33610 Federal Register / Vol. 66, No. 121 / Friday, June 22, 2001 / Rules and Regulations

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

24 CFR Part 982

[Docket No. FR–4661–I–01]

RIN 2577–AC24

Section 8 Homeownership Program;

Pilot Program for Homeownership

Assistance for Disabled Families

AGENCY: Office of Assistant Secretary for

Public and Indian Housing, HUD.

ACTION: Interim rule.

SUMMARY: This interim rule establishes

regulations to implement the three-year

pilot program authorized by section 302

of the American Homeownership and

Economic Opportunity Act of 2000. A

public housing agency (PHA) may elect

to provide homeownership assistance to

a disabled family under the pilot

program, rather than under the Housing

Choice Voucher Program

homeownership option. Under the pilot

program, a PHA provides

homeownership assistance to a disabled

family residing in a home purchased

and owned by one or more members of

the family. The interim rule

incorporates the requirements for the

pilot program in HUD’s regulations for

the homeownership option. In addition

to the amendments implementing

section 302, HUD has taken the

opportunity afforded by this interim

rule to make several clarifying and

technical amendments to its September

12, 2000 final rule establishing the

homeownership option.

DATES: Effective Date: July 23, 2001.

Comments Due Date: August 21, 2001.

ADDRESSES: Interested persons are

invited to submit comments regarding

this interim 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 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.

Under the basic homeownership

option, special provisions already exist

for families with a member who is a

person with disabilities. For example,

there is no maximum term of

homeownership assistance for disabled

families (assistance to other families is

limited to a fifteen or ten-year term as

described in § 982.634). Further, the

PHA is required to count welfare

assistance provided to the disabled

family for purposes of determining

whether the family satisfies the

minimum income eligibility

requirements (generally, such assistance

is not counted for other families under

§ 982.627(c)). In addition, if a PHA

determines that a disabled family

requires homeownership assistance as a

reasonable accommodation, the firsttime homeowner requirement does not

apply (see § 982.627(b)(3)).

Section 302 of the American

Homeownership and Economic

Opportunity Act of 2000 (Public Law

106–569, 114 Stat. 2944, approved

December 27, 2000) authorizes a pilot

program to assist disabled families.

Under the pilot program, a PHA may

provide tenant-based homeownership

assistance to a disabled family residing

in a home purchased and owned by one

or more members of the family. The

pilot program is authorized to operate

for a three-year period commencing on

the effective date of HUD’s

implementing regulations.

The pilot program provides disabled

families with certain benefits and

disadvantages in comparison to the

basic homeownership option. For

example, families whose annual income

exceeds 80 percent of the median

income for the area are usually

ineligible for admission to the Housing

Choice Voucher Program. PHAs may

admit disabled families whose annual

income is greater than 80 percent of the

area median into the pilot program. On

the other hand, whenever the annual

income of a disabled family

participating in the pilot program

exceeds 80 percent of the area median

income, the amount of assistance the

family would normally receive under

the subsidy formula for the basic

homeownership option is reduced.

II. This Interim Rule

A. Implementation of Pilot Program to

Assist Disabled Families

1. General. This interim rule

establishes regulations to implement the

section 302 pilot program. Because

assistance under the pilot program is an

alternative to tenant-based

homeownership assistance, HUD has

incorporated the requirements for the

pilot program in its regulations for the

homeownership option (codified at

§§ 982.625–982.641). Specifically, the

interim rule establishes a new § 982.642,

which describes those requirements that

are unique to the pilot program. Except

as provided in new § 982.642, all of the

regulatory requirements applicable to

the homeownership option are also

applicable to the pilot program.

A PHA that administers tenant-based

assistance has the choice whether to

offer homeownership assistance under

the pilot program (whether or not the

PHA has also decided to offer the basic

homeownership option). However, a

PHA that elects to provide

homeownership assistance under the

pilot program must have the required

capacity to operate a successful

homeownership program (as required

under § 982.625(d) of the existing

homeownership option regulations).

