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12 U.S.C. § 4110 — Incentives for transfer to qualified purchasers

Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4110 — Incentives for transfer to qualified purchasers

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Source file: Laws/federal/codes/united-states-code/title-12/section-4110-incentives-for-transfer-to-qualified-purchasers--363b12738b.md
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Source location: Title 12, Chapter 42, § 4110; chapter-042-low-income-housing-preservation-and-resident-homeownership.md

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**(a) In general** With respect to any eligible low-income housing for which an owner has submitted a second notice of intent under [section 4106(d) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4106/d&num=0&edition=prelim) to transfer the housing to a qualified purchaser, the owner shall offer the housing for transfer to qualified purchasers as provided in this section. The Secretary shall issue regulations describing the means by which potential qualified purchasers shall be notified of the availability of the housing for sale. The Secretary shall take into account the Federal cost limits under [section 4105(a) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4105/a&num=0&edition=prelim) for the housing when providing incentives under section 4109(b)(2) and (b)(3) of this title (pursuant to subsection (d)(3) of this section). **(b) Right of first offer to priority purchasers** (1) **Negotiation period** — For the 12-month period beginning on the receipt by the Secretary of a second notice of intent under [section 4106(d) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4106/d&num=0&edition=prelim) with respect to such housing, the owner may offer to sell and negotiate a sale of the housing only with priority purchasers. The negotiated sale price may not exceed the preservation value of the housing determined under [section 4103(b)(2) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4103/b/2&num=0&edition=prelim). The owner or the purchaser shall submit a plan of action under [section 4107 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4107&num=0&edition=prelim) for any sale under this subsection, which shall include any request for assistance under this section, upon the acceptance of any bona fide offer meeting the requirements of this paragraph. (2) **Expression of interest** — During such period, priority purchasers may submit written notice to the Secretary stating their interest in acquiring the housing. Such notice shall be made in the form and include such information as the Secretary may prescribe. (3) **Information** — Within 30 days of receipt of an expression of interest by a priority purchaser, the Secretary shall provide such purchaser with information on the assistance available from the Federal Government to facilitate a transfer and the owner shall provide appropriate information on the housing, as determined by the Secretary. **(c) Right of refusal for other qualified purchasers** If no bona fide offer to purchase any eligible low-income housing subject to this section that meets the requirements of subsection (b) is made and accepted during the period under such subsection, during the 3-month period beginning upon the expiration of the 12-month period under subsection (b)(1), the owner of the housing may offer to sell and may sell the housing only to qualified purchasers. The negotiated sale price may not exceed the preservation value of the housing determined under [section 4103(b)(2) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4103/b/2&num=0&edition=prelim). The owner or purchaser shall submit a plan of action under [section 4107 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4107&num=0&edition=prelim) for any sale under this subsection, which shall include any request for assistance under this section, upon the acceptance of any bona fide offer meeting the requirements of this paragraph.11 So in original. Probably should be “subsection.” **(d) Assistance** (1) **Approval** — If the qualified purchaser is a resident council, the Secretary may not approve a plan of action for assistance under this section unless the council’s proposed resident homeownership program meets the requirements under [section 4116 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4116&num=0&edition=prelim). For all other qualified purchasers, the Secretary may not approve the plan unless the Secretary finds that the criteria for approval under [section 4112 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4112&num=0&edition=prelim) have been satisfied. (2) **Amount** — Subject to the availability of amounts approved in appropriations Acts, the Secretary shall, for approvable plans of action, provide assistance sufficient to enable qualified purchasers (including all priority purchasers other than resident councils acquiring under the homeownership program authorized by [section 4116 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4116&num=0&edition=prelim)) to— (A) acquire the eligible low-income housing from the current owner for a purchase price not greater than the preservation equity of the housing; (B) pay the debt service on the federally-assisted mortgage covering the housing; (C) pay the debt service on any loan for the rehabilitation of the housing; (D) meet project operating expenses and establish adequate reserves for the housing, and in the case of a priority purchaser, meet project oversight costs; (E) receive a distribution equal to an 8 percent annual return on any actual cash investment (from sources other than assistance provided under this title 22 See References in Text note below.) made to acquire or rehabilitate the project; (F) in the case of a priority purchaser, receive a reimbursement of all reasonable transaction expenses associated with the acquisition, loan closing, and implementation of an approved plan of action; and (G) in the case of an approved resident homeownership program, cover the costs of training for the resident council, homeownership counseling and training, the fees for the nonprofit entity or public agency working with the resident council and costs related to relocation of tenants who elect to move. (3) **Incentives** (A) *In general* — For all qualified purchasers of housing under this subsection, the Secretary may provide assistance for an approved plan of action in the form of 1 or more of the incentives authorized under [section 4109(b) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4109/b&num=0&edition=prelim), except that the incentive under such [section 4109(b)(7) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4109/b/7&num=0&edition=prelim) may include an acquisition loan under section 1715z–6(f) 2 of this title. (B) *Priority purchasers* — Where the qualified purchaser is a priority purchaser, the Secretary may provide assistance for an approved plan of action (in the form of a grant) for each unit in the housing in an amount, as determined by the Secretary, that does not exceed the present value of the total of the projected published fair market rentals for existing housing (established by the Secretary under [section 1437f(c) of title 42](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section1437f/c&num=0&edition=prelim)) for the next 10 years (or such longer period if additional assistance is necessary to cover the costs referred to in paragraph (2)).

