, the administrative fee for downpayment 
assistance would be treated as an ``extraordinary cost'' under 
Sec. 982.152(a)(1)(iii)(C). The administrative fee would be established 
through HUD field notice, in accordance with the existing procedures 
for the establishment of such fees. HUD proposes that the 
administrative fee for downpayment assistance initially be set at $250.

H. Renewal of Vouchers

    When issuing a voucher used for a downpayment assistance grant to a 
family, the PHA should consider the amount of available reserves. In 
calculating the per-unit costs for purposes of voucher renewal funding, 
downpayment assistance shall not be counted.

III. Streamlining and Clarifying Amendments to Homeownership Option

A. Minimum Income Requirement

    Section 8(y) of the United States Housing Act of 1937, provides 
that a family may not receive homeownership assistance unless the 
family demonstrates that gross monthly income is at least two times the 
voucher ``payment standard'' or an ``other amount'' established by the 
Secretary (section 8(y)(1)(B), 42 U.S.C. 1437(y)(1)(B)). HUD has 
implemented the statutory minimum income requirements at 
Sec. 982.627(c)(1). Specifically, the regulation currently provides for 
a uniform national minimum income requirement that is equal to 2,000 
hours of annual full-time work at the Federal minimum wage.
    Some PHAs have expressed a concern that the current minimum income 
is too low for their area and that few, if any, families with incomes 
that low would qualify for a mortgage. These PHAs argue that this 
unrealistically raises the expectations of many families and results in 
an unnecessary administrative burden for PHAs who must process a large 
number of applications that have no realistic chance of leading to 
homeownership. On the other hand, HUD wants to make sure that PHA-
specific income limits do not prevent use of the homeownership option 
by families who can qualify for a mortgage from a reputable lending 
institution.
    To balance these respective concerns, this proposed rule would 
provide PHAs with the flexibility to establish a

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minimum income requirement that is higher than the standard described 
in Sec. 982.627(c)(1), based on factors such as housing costs and the 
practices of participating lenders. However, a family that does not 
meet the higher standard established by the PHA shall be considered to 
satisfy the minimum income requirement if the family: (1) Meets the 
HUD-established standard; and (2) has been pre-qualified or pre-
approved for financing. The pre-qualified or pre-approved financing 
must meet any PHA established requirements for financing the purchase 
of the home (including qualifications of lenders and terms of 
financing). Further, the pre-qualified or pre-approved financing amount 
must be sufficient to purchase decent, safe, and sanitary housing of a 
modest nature in the PHA's jurisdiction.

B. Eligibility of Units Not Yet Under Construction

    The homeownership option regulations at Sec. 982.628(a)(2) provide 
that a home is eligible for purchase under the homeownership option if, 
at the time the PHA determines that the family is eligible to purchase 
the home with homeownership assistance, the home is either existing or 
under construction. Under the existing regulations, homeownership 
assistance may not be provided for the purchase of a unit that is not 
yet under construction. However, HUD has become aware of concerns that 
this restriction may limit the participation in the homeownership 
option of families that also participate in certain other Federal 
homeownership programs. (For instance, the Rural Housing Service Mutual 
Self-Help Housing Loan program requires the family to assist in the 
construction of the unit. Typically, under these ``sweat equity'' 
homeownership programs, the family must commit to purchase the unit 
before construction of the home begins.) To address these concerns, and 
increase participation in the homeownership option, HUD is considering 
the feasibility of expanding the list of eligible units at the final 
rule stage to include certain new homes not yet under construction. 
However, there are several issues that will need to be considered 
before implementation of such a change--including whether HUD may 
provide homeownership assistance for the purchase of these units in a 
manner that is consistent with the statutory environmental review 
requirements of the National Environmental Policy Act (42 U.S.C. 4321) 
and related Federal authorities, and does not impose an undue 
administrative burden. HUD anticipates that these issues will be 
resolved by the final rule stage and that the final rule will reflect 
whether expansion of eligibility is feasible or not.

C. Eligibility of Manufactured Homes

    As noted, Sec. 982.628 describes the units eligible for purchase 
under the homeownership option. Although manufactured housing is not 
specifically mentioned in Sec. 982.628, the preamble to HUD's September 
12, 2000 final rule made clear that a manufactured home and the real 
property upon which the manufactured home sits are eligible for 
purchase under the homeownership option (see 65 FR 55134 at 55147, 
first column). For purposes of clarity, this proposed rule would amend 
Sec. 982.628 to explicitly reference the eligibility of manufactured 
homes. The proposed rule would also authorize the provision of 
homeownership assistance for the purchase of a manufactured home where 
the family will not own fee title to the real property on which the 
home is located in certain circumstances. However, the manufactured 
home must have a permanent foundation. Further, the family must have 
the right to occupy the manufactured home site for a period of at least 
thirty years.

