National Housing Law Project Housing Law Bulletin

Copies of the cited documents may be secured from various sources, including (1) the Handsnet folder at Legal Services/Substantive Law/Housing Forum, (2) the Government Printing Office’s spot on the World Wide Web,¹ (3) bound volumes of the Federal Register, (4) HUD Clips,² and (5) HUD.³ Citations are included with each document to help you secure copies.

HUD REGULATIONS

Ceiling Rents for Public Housing; Proposed Rule
24 C.F.R. Part 5
62 Fed. Reg. 62,927-62,931 (Nov. 25, 1997)

Summary: This proposed rule would permit public housing agencies (PHAs) to adopt caps on total tenant payments for public housing projects or dwelling units that are assisted under the United States Housing Act of 1937 (the 1937 Act). The Balanced Budget Downpayment Act I amended the 1937 Act to permit the establishment of caps, or ceiling rents, on the income-based monthly total tenant payment that reflect the reasonable market value of the housing, but that are not less than the monthly costs, in order to operate the housing of the PHA; and to make a deposit to a replacement reserve (in the sole discretion of the PHA). The proposed rule would not amend HUD’s Indian Housing regulations. Further, this proposed rule would not apply to Section 8 assisted housing.

Comments due: January 26, 1998.

Single-Family Mortgage Insurance — Loss Mitigation Procedures; Final Rule
24 C.F.R. Parts 203 and 206
62 Fed. Reg. 60,123-60,130 (Nov. 6, 1997)

Summary: This rule implements as final an interim rule that amends 24 C.F.R. Part 203 to eliminate the Mortgage Assignment Program and to provide that HUD may (1) recompense mortgagees for using mortgage foreclosure alternatives, such as special forbearance, loan modifications, and deeds in lieu of foreclosure; (2) pay the mortgagee a partial claim which would be applied to the arrearage of a defaulted mortgage; and (3) accept assignment of a mortgage that the mortgagee has modified to cure the default.

Effective date: February 1, 1998.

HUD FEDERAL REGISTER NOTICES

The HUD 2020 Management Reform Plan; Notice of New HUD Field Structure
62 Fed. Reg. 62,477-62,484 (Nov. 21, 1997)

Summary: On August 12, 1997, HUD published in the Federal Register a Notice of HUD’s plan for significant management reforms at the Department, the HUD 2020 Management Reform Plan. This Notice presents the new HUD field structure under the HUD 2020 Management Reform Plan, including an analysis of the costs and benefits of that plan. The new field structure is designed to reallocate the Department’s resources in order to strengthen service delivery from HUD’s current 81 field offices. The HUD 2020 Management Reform Plan does not result in the closing of any HUD offices and calls for no reduction or transfer in the location or in the amount of services currently provided by the Department to its constituents.

For some time, the Department has needed to find new and more efficient ways to carry out its mission because of budget constraints and related downsizing pressures. One strategy that HUD will pursue in this connection is the consolidation of certain internal operations and moving the responsibility for these operations to field locations. The most important consolidation efforts involve creating both department-wide and program-specific centers. Overall, the HUD 2020 Management Reform Plan calls for the establishment of 17 types of consolidated operation centers in the field. The location of these centers reflects a geographic balance throughout the United States. The major consolidations include an Enforcement Center, a Real Estate Assessment Center, Section 8 Financial Management Center, Single Family Homeownership centers and the Chief Financial Officer’s (CFO) Accounting Center. The specific operations of these centers were discussed in more detail in the August 12, 1997, Federal Register Notice. (See 62 Fed. Reg. 43,212-43,213.)

OTHER AGENCY FEDERAL
REGISTER NOTICES

Interim Guidance on Verification of Citizenship,
Qualified Alien Status and Eligibility Under Title IV
of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996
62 Fed. Reg. 61,344-61,416 (Nov. 17, 1997)

Summary: Title IV of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 ("PRWORA") requires the Attorney General, by February 1998, to promulgate regulations requiring verification that a non-citizen applicant for federal public benefits is a qualified alien eligible to receive federal public benefits under the Act. Amendments to the PRWORA by the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 also require the Attorney General, within the same time period, to establish fair and nondiscriminatory procedures for applicants to provide proof of citizenship or legal status. Amendments to the PRWORA by the Balanced Budget Act of 1997 require the Attorney General, by November 3, 1997, to have issued interim verification guidance that sets forth procedures that benefit providers can use to verify citizenship, qualified alien status, and eligibility under Title IV of the PRWORA prior to issuance of the final regulations. In accordance with this last statutory requirement, the Attorney General, in consultation with federal benefit-granting agencies, has developed this interim guidance.

