42 U.S.C. § 12895 — Other program requirements

Page 8499 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 12895 1 So in original. The word ‘‘of’’ probably should not appear. 2 So in original. See References in Text note below. prices (including principal, insurance, taxes, and interest and closing costs) for initial acquisition of the property, and for sales to eligible fami- lies, such that the eligible family shall not be required to expend more than 30 percent of the adjusted income of the family per month to complete a sale under the homeownership pro- gram. (c) Eligible property A property may not participate in a home- ownership program under this part unless all tenants or occupants of the property (at the time of 1 the application for the implementation grant covering the property is filed with the Secretary) participate in the homeownership program. (d) Plan A homeownership program under this part shall provide, and include a plan, for— (1) identifying and selecting eligible families to participate in the homeownership program; (2) providing relocation assistance to fami- lies who elect to move; and (3) ensuring continued affordability of the property to homebuyers and homeowners. (e) Housing quality standards The application shall include a plan ensuring that the unit— (1) will be free from any defects that pose a danger to health or safety before transfer of an ownership interest in, or shares representing, a unit to an eligible family; and (2) will, not later than 2 years after the transfer to an eligible family, meet minimum housing standards established by the Sec- retary for the purpose of this title.2 (f) Preference for acquisition of vacant units Each homeownership program under this part shall provide that, in making vacant units in el- igible properties available for acquisition by eli- gible families, preference shall be given to eligi- ble families who reside in public or Indian hous- ing. (Pub. L. 101–625, title IV, § 444, Nov. 28, 1990, 104 Stat. 4176; Pub. L. 102–550, title I, § 181(f), Oct. 28, 1992, 106 Stat. 3736.) Editorial Notes REFERENCES IN TEXT This title, referred to in subsec. (e)(2), is title IV of Pub. L. 101–625, Nov. 28, 1990, 104 Stat. 4148, known as the Homeownership and Opportunity Through HOPE Act, which enacted this subchapter and subchapter II–A (§ 1437aaa et seq.) of chapter 8 of this title, amended sec- tions 1437c, 1437f, 1437l, 1437p, 1437r, and 1437s of this title and section 1709 of Title 12, Banks and Banking, and enacted provisions set out as notes under sections 1437c, 1437aa, and 1437aaa of this title. For complete classification of title IV to the Code, see Short Title note set out under section 1437aaa of this title and Ta- bles. AMENDMENTS 1992—Subsec. (f). Pub. L. 102–550 added subsec. (f). § 12895. Other program requirements (a) Cost limitations The Secretary may establish cost limitations on eligible activities under this part, subject to the provisions of this part. (b) Use of proceeds from sales to eligible families Any entity that transfers ownership interests in, or shares representing, units to eligible fami- lies, or another entity specified in the approved application, may use the proceeds, if any, from the initial sale for costs of the homeownership program, including operating expenses, improve- ments to the project, business opportunities for low-income families, supportive services related to the homeownership program, additional homeownership opportunities, and other activi- ties approved by the Secretary. (c) Restrictions on resale by homeowners (1) In general (A) Transfer permitted A homeowner under a homeownership pro- gram may transfer the homeowner’s owner- ship interest in, or shares representing, the unit, except that a homeownership program may establish restrictions on the resale of units under the program. (B) Right to purchase Where a resident management corpora- tion, resident council, or cooperative has ju- risdiction over the unit, the corporation, council, or cooperative shall have the right to purchase the ownership interest in, or shares representing, