National Housing Law Project Housing Law Bulletin

The following are housing-related regulations and notices that HUD and other federal agencies have recently issued. For the most part, the summaries are taken directly from the agency’s summary of the regulation in the Federal Register. The Notice summaries are taken from the introductory paragraphs in the Notices.

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 Federal Register Notices

Notice of Delegation of Authority
63 Fed. Reg. 3,761 (Jan. 26, 1998)

Summary: This Notice delegates to the Assistant Secretary for Community Planning and Development the Secretary’s authority to designate two additional urban Empowerment Zones, pursuant to 26 U.S.C. § 1391, as amended by Title IX, Subtitle F, Chapter 1, Section 951 (Additional Empowerment Zones) of the Taxpayer Relief Act of 1997, Pub. L. No. 105-34, 111 Stat. 885, approved August 5, 1997.

Effective date: January 7, 1998.

Notice of Funding for Fiscal Year 1997: Capacity Building for Community Development and Affordable Housing
63 Fed. Reg. 5,219 (Jan. 30, 1998)

Summary: The 1997 Emergency Supplemental Appropriations Act, Pub. L. No. 105-18, 111 Stat. 198 and 201 (June 12, 1997), transfers $30.2 million in Fiscal Year (FY) 1997 funds to Section 4 of the HUD Demonstration Act of 1993 and amends it to provide this assistance through the Enterprise Foundation, the Local Initiatives Support Corporation (LISC), Habitat for Humanity, and Youthbuild, USA. The funds are to be used for capacity building for community development and affordable housing — provided that at least $10 million of the funding be used in rural areas, including tribal areas — as required by Section 4 of the 1993 Act.

Section 4 authorizes the Secretary to establish by notice such requirements as may be necessary to carry out its provisions. This Notice indicates that HUD will equally divide the $30.2 million appropriated for this capacity-building initiative among the four organizations cited above. Each organization will match the HUD assistance provided with resources from private sources in an amount equal to three times its share, as required by Section 4 of the 1993 Act. Each organization will use at least $2.5 million of its $7.55 million share for activities in rural areas, including tribal areas.

Eligible activities under this award include:

(a) Training, education, support, and advice to enhance the technical and administrative capabilities of community development corporations (CDCs) and community housing development organizations (CHDOs);

(b) Loans, grants, development assistance, pre-development assistance, or other financial assistance to CDCs/CHDOs to carry out community development and affordable housing activities that benefit low-income families and persons, including the acquisition, construction, or rehabilitation of housing for low-income families and persons, and community and economic development activities that create jobs for low-income persons; and

(c) Such other activities as may be determined by the Enterprise Foundation, LISC, Habitat for Humanity, and Youthbuild in consultation with the Secretary or his designee.

This Notice also provides details regarding administrative and other requirements that shall apply to this program.

Effective date: Upon issuance (Jan. 30, 1998).

Notice of Annual Factors for Determining Public Housing Agency Administrative Fees for the Section 8 Rental Voucher, Rental Certificate and Moderate Rehabilitation Programs
63 Fed. Reg. 4,089 (Jan. 27, 1998)

Summary: This Notice transmits the schedule of monthly per-unit fee amounts for use in determining the ongoing administrative fee for housing agencies (HAs) administering the rental voucher, rental certificate and moderate rehabilitation programs during federal Fiscal Year 1998. The procedures for calculating the earned administrative fees will be issued in an ensuing Notice.

Effective date: Procedures in this Notice will be used to review and approve the administrative fees stated in the HA’s year-end financial statements for appropriateness for HA fiscal years ending on December 31, 1997; March 31, 1998; June 30, 1998; and September 30, 1998. These procedures may also be used to project earned administrative fees in the annual HA budget. This Notice applies to that portion of the HA fiscal year that falls within federal Fiscal Year 1998 (October 1, 1997, to September 30, 1998).