Effective date: This Interim Guidance is effective October 29, 1997.

Cancellation Pursuant to Line Item Veto Act;
Departments of Veterans Affairs and Housing and
Urban Development, and Independent Agencies
Appropriations Act, 1998, and Department of
Transportation and Related Agencies Appropriations Act, 1998
62 Fed. Reg. 59,765-59,771 (Nov. 4, 1997)

Summary: President Clinton used the line item veto authority to cancel several projects that were funded in the HUD Fiscal Year 1998 Appropriations Act. Two of the canceled projects would have been funded out of HUD’s funds, as follows:

FY 1998 Performance Funding System (PFS) Inflation Factor and Equation
Notice PIH 97-55 (HA) (Oct. 30, 1997)

Summary: This Notice transmits information about the public housing operating subsidy calculations, including the updated Inflation Factor Equation, and related tables that must be used for the determination of operating subsidy eligibility for Public Housing Agencies (HAs) operating locally owned projects for fiscal years beginning January 1, April 1, July 1, and October 1, 1998. It also includes the following reminders of changes to operating subsidy eligibility, among others:

Summary: The purpose of this Notice is to provide instructions for closing out Homeownership for People Everywhere (HOPE 3) Program Implementation Grants authorized by the National Affordable Housing Act of 1990, as amended by the Housing and Community Development Act of 1992. The HOPE 3 program regulations provide, at 24 C.F.R. § 572.210(g), that recipients will comply with closeout procedures as issued by HUD. Closeout of HOPE 3 Implementation Grants will provide a systematic process of verifying that major program requirements have been met as specified in the program regulations at 24 C.F.R. Part 572.

Pre-foreclosure Sale Exceptions to Occupancy
Requirement
Notice H-97-64 (HUD) (Oct. 29, 1997)

Summary: The pre-foreclosure sale option has increased in use since implementation of the Loss Mitigation Program. HUD continues to encourage mortgagees to use this procedure to assist eligible mortgagors in disposing of their property when circumstances prevent the mortgagor from remaining in the home, thus delaying a foreclosure and allowing the mortgagor to market and hopefully sell the property to a third-party buyer at its approximate current fair market value.

However, when a situation arises in which a mortgagee believes that it would be in HUD’s best interest to except a specific requirement of the PFS procedure, and the mortgagee contacts the local HUD office with jurisdiction over the subject property to request a "variance" from the criterion, the local HUD office must respond to the variance request.

Many questions have been addressed to Headquarters regarding requests for exceptions to the mortgagor occupancy requirement. In certain situations this requirement may be excepted, when all other requirements have been met, and only if the request is reasonable and appropriate (examples are attached to the Notice). One of the following reasons for the non-owner occupancy exception must be confirmed and documented by the mortgagee:

Summary: The purpose of this Notice is to distribute to public housing agencies (PHAs) and HUD field personnel a copy of a sample public housing lease. In HUD’s view, this lease complies with the Housing Opportunity Program Extension Act of 1996, and the "One Strike and You’re Out" policy.

HUD also notes that a PHA’s lease must be structured to, and be in conformance with, its admissions and continued occupancy policy, the lease and grievance procedures outlined in 24 C.F.R. § 966.4, and state laws. Since this lease includes both required and optional elements, HUD recommends that a PHA review each optional element carefully before adopting it.

FY 1998 HUD Appropriations Act
Notice H 97-66 (HUD) (Nov. 12, 1997)

Summary: This Notice implements the provisions of the Departments of Veteran Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1998 (Pub. L. No. 105-65, 111 Stat. 1344, approved Oct. 27, 1997) that establish contract renewal policies for FY 1998. In addition to the "transitional" policy for FY 1998, the 1998 appropriations act also establishes a new renewal policy for expiring contracts in "FY 1999 and beyond." The Department is currently studying the "FY 1999 and beyond" provisions and will publish a Notice implementing the permanent provisions at a later time.