2. Eligibility requirements. The PHA

may not provide homeownership

assistance under the pilot program

unless the PHA determines that the

family satisfies all of the following

initial requirements at commencement

of homeownership assistance for the

family:

• The family is a disabled family (as

that term is defined in § 5.403 of HUD’s

regulations);

• The family’s annual income at the

time of admission does not exceed 99

Federal Register / Vol. 66, No. 121 / Friday, June 22, 2001 / Rules and Regulations 33611

percent of the median income for the

area;

• The family is not a current

homeowner;

• The family will close on the

purchase of the home during the three

year period commencing on the

effective date of this interim rule; and

• The family meets the initial

requirements for assistance under the

homeownership option described in

§ 982.626. However, section 302

exempts families seeking to participate

in the pilot program from two of the

eligibility criteria for basic tenant-based

homeownership assistance—the

requirement that the family be a ‘‘firsttime homeowner’’ (as that term is

defined in § 982.4) and the income

eligibility requirements of

§ 982.201(b)(1).

Accordingly, a member of the

disabled family may have owned a

present homeownership interest in a

residence during the three-years before

commencement of homeownership

assistance under the pilot program (as in

the basic homeownership option,

current homeowners are not eligible to

participate in the pilot program).

Secondly, the family need not be lowincome to participate in the pilot

program (however, as noted, the annual

income of the family at admission may

not exceed 99 percent of the median

income for the area). Further, any new

admissions to the Housing Choice

Voucher Program through this pilot

program must be selected from the PHA

waiting list and are counted towards the

PHA income targeting requirements of

§ 982.201(b)(2).

3. Homeownership assistance

payments. While the disabled family is

residing in the home, the PHA shall

calculate a monthly homeownership

assistance payment on behalf of the

family by using the lower of (1) the

payment standard minus the total tenant

payment or (2) the monthly

homeownership expenses minus the

total tenant payment (see § 982.635).

(Total tenant payment is higher of the

minimum rent, 10 percent of monthly

income, 30 percent of monthly adjusted

income, or the welfare rent.) The PHA

must use the utility allowance schedule

and payment standard schedules

applicable to the Housing Choice

Voucher Program.

Families will receive a monthly

homeownership payment equal to a

specified percentage of the amount

calculated under § 982.635. The

percentage will depend on the annual

income of the family at the

commencement of assistance under the

pilot program, and at subsequent

recertifications. The amount of the

homeownership payments will be as

follows:

• A family that is a low income

family (as defined at 24 CFR 5.603(b)) as

determined by HUD shall receive the

full amount of the monthly

homeownership assistance payment

calculated under § 982.635.

• A family whose annual income is

greater than the low income family

ceiling but does not exceed 89 percent

of the median income for the area as

determined by HUD shall receive a

monthly homeownership assistance

payment equal to 66 percent of the

amount calculated under § 982.635.

• A family whose annual income is

greater than the 89 percent ceiling but

does not exceed 99 percent of the

median income for the area as

determined by HUD shall receive a

monthly homeownership assistance

payment equal to 33 percent of the

amount calculated under § 982.635.

• A family whose annual income is

greater than 99 percent of the median

income for the area shall not receive

homeownership assistance under the

pilot program.

The family is responsible for the

monthly homeownership expenses not

reimbursed by the housing assistance

payment. The PHA must make the

homeownership assistance payments to

the lender on behalf of the disabled

family (the provisions of § 982.635(d),

which permit the PHA to make the

payments directly to the family, do not

apply to the pilot program). If the

assistance payment exceeds the amount

due to the lender, the PHA must pay the

excess directly to the family.

4. Mortgage defaults. As in the basic

homeownership option, the PHA must

terminate assistance for any member of

the family receiving homeownership

assistance that is dispossessed from the

home pursuant to a judgment or order

of foreclosure on any mortgage securing

debt incurred to purchase the home, or

any refinancing of such debt (whether or

not the mortgage is insured by HUDFederal Housing Administration (FHA)).

However, unlike the basic

homeownership option, the PHA may

permit the family to move to a new unit

with continued homeownership

assistance if the PHA determines that

the default is due to catastrophic

medical reasons or due to the impact of

a federally declared major disaster or

emergency. In the case of all other

mortgage defaults, although the family

is not eligible to purchase another home

with tenant-based assistance, the PHA

may, in its discretion, provide the

family with continued voucher rental

assistance. The PHA must deny such

rental assistance if the family defaulted

on an FHA-insured mortgage and the

family fails to demonstrate that:

• The family has conveyed, or will

convey, title to the home, as required by

HUD, to HUD or HUD’s designee; and

• The family has moved, or will

move, from the home within the time

period established or approved by HUD.

B. Technical and Clarifying Changes to

Homeownership Option Regulations

In addition to implementing the pilot

program for disabled families, HUD has

taken the opportunity afforded by this

interim rule to make several clarifying

and technical amendments to the

existing regulations for the

homeownership option. The

amendments do not establish or modify

substantive requirements or procedures.