Indian Housing Block Grant Program — Revised Notice of Transition Requirements
63 Fed. Reg. 4,075 (Jan. 27, 1998)

Summary: On January 27, 1997 (62 Fed. Reg. 3,972), HUD published for public comment a notice to implement that part of Section 106 of the Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA) which requires HUD to establish the requirements necessary to provide for the transition from the provision of assistance for Indian tribes and Indian housing authorities under the United States Housing Act of 1937 and other related provisions of law to the provision of assistance in accordance with NAHASDA. The January 27, 1997, Notice also provided notice of the negotiated rulemaking process for the development of regulations necessary to implement NAHASDA, and requested nominations for membership on the negotiated rulemaking committee. This Notice addresses the public comments received on the January 27, 1997, transition requirements, and provides additional transition guidance and requirements.

Effective date: The revised transition requirements are effective upon publication (Jan. 27, 1998).

IHP submission date: No earlier than the publication date of the final regulations implementing NAHASDA and no later than July 1, 1998.

Effective date of NAHASDA § 701(c): November 3, 1998.

HUD Notices

Annual Adjustment Factors
Notice H 98-3 (HUD) (Jan. 23, 1998)

Summary: This Notice announces the extension of statutory rent adjustment procedures for Section 8 projects that use the HUD-published Annual Adjustment Factors (AAF) for adjustment of contract rents. These procedures concern (1) the application of comparability to rent adjustment for Section 8 New Construction and Substantial Rehabilitation projects; and (2) rent adjustment for non-turnover Section 8 units (for Section 8 New Construction and Substantial Rehabilitation projects, Loan Management (LMSA) projects, property disposition (PD) projects, and renewal or extension projects). The procedures do not apply to rent adjustments for the Section 8 Moderate Rehabilitation program or the Project-Based Certificate (PBC) program.

Since the law is now permanent, HUD hereby extends indefinitely, until further notice, Housing Notice 97-14, which describes procedures for implementing statutory Section 8 adjustment requirements concerning comparability for Section 8 New Construction and Substantial Rehabilitation projects, and requiring reduced adjustments for non-turnover units.

FHA Loss Mitigation Program Policy and Procedural Updates
Mortgagee Letter 98-7 (Jan. 27, 1998)

Summary: The purpose of this Mortgagee Letter is to provide guidance for several policy and procedural changes contained in HUD’s Loss Mitigation Procedures final rule which was issued on November 6, 1997.

Loss Mitigation Performance Scores
Mortgagee Letter 98-9 (Feb. 12, 1998)

Summary: As referenced in Mortgagee Letters 96-61 and 97-21, FHA is announcing its annual scores for lender or servicer performance (hereinafter described as lender performance) related to loss mitigation. A lender’s performance, as referenced by these scores, will directly affect loss mitigation incentive payments, certain claim reimbursements, and delegated program authorities. The FHA’s lender performance score for 1997 measures two components of a lender’s loss mitigation performance: the lender’s success in holding down its default rate (25 percent of overall score), and its actual costs compared to its potential costs to FHA (75 percent of overall score), relative to other lenders in each of 116 insuring districts, as defined by the first three digits of the FHA case number.

Lenders scoring within the top 25th percentile (based on the number of scored loans) of each group are eligible for the following increased loss mitigation incentives:

1. An additional $100 payment for each Special Forbearance Agreement executed on or after 15 days from the date of this Mortgagee Letter;

2. Pre-foreclosure sale timeframes may be extended an additional two months without prior HUD approval;

3. Automatic reimbursement of 75 percent of foreclosure costs on Part B claims received after February 1, 1998, for mortgages endorsed on or after February 1, 1998. Lenders who are not within the top 25th percentile will be reimbursed 67 percent of foreclosure costs on Part B claims received after February 1, 1998, for mortgages endorsed on or after February 1, 1998.

All lenders will be reimbursed two-thirds of foreclosure costs on Part B claims for mortgages endorsed before February 1, 1998.

FY 1997 and 1998 Subsidies for Operation of Low-Income Housing Projects
Notice PIH 97-61(HA) (Dec. 8, 1997)

Summary: The first purpose of this Notice is to advise Public Housing Agencies (PHAs) that there will be no proration of operating budget approvals during federal Fiscal Year 1998 (HA fiscal years beginning January 1, April 1, July 1, and September 1, 1998).