D. Removal of Recapture Provisions

    The homeownership option regulations at Sec. 982.640 provide for 
the recapture of a percentage of the homeownership assistance provided 
to the family upon the sale of refinancing of the home. The recapture 
provisions were included in the regulation to protect program integrity 
by preventing windfalls to individual families and program abuses. 
PHAs, lenders, and other potential program participants, however, have 
expressed concerns that the recapture provisions are not an important 
safeguard given the structure and likely use of this subsidy program, 
will unduly complicate administration of the homeownership option, and 
will discourage participation in the homeownership option by PHAs, 
lenders and families. Accordingly, HUD has determined that removal of 
the recapture provisions is appropriate.

IV. Findings and Certifications

Regulatory Planning and Review

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

Unfunded Mandates Reform Act

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

Environmental Impact

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

Impact on Small Entities

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)) (the RFA), has reviewed and approved this proposed rule 
and in so doing certifies that this rule will not have a significant 
economic impact on a substantial number of small entities. The reasons 
for HUD's determination are as follows:
    (1) A Substantial Number of Small Entities Will Not be Affected. 
The proposed rule is exclusively concerned with public housing agencies 
that administer tenant-based housing assistance under section 8 of the 
United States Housing Act of 1937. Specifically, the proposed rule 
would implement an alternative to the basic homeownership option under 
which a PHA may elect to provide a one-time downpayment assistance 
grant to eligible families. The proposed rule would also make several 
clarifying and streamlining amendments to the regulations governing 
basic homeownership voucher assistance, which is also administered by 
PHAs. Under the definition of ``small governmental jurisdiction'' in 
section 601(5) of the RFA, the provisions of the

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RFA are applicable only to those few PHAs that are part of a political 
jurisdiction with a population of under 50,000 persons. The number of 
entities potentially affected by this rule is therefore not 
substantial.
    (2) No Significant Economic Impact. The proposed rule would not 
change the amount of funding available under the Housing Choice Voucher 
Program. Accordingly, the economic impact of this rule will not be 
significant, and it will not affect a substantial number of small 
entities.
    Notwithstanding HUD's determination that this rule will not have a 
significant economic effect on a substantial number of small entities, 
HUD specifically invites comments regarding any less burdensome 
alternatives to this rule that will meet HUD's objectives as described 
in this preamble.

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either imposes substantial direct compliance costs on State and local 
governments and is not required by statute, or the rule preempts State 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive Order. This proposed rule is exclusively 
concerned with homeownership voucher assistance. This proposed rule 
does not have federalism implications and does not impose substantial 
direct compliance costs on State and local governments or preempt State 
law within the meaning of the Executive Order.

Catalog of Domestic Assistance Number

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

List of Subjects in 24 CFR Part 982

    Grant programs--housing and community development, Housing, Rent 
subsidies, Reporting and recordkeeping requirements.
    Accordingly, for the reasons described in the preamble, HUD 
proposes to amend 24 CFR part 982 as follows:

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

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

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

    2. In Sec. 982.4(b), add the definition of ``Downpayment assistance 
grant'' in alphabetical order, and revise the definition of 
``Homeownership assistance'' to read as follows:


Sec. 982.4  Definitions.

* * * * *
    (b) * * *
    Downpayment assistance grant. A form of homeownership assistance in 
the homeownership option: A single downpayment assistance grant for the 
family. If a family receives a downpayment assistance grant, a PHA may 
not make homeownership assistance payments for the family. A 
downpayment assistance grant is applied to the downpayment for purchase 
of the home.
* * * * *
    Homeownership assistance. Assistance for a family under the 
homeownership option. There are two alternative and mutually exclusive 
forms of homeownership assistance by a PHA for a family: monthly 
homeownership assistance payments, or a single downpayment assistance 
grant. Either form of homeownership assistance may be paid to the 
family, or to a mortgage lender on behalf of the family.
* * * * *
    3. Add Sec. 982.625(e) to read as follows:


Sec. 982.625  Homeownership option: General.