Rather, these technical changes are

designed to correct a typographical

error, improve the clarity of existing

requirements, and facilitate

administration of the homeownership

option. The changes are as follows:

1. Correction of typographical error

(§ 982.4(b)). This interim rule corrects a

typographical error contained in the

definition of the term ‘‘present

homeownership interest’’ at § 982.4. The

codified text erroneously refers to

‘‘present homeownership option.’’

Although the appropriate term is made

clear by the surrounding text, HUD has

taken this opportunity to make the

necessary correction.

2. PHA requirements for financing

purchase of home (§ 982.632(a)). This

interim rule clarifies the regulatory

provisions governing PHA

establishment of lender qualifications.

Under § 982.632(a), a PHA may

establish requirements for financing the

purchase of a home to be assisted under

the homeownership option. These

requirements may include requirements

concerning the qualification of lenders

or the terms of financing.

The regulatory language of

§ 982.632(a) might be interpreted to

mean that a PHA may require a family

to use the services of specific lenders,

thereby restricting the family’s ability to

secure favorable financing terms.

However, as the preamble to the

September 12, 2000 final rule makes

clear, ‘‘[a] PHA may not reduce a

family’s choice by limiting the use of

homeownership assistance to particular

* * * lenders’’ (see, 65 FR 55134,

middle column). This interim rule

amends § 982.632(a) to clarify that a

PHA may not require that families

acquire financing from one or more

specified lenders.

This interim rule also amends

§ 982.632(a) to highlight PHA efforts to

curb predatory lending abuses in the

33612 Federal Register / Vol. 66, No. 121 / Friday, June 22, 2001 / Rules and Regulations

homeownership option. The regulatory

language contains a non-exclusive list of

financing terms that a PHA may elect to

require for financing the purchase of a

home with homeownership assistance.

This interim rule expands this list of

examples to clarify that a PHA may

choose to require financing terms

necessary to protect borrowers against

high cost loans or predatory loans. (See

section VII of the preamble to the

September 12, 2000 final rule

establishing the homeownership option

for additional discussion regarding the

prevention of predatory lending

practices, 65 FR 55159, middle column.)

3. Continued voucher rental

assistance following a default on an

FHA-insured mortgage (§ 982.638(d)).

This interim rule amends the provisions

regarding the continuation of voucher

rental assistance to a family following a

default on an FHA-insured mortgage.

Currently, § 982.638(d) provides that the

PHA may only permit such continued

assistance if the family has: (1)

conveyed title to the home, as required

by HUD, to HUD or HUD’s designee,

and (2) moved from the home within the

period established or approved by HUD.

This regulatory requirement has the

potential to delay the provision of

continued assistance to families who

will shortly be complying with the two

prerequisite requirements for such

assistance, but have not yet conveyed

title and moved from the home.

Accordingly, this interim rule

authorizes a PHA to provide continued

voucher rental assistance to a family

that has defaulted on an FHA-insured

mortgage if the family has complied or

will be complying with the two

requirements described above.

4. Recapture documentation

(§ 982.640(b)). Under § 982.640, a PHA

is required to recapture a percentage of

the homeownership assistance provided

to a family upon the sale or refinancing

of the home. The regulatory language of

§ 982.640(b) requires that, upon

purchase of the home, the family

execute documentation ‘‘as required by

HUD’’ to secure the PHA’s recapture

rights. However, given the many

variations in State and local law

regarding liens, HUD does not believe it

would be appropriate, or feasible, to

develop a single lien document

applicable to all recaptures under the

homeownership option. Accordingly,

HUD is revising § 982.640(b) to provide

PHAs with the necessary flexibility to

develop lien documentation that is

consistent with State and local

requirements.

III. Justification for Interim

Rulemaking

In general, HUD publishes a rule for

public comment before issuing a rule for

effect, in accordance with its own

regulations on rulemaking at 24 CFR

part 10. Part 10, however, does provide

for exceptions from that general rule

where HUD finds good cause to omit

advance notice and public participation.

The good cause requirement is satisfied

when the prior public procedure is

‘‘impracticable, unnecessary, or contrary

to the public interest’’ (24 CFR 10.1).

HUD finds that good cause exists to

publish this rule for effect without first

soliciting public comment, in that prior

public procedure is unnecessary and

contrary to the public interest. The

reasons for HUD’s determination are as

follows.