The 1998 Departments of Veterans Affairs and Housing and Urban Development and Independent Agencies Appropriations Act includes $2.9 billion for FY 1998 operating subsidy requirements. Under current authorizations, the amount appropriated in the FY 1998 Appropriations Act will be sufficient to cover total subsidy requirements for both Performance Funding System (PFS) and non-PFS projects. Accordingly, payments to all PHAs will be based on 100 percent of the full eligibility of each as determined by the PFS, or the appropriate alternate approach for the non-PFS PHAs and projects. Should actual requirements for FY 1998 vary significantly from the estimate, this percentage is subject to change.

The second purpose of this Notice is to advise PHAs that the proration level of operating subsidies at 95 percent, previously necessitated by the shortfall of appropriated funds, has been revised. Actual FY 1997 operating subsidy requirements were lower than anticipated. Accordingly, payments to all PHAs will be at 99 percent of eligibility as determined by the PFS, or the appropriate alternative approach for the non-PFS PHAs and projects. Those PHAs with approved operating budgets or Calculation of Performance Funding System Operating Subsidy forms will not have to submit any documents to effect payment of the additional amount due.

Recapture of Section 8 Program Reserves
Notice PIH 98-3 (HA) (Jan. 16, 1998)

Summary: This Notice provides guidance to public housing agencies and HUD staff on the process used to recapture excess Section 8 program reserves. The recapture of excess program reserves is applicable to the Rental Certificate and Rental Voucher programs. Public Law No. 105-18 instructed the Secretary of HUD to recapture $5.8 billion in Section 8 program reserves for the Rental Certificate and Rental Voucher programs in order to provide funding for disaster relief activities from the spring floods and to establish a fund account for future Section 8 contract renewals. HUD State or Area Offices will provide a notification letter to HAs identifying the exact amount of the recapture by program and the appropriate adjustments to the accounting records.

Fiscal Year 1998 Financial Management Requirements for Section 8 Moderate Rehabilitation Program Housing Assistance Payments Contract Expirations
Notice PIH 98-11 (HA) (Feb. 3, 1998)

Summary: This Notice provides instructions to PIH State/Area Offices on financial procedures for implementing Notice PIH 97-58, Fiscal Year 1998 Renewal of Expiring Section 8 Moderate Rehabilitation (Mod Rehab) Housing Assistance Payments (HAP) Contracts (Nov. 21, 1997). This Notice updates Notice 97-15, Financial Management Program Requirements for the Moderate Rehabilitation Program (Apr. 10, 1997). As stated in Notice 97-58, the FY 1998 Appropriations Act extends Section 211(b) of the FY 1997 Appropriations Act to cover HAP contracts expiring during FY 1998. Financial processing of Mod Rehab renewal increments, as well as replacement certificate increments, will be substantially similar to the procedures followed for FY 1997, with additional instructions contained in this Notice. Prior to passage of the FY 1998 Appropriations Act, State and Area HUD Offices were instructed to reserve and contract funds for tenant-based certificates to replace all HAP contracts expiring in the first quarter of FY 1998, from October 1, 1997, to December 31, 1997. Because Section 211(b) of the Appropriations Act was extended for FY 1998, eligible property owners may in certain circumstances retroactively request renewal of their units for which HAP contracts expired from October 1, 1997, to December 31, 1997.

All Mod Rehab HAP contracts expiring during the period covered by this Notice will either be renewed or replaced with tenant-based certificates or vouchers, if approved by HUD Headquarters.

Renewal of Expiring Contracts in the Section 8 Rental Certificate and Rental Voucher Programs during Fiscal Year 1998
Notice PIH 98-12 (HA) (Feb. 13, 1998)

Summary: This Notice provides instructions and guidance to Public Housing field offices for replacing rental certificate and rental voucher funding increments expiring between October 1997 and December 1998. This Notice does not apply to Offices of Native American Programs, and expiring Section 8 contracts administered by Indian Housing Authorities (IHA). IHA-administered Section 8 contracts that expire on or after September 30, 1997, will not be renewed, pursuant to the Native Americans Housing Assistance and Self Determination Act of 1996.

This Notice supersedes Notice PIH 97-1 (Jan. 15, 1997). The instructions for processing FY 1998 renewals have changed substantially from instructions in Notice 97-1. During FY 1997, Annual Contributions Contract (ACC) reserves for most Housing Agencies (HAs) were reduced significantly by the recapture of excess reserves. HUD’s objective is to ensure continued assistance to HAs with expiring contracts, and to the owners and families they serve.

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.