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4116 — Resident homeownership program

**(a) Formation of resident council** Tenants seeking to purchase eligible low-income housing in accordance with [section 4110 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4110&num=0&edition=prelim) shall organize a resident council for the purpose of developing a resident homeownership program in accordance with standards established by the Secretary. The resident council shall work with a public or private nonprofit organization or a public body (including an agency or instrumentality thereof). Such organization or public body shall have experience to enable it to help the tenants consider their options and to develop the capacity necessary to own and manage the housing, where appropriate, and shall be approved by the Secretary. **(b) Other program requirements and limitations** (1) **Sales to residents** — As a condition of approval of a plan of action involving homeownership program under this subchapter, the resident council shall prepare a workable plan acceptable to the Secretary for giving all residents an opportunity to become owners, which plan shall identify— (A) the price at which the resident council intends to transfer ownership interests in, or shares representing, units in the housing; (B) the factors that will influence the establishment of such price; (C) how such price compares to the estimated appraised value of the ownership interests or shares; (D) the underwriting standard the resident council plans to use (or reasonably expects a public or private lender to use) for potential tenant purchasers; (E) the financing arrangements the tenants are expected to pursue or be provided; and (F) a workable schedule of sale (subject to the limitations of paragraph (8)) based on estimated tenant

Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 4116

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4112 — Criteria for approval of plan of action involving incentives

**(a) In general** The Secretary may approve a plan of action for extension of the low-income affordability restrictions on any eligible low-income housing or transfer the housing to a qualified purchaser (other than a resident council) only upon finding that— (1) due diligence has been given to ensuring that the package of incentives is, for the Federal Government, the least costly alternative that is consistent with the full achievement of the purposes of this title; 11 See References in Text note below. (2) binding commitments have been made to ensure that— (A) the housing will be retained as housing affordable for very low-income families or persons, low-income families or persons, and moderate-income families or persons for the remaining useful life of such housing (as determined under subsection (c)); (B) throughout such period, adequate expenditures will be made for maintenance and operation of the housing and that the project meets housing standards established by the Secretary under subsection (d), as determined by inspections conducted under such subsection by the Secretary; (C) current tenants will not be involuntarily displaced (except for good cause); (D) any increase in rent contributions for current tenants will be to a level that does not exceed 30 percent of the adjusted income of the tenant or the published existing fair market rent for comparable housing established under [section 1437f(c) of title 42](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section1437f/c&num=0&edition=prelim), whichever is lower, except that the rent contributions of any tenants occupying the housing at the time of any increase may not be reduced by reason of this subparagraph (except with respect to tenants receiving section 8 [[42 U.S.C.

Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 4112

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4101 — General prepayment limitation

**(a) Prepayment and termination** An owner of eligible low-income housing may prepay, and a mortgagee may accept prepayment of, a mortgage on such housing only in accordance with a plan of action approved by the Secretary under this subchapter or in accordance with [section 4114 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4114&num=0&edition=prelim). An insurance contract with respect to eligible low-income housing may be terminated pursuant to [section 1715t of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1715t&num=0&edition=prelim) only in accordance with a plan of action approved by the Secretary under this subchapter or in accordance with [section 4114 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4114&num=0&edition=prelim). **(b) Foreclosure** A mortgagee may foreclose the mortgage on, or acquire by deed in lieu of foreclosure, any eligible low-income housing project only if the mortgagee also conveys title to the project to the Secretary in connection with a claim for insurance benefits. **(c) Effect of unauthorized prepayment** Any prepayment of a mortgage on eligible low-income housing or termination of the mortgage insurance on such housing not in compliance with the provisions of this subchapter shall be null and void and any low-income affordability restrictions on the housing shall continue to apply to the housing.

Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 4101

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4107 — Plan of action

**(a) Submission to Secretary** (1) **Timing** — Not later than 6 months after receipt of the information from the Secretary under [section 4106 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4106&num=0&edition=prelim) an owner seeking to terminate the low-income affordability restrictions through prepayment of the mortgage or voluntary termination under [section 4108 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4108&num=0&edition=prelim), or to extend the low-income affordability restriction on the housing under [section 4109 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4109&num=0&edition=prelim), shall submit a plan of action to the Secretary in such form and manner as the Secretary shall prescribe. Any owner or purchaser seeking a transfer of the housing under section 4110 or 4111 of this title shall submit a plan of action under this section to the Secretary upon acceptance of a bona fide offer under section 4110(b) or (c) of this title or upon making of any bona fide offer under [section 4111 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4111&num=0&edition=prelim). (2) **Copies to tenants** — Each owner submitting a plan of action under this section to the Secretary shall also submit a copy to the tenants of the housing. The owner shall simultaneously submit the plan of action to the office of the chief executive officer of the appropriate State or local government for the jurisdiction within which the housing is located. Each owner and the Secretary shall also, upon request, make available to the tenants of the housing and to the office of the chief executive officer of the appropriat

Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 4107

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4102 — Notice of intent

**(a) Filing with Secretary** An owner of eligible low-income housing that intends to terminate the low-income affordability restrictions through prepayment or voluntary termination in accordance with [section 4108 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4108&num=0&edition=prelim), extend the low-income affordability restrictions of the housing in accordance with [section 4109 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4109&num=0&edition=prelim), or transfer the housing to a qualified purchaser in accordance with [section 4110 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4110&num=0&edition=prelim), shall file with the Secretary a notice indicating such intent in the form and manner as the Secretary shall prescribe. **(b) Filing with State or local government, tenants, and mortgagee** The owner, upon filing a notice of intent under this section, shall simultaneously file the notice of intent with the chief executive officer of the appropriate State or local government for the jurisdiction within which the housing is located and with the mortgagee, and shall inform the tenants of the housing of the filing. **(c) Ineligibility for filing** An owner shall not be eligible to file a notice of intent under this section if the mortgage covering the housing— (1) falls into default on or after November 28, 1990; or (2) (A) fell into default before, but is current as of, November 28, 1990; and (B) the owner does not agree to recompense the appropriate Insurance Fund, in the amount the Secretary determines appropriate, for any losses sustained by the Fund as a result of any work-out or other arrangement agreed to by the Secretary

Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 4102

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4103 — Appraisal and preservation value of eligible low-income housing

**(a) Appraisal** Upon receiving notice of intent regarding an eligible low-income housing project indicating an intent to extend the low-income affordability restrictions under [section 4109 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4109&num=0&edition=prelim) or transfer the housing under [section 4110 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4110&num=0&edition=prelim), the Secretary shall provide for determination of the preservation value of the housing, as follows: (1) **Appraisers** — The preservation value shall be determined by 2 independent appraisers, one of whom shall be selected by the Secretary and one of whom shall be selected by the owner. The appraisals shall be conducted not later than 4 months after filing the notice of intent under [section 4102 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4102&num=0&edition=prelim), and the owner shall submit to the Secretary the appraisal made by the owner’s selected appraiser not later than 90 days after receipt of the notice under paragraph (2). If the 2 appraisers fail to agree on the preservation value, and the Secretary and the owner also fail to agree on the preservation value, the Secretary and the owner shall jointly select and jointly compensate a third appraiser, whose appraisal shall be binding on the parties. (2) **Notice** — Not later than 30 days after the filing of a notice of intent to seek incentives under [section 4109 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4109&num=0&edition=prelim) or transfer the property under [section 4110 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-t

Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 4103

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4105 — Federal cost limits and limitations on plans of action

**(a) Determination of relationship to Federal cost limits** (1) **Initial determination** — For each eligible low-income housing project appraised under [section 4103(a) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4103/a&num=0&edition=prelim), the Secretary shall determine whether the aggregate preservation rents for the project determined under paragraph (1) or (2) of [section 4104(b) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4104/b&num=0&edition=prelim) exceed the amount determined by multiplying 120 percent of the fair market rental (established under [section 1437f(c) of title 42](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section1437f/c&num=0&edition=prelim)) for the market area in which the housing is located by the number of dwelling units in the project (according to appropriate unit sizes). (2) **Relevant local markets** — If the aggregate preservation rents for a project exceeds the amount determined under paragraph (1), the Secretary shall determine whether such aggregate rents exceed the amount determined by multiplying 120 percent of the prevailing rents in the relevant local market area in which the housing is located by the number of units in the project (according to the appropriate unit sizes). A relevant local market area shall be an area geographically smaller than a market area established by the Secretary under [section 1437f(c)(1) of title 42](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section1437f/c/1&num=0&edition=prelim) that is identifiable as a distinct rental market area. The Secretary may rely on the appraisal to determine the relevant local market areas and prevailing rents in such local area

Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 4105

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4106 — Information from Secretary

**(a) Information to owners terminating affordability restrictions** The Secretary shall provide each owner who submits a notice of intent to terminate the low-income affordability restrictions on the housing under [section 4108 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4108&num=0&edition=prelim) with information under this section not later than 6 months after receipt of the notice of intent. The information shall include a description of the criteria for such termination specified under [section 4108 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4108&num=0&edition=prelim) and the documentation required to satisfy such criteria. **(b) Information to owners extending low-income affordability restrictions** The Secretary shall provide each owner who submits notice of intent to extend the low-income affordability restrictions on the housing under [section 4109 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4109&num=0&edition=prelim) or transfer the housing under [section 4110 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4110&num=0&edition=prelim) to a qualified purchaser with information under this subsection not later than 9 months after receipt of the notice of intent. The information shall include any information necessary for the owner to prepare a plan of action under [section 4107 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4107&num=0&edition=prelim), including the following: (1) **Preservation values** — A statement of the preservation value of the housing determined under paragraphs (1) and (2) of [section 4103(b) of this title](https:

Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 4106

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4111 — Mandatory sale for housing exceeding Federal cost limits

**(a) In general** With respect to any eligible low-income housing for which the aggregate preservation rents determined under [section 4104(b) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4104/b&num=0&edition=prelim) exceed the Federal cost limit, the owner shall offer the housing for sale to qualified purchasers as provided in this section. **(b) Right of first refusal to priority purchasers** (1) **Duration and required sale** — For the 12-month period beginning upon the receipt by the Secretary of the second notice of intent under [section 4106(d) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4106/d&num=0&edition=prelim) with respect to such housing, the owner of the housing may offer to sell and may sell the housing only to priority purchasers. If, during such period, a priority purchaser makes a bona fide offer to purchase the housing for a sale price not less than the preservation value of the housing determined under [section 4103(b)(2) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4103/b/2&num=0&edition=prelim), the Secretary shall require the owner to sell the housing pursuant to such offer. (2) **Expression of interest** — During the period under paragraph (1), priority purchasers shall have the opportunity to submit written notice to the owner and the Secretary stating their interest in acquiring the housing. Such written notice shall be in such form and include such information as the Secretary may prescribe. (3) **Information from Secretary** — Not later than 30 days after receipt of any notice under paragraph (2), the Secretary shall provide such purchaser with information on the assistance available from the Federal

Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 4111

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4142 — Purposes

The purposes of this subchapter are— (1) to promote the ability of residents of eligible low-income housing to meaningfully participate in the preservation process established by this title 11 See References in Text note below. and affect decisions about the future of their housing; (2) to promote the ability of community-based nonprofit housing developers and resident councils to acquire, rehabilitate, and competently own and manage eligible housing as rental or cooperative housing for low- and moderate-income people; and (3) to assist the Secretary in discharging the obligation under [section 4110 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4110&num=0&edition=prelim) to notify potential qualified purchasers of the availability of properties for sale and to otherwise facilitate the coordination and oversight of the preservation program established under this title.1

Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 4142

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