To a large extent, section 302 repeats

the statutory language of the section 8(y)

homeownership option, which HUD has

already implemented through notice

and comment rulemaking. Where

applicable, the interim rule simply

cross-references to those existing

regulatory requirements (§ 982.642(b)),

and does not elaborate on or modify

these provisions. Where the interim rule

differs from the regulations for the basic

homeownership option (for example, in

exempting disabled families from the

‘‘first-time homeowner’’ and the income

eligibility requirements) it does so as a

result of the statutory mandates

contained in section 302 and not as an

exercise of HUD’s rulemaking

discretion. Accordingly, HUD’s

authority to revise these provisions of

the interim rule in response to public

comment would be limited.

Further, HUD believes that delaying

the implementation of the pilot program

to permit prior public comment would

be contrary to the public interest. As

discussed in this preamble, the pilot

program is designed to expand the

provision of voucher homeownership

assistance to disabled families.

Immediate implementation of this

interim rule will allow disabled families

to enjoy the benefits of the pilot

program as expeditiously as possible.

In addition to implementing section

302, HUD has taken the opportunity

afforded by this interim rule to make

several clarifying and technical

amendments to the existing regulations

for the homeownership option. The

amendments do not establish or modify

substantive requirements or procedures.

Rather, these technical changes are

designed to correct a typographical

error, improve the clarity of existing

requirements, and facilitate

administration of the homeownership

option. Accordingly, HUD believes it is

unnecessary to solicit public comments

before making these technical changes

effective.

Although HUD believes that good

cause exists to publish this rule for

effect without prior public comment,

HUD recognizes the value of public

comment in the development of its

regulations. HUD has, therefore, issued

these regulations on an interim basis

and has provided the public with a 60-

day comment period. HUD welcomes

comment on the regulatory amendments

made by this interim rule. The public

comments will be addressed in the final

rule.

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 this 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 interim 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

(FONSI) with respect to the

environment has been made 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. 4223).

This FONSI is available for public

inspection between 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.

Federal Register / Vol. 66, No. 121 / Friday, June 22, 2001 / Rules and Regulations 33613

605(b)) (the RFA), has reviewed and

approved this interim 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

interim 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 interim rule implements a pilot

program under which a PHA may elect

to provide tenant-based assistance to an

eligible disabled family residing in a

home purchased and owned by one or

more members of the family. Under the

definition of ‘‘small governmental

jurisdiction’’ in section 601(5) of the

RFA, the provisions of the 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 interim rule will 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

interim rule is exclusively concerned

with the establishment of an alternative

use of rental voucher assistance.

Specifically, the rule authorizes a PHA

to provide tenant-based assistance for an

eligible disabled family that purchases a

dwelling unit that will be occupied by

the family. This interim 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 amends 24 CFR

part 982 as follows:

PART 982—SECTION 8 TENANTBASED 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 § 982.4(b), revise the definition

of ‘‘Present homeownership interest’’ to

read as follows:

§ 982.4 Definitions

* * * * *

(b) * * *

Present homeownership interest. In

the homeownership option: ‘‘Present

ownership interest’’ in a residence

includes title, in whole or in part, to a

residence, or ownership, in whole or in

part, of membership shares in a

cooperative. ‘‘Present ownership

interest’’ in a residence does not include

the right to purchase title to the

residence under a lease-purchase

agreement.

* * * * *

3. Revise § 982.632(a) to read as

follows:

§ 982.632 Homeownership option:

Financing purchase of home; affordability

of purchase.

(a) The PHA may establish

requirements for financing purchase of

a home to be assisted under the

homeownership option. Such PHA

requirements may include requirements

concerning qualification of lenders (for

example, prohibition of seller financing

or case-by-case approval of seller

financing), or concerning terms of

financing (for example, a prohibition of

balloon payment mortgages,

establishment of a minimum

homeowner equity requirement from

personal resources, or provisions

required to protect borrowers against

high cost loans or predatory loans). A

PHA may not require that families

acquire financing from one or more

specified lenders, thereby restricting the

family’s ability to secure favorable

financing terms.

* * * * *

4. Revise § 982.638(d)(2) to read as

follows:

§ 982.638 Homeownership option: Denial

or termination of assistance for family.

* * * * *

(d) * * *

(2) The family fails to demonstrate

that:

(i) The family has conveyed, or will

convey, title to the home, as required by

HUD, to HUD or HUD’s designee; and

(ii) The family has moved, or will

move, from the home within the period

established or approved by HUD.