With respect to the administrative provisions, Section 201(d)of the FY 1998 Appropriations Act extends the Section 8 minimum rent requirement as well as the suspension of mandatory preferences for admissions for the duration of FY 1998. There are no changes involving these two items, and program participants should continue to follow the existing policies in set out in Notice H-96-89.

With respect to the Annual Adjustment Factor (AAF) rent adjustment provisions (comparability for New Construction and Substantial Rehabilitation projects with current gross rents in excess of FMRs and the one-percent reduction of annual adjustment for non-turnover units), Section 201(c) of the 1998 Appropriations Act extends these provisions into FY 1998. Additionally, Sections 2003 and 2004 of the Balanced Budget Act of 1997 (Pub. L. No. 105-33, 111 Stat. 251, approved Aug. 5, 1997) make these provisions applicable in "FY 1999 and thereafter" (i.e., these provisions are now permanent law). A Notice addressing these provisions will be issued under separate cover.

Section 8 Certificate and Moderate Rehabilitation
Programs — Rent Adjustments
Notice PIH 97-57 (HA) (Nov. 19, 1997)

Summary: The United States Housing Act of 1937 (USHA) requires that assistance contracts signed by owners participating in HUD’s Section 8 housing assistance payments (HAP) programs provide for annual adjustments in the maximum monthly rentals for units covered by the contract. HAP contracts provide that rents shall be adjusted by applying the annual adjustment factor (AAF) published by HUD in the Federal Register. However, the method used for establishing the AAFs is determined by HUD.

USHA requires that assistance contracts signed by owners provide that adjustments in the maximum monthly rental not result in material differences between rents charged for assisted and comparable unassisted units. Procedures outlined in this Notice describe the method HAs shall use in applying the contractual comparability limitation in FY 1998 to units in the Section 8 Moderate Rehabilitation program, the Section 8 Moderate Rehabilitation Single-Room Occupancy SRO) program, the Section 8 project-based certificate program, and the Section 8 tenant-based certificate program.

This Notice does not apply to the rental voucher program since annual rent adjustments are negotiated between the owner and the tenant. This Notice states procedures that housing agencies, including Indian housing authorities, will follow for:

Fiscal Year 1998 Renewal of Expiring Section 8
Moderate Rehabilitation Housing Assistance
Payments Contracts
Notice PIH 97-58 (HA) (Nov. 21, 1997)

Purpose: This Notice provides instructions for implementing Sections 522(b) and 523(e) of the Department of Veterans Affairs and Housing and Urban Development and Independent Agencies Appropriations Act, 1998 (FY 1998 Appropriations Act) governing the renewal of HAP contracts under the Section 8 Moderate Rehabilitation program. This Notice also rescinds Notice PIH 97-46 to the extent that it conflicts with procedures outlined below.

Background: During FY 1997, Section 211(b) of the Department of Veterans Affairs and Housing and Urban Development and Independent Agencies Appropriations Act, 1997 (FY 1997 Appropriations Act) required, upon the request of an owner of a multifamily housing project that was covered by an expiring project-based HAP contract, that the Secretary renew the expiring HAP contract as project-based assistance for a period of not more than one year.

The FY 1998 Appropriations Act was enacted on October 27, 1997, as Pub. L. No. 105-65; 111 Stat. 1344. Section 522(b) of the FY 1998 Appropriations Act extends Section 211(b) of the FY 1997 Appropriations Act to cover HAP contracts expiring during FY 1998.

Applicability: This Notice applies to all units in a multifamily housing project (including FHA-insured multifamily housing projects) under a Section 8 Moderate Rehabilitation HAP contract expiring on or after October 1, 1997, and on or before September 30, 1998. This Notice is not applicable to the Section 8 Moderate Rehabilitation Single Room Occupancy Program.

1. At http://www.access.gpo.gov/su_docs.
2. At http://www.hudclips.org/cgi/index.cgi.
3. To order Notices and Handbooks from HUD, call (800) 767-7468 or fax (202) 708-2313.