* * * * *
    (e) Two types of homeownership assistance. (1) A PHA may provide 
one of two types of homeownership assistance for a family:
    (i) Monthly homeownership assistance payments; or
    (ii) A single downpayment assistance grant.
    (2) The PHA may choose to offer either or both forms of 
homeownership assistance under its program, or choose not to offer 
either form of assistance. However, the PHA must offer either form of 
homeownership assistance if necessary as a reasonable accommodation for 
a person with disabilities in accordance with Sec. 982.601(b)(3)).
    (3) Paragraphs (e)(4), (e)(5), and (e)(6) of this section specify 
what regulatory provisions (under the heading ``homeownership option'') 
are applicable to either or both forms of homeownership assistance 
(except as otherwise specifically provided):
    (4) Common provisions that apply to both forms of homeownership 
assistance:
    (i) Section 982.625 (General);
    (ii) Section 982.626 (Initial requirements);
    (iii) Section 982.627 (Eligibility requirements for families);
    (iv) Section 982.628 (Eligible units);
    (v) Section 982.629 (Additional PHA requirements for family search 
and purchase);
    (vi) Section 982.630 (Homeownership counseling);
    (vii) Section 982.631 (Home inspections and contract of sale);
    (viii) Section 982.632 (Financing purchase of home; affordability 
of purchase);
    (ix) Section 982.636 (Portability) (However, paragraphs (a) and (e) 
of Sec. 982.636 do not apply to downpayment assistance grants); and
    (x) Section 982.641 (Applicability of other requirements).
    (5) Provisions that apply to homeownership assistance in the form 
of monthly housing assistance payments:
    (i) Section 982.633 (Continued assistance requirements; family 
obligations);
    (ii) Section 982.634 (Maximum term of homeownership assistance);
    (iii) Section 982.635 (Amount and distribution of monthly 
homeownership assistance payment);
    (iv) Section 982.637 (Move with continued tenant-based assistance);
    (v) Section 982.638 (Denial or termination of assistance for 
family); and
    (vi) Section 982.639 (Administrative fees).
    (6) Provision that applies to homeownership assistance in the form 
of a downpayment assistance grant: Section 982.643 (Downpayment 
assistance grants).
    4. Revise Sec. 982.627(c)(3) to read as follows:


Sec. 982.627  Homeownership option: Eligibility requirements for 
families.

* * * * *
    (c) * * *
    (3) A PHA may establish a minimum income requirement that is higher 
than the Federal minimum wage multiplied by 2,000 hours, based on 
factors such as housing costs and the practices of participating 
lenders. However, a family that does not meet the higher standard 
established by the PHA shall be considered to satisfy the minimum 
income requirement if:
    (i) The family meets the minimum income requirement as described in 
paragraphs (c)(1) and (c)(2) of this section;
    (ii) The family demonstrates that it has been pre-qualified or pre-
approved for financing;
    (iii) The pre-qualified or pre-approved financing meets any PHA 
established requirements under Sec. 982.632 for financing the purchase 
of the home

[[Page 32202]]

(including qualifications of lenders and terms of financing); and
    (iv) The pre-qualified or pre-approved financing amount is 
sufficient to purchase decent, safe, and sanitary housing of a modest 
nature in the PHA's jurisdiction.
* * * * *
    5. Amend Sec. 982.628 as follows:
    a. Revise paragraph (a)(3);
    b. Redesignate paragraph (b) as paragraph (c); and
    c. Add new paragraph (b) to read as follows.


Sec. 982.628  Homeownership option: Eligible units.

    (a) * * *
    (3) The unit is either a one unit property (including a 
manufactured home) or a single dwelling unit in a cooperative or 
condominium.
* * * * *
    (b) Purchase of manufactured home where family will not own real 
property. Homeownership assistance may be provided for the purchase of 
a manufactured home where the family will not own fee title to the real 
property on which the home is located, but only if:
    (1) The manufactured home is located on a permanent foundation; and
    (2) The family has the right to occupy the manufactured home site 
for at least thirty years.
* * * * *
    6. In Sec. 982.635(e), revise the first sentence to read as 
follows:


Sec. 982.635  Homeownership option: Amount and distribution of monthly 
homeownership assistance payment.

* * * * *
    (e) Automatic termination of homeownership assistance. 
Homeownership assistance for a family terminates automatically 180 
calendar days after the last homeownership assistance payment on behalf 
of the family. * * *
    7. Remove Sec. 982.640.
    8. Add Sec. 982.643 to read as follows:


Sec. 982.643  Homeownership option: Downpayment assistance grants.

    (a) General. (1) A PHA may provide homeownership assistance for the 
family in the form of a single grant to be applied toward the 
downpayment required in connection with the purchase of the home.
    (2) The family must have already been receiving Section 8 tenant-
based rental assistance for a period of at least one year to receive a 
downpayment assistance grant under this section.
    (3) A member of a family that has received a downpayment assistance 
grant may not receive monthly homeownership assistance payments from 
any PHA. A member of a family that has received homeownership 
assistance payments may not receive a downpayment assistance grant from 
any PHA.
    (b) Maximum downpayment grant. A downpayment assistance grant may 
not exceed twelve times the payment standard minus the total tenant 
payment.
    (c) Payment of downpayment grant. The downpayment assistance grant 
shall be paid at the closing of the family's purchase of the home.
    (d) Administrative fee. For each downpayment assistance grant made 
by the PHA, HUD will pay the PHA a one-time administrative fee in 
accordance with Sec. 982.152(a)(1)(iii).

    Dated: May 23, 2001.
Mel Martinez,
Secretary.
[FR Doc. 01-14882 Filed 6-12-01; 8:45 am]
BILLING CODE 4210-33-P