5. Revise § 982.640(b) to read as

follows:

§ 982.640 Homeownership option:

Recapture of homeownership assistance.

* * * * *

(b) Securing the PHA’s right of

recapture. Upon purchase of the home,

a family receiving homeownership

assistance shall execute documentation

as required by the PHA and consistent

with State and local law, that secures

the PHA’s right to recapture the

homeownership assistance in

accordance with this section. The lien

securing the recapture of

homeownership subsidy may be

subordinated to a refinanced mortgage.

* * * * *

6. Add § 982.642 to read as follows:

§ 982.642 Homeownership option: Pilot

program for homeownership assistance for

disabled families.

(a) General. This section implements

the pilot program authorized by section

302 of the American Homeownership

and Economic Opportunity Act of 2000.

Under the pilot program, a PHA may

provide homeownership assistance to a

disabled family residing in a home

purchased and owned by one or more

members of the family. A PHA that

administers tenant-based assistance has

the choice whether to offer

homeownership assistance under the

pilot program (whether or not the PHA

has also decided to offer the

homeownership option).

(b) Applicability of homeownership

option requirements. Except as provided

in this section, all of the regulations

applicable to the homeownership option

(as described in §§ 982.625 through

982.641) are also applicable to the pilot

program.

(c) Initial eligibility requirements.

Before commencing homeownership

assistance under the pilot program for a

family, the PHA must determine that all

33614 Federal Register / Vol. 66, No. 121 / Friday, June 22, 2001 / Rules and Regulations

of the following initial requirements

have been satisfied:

(1) The family is a disabled family (as

defined in § 5.403 of this title);

(2) The family annual income does

not exceed 99 percent of the median

income for the area;

(3) The family is not a current

homeowner;

(4) The family must close on the

purchase of the home during the period

starting on July 23, 2001 and ending on

July 23, 2004; and

(5) The family meets the initial

requirements described in § 982.626;

however, the following initial

requirements do not apply to a family

seeking to participate in the pilot

program:

(i) The income eligibility

requirements of § 982.201(b)(1);

(ii) The first-time homeowner

requirements of § 982.627(b); and

(iii) The mortgage default

requirements of § 982.627(e), if the PHA

determines that the default is due to

catastrophic medical reasons or due to

the impact of a federally declared major

disaster or emergency.

(d) Amount and distribution of

homeownership assistance payments.

(1) While the family is residing in the

home, the PHA shall calculate a

monthly homeownership assistance

payment on behalf of the family in

accordance with § 982.635 and this

section.

(2) A family that is a low income

family (as defined at 24 CFR 5.603(b)) as

determined by HUD shall receive the

full amount of the monthly

homeownership assistance payment

calculated under § 982.635.

(3) A family whose annual income is

greater than the low income family

ceiling but does not exceed 89 percent

of the median income for the area as

determined by HUD shall receive a

monthly homeownership assistance

payment equal to 66 percent of the

amount calculated under § 982.635.

(4) A family whose annual income is

greater than the 89 percent ceiling but

does not exceed 99 percent of the

median income for the area as

determined by HUD shall receive a

monthly homeownership assistance

payment equal to 33 percent of the

amount calculated under § 982.635.

(5) A family whose annual income is

greater than 99 percent of the median

income for the area shall not receive

homeownership assistance under the

pilot program.

(e) Assistance payments to lender.

The PHA must make homeownership

assistance payments to a lender on

behalf of the disabled family. If the

assistance payment exceeds the amount

due to the lender, the PHA must pay the

excess directly to the family. The

provisions of § 982.635(d), which permit

the PHA to make monthly

homeownership assistance payments

directly to the family, do not apply to

the pilot program.

(f) Mortgage defaults. The

requirements of § 982.638(d) regarding

mortgage defaults are applicable to the

pilot program. However,

notwithstanding § 982.638(d), the PHA

may, in its discretion, permit a family

that has defaulted on its mortgage to

move to a new unit with continued

voucher homeownership assistance if

the PHA determines that the default is

due to catastrophic medical reasons or

due to the impact of a federally declared

major disaster or emergency. The

requirements of §§ 982.627(a)(5) and

982.627(e) do not apply to such a

family.

Dated: March 19, 2001.

Mel Martinez,

Secretary.

[FR Doc. 01–15721 Filed 6–19–01; 2:10 pm]

BILLING CODE 4210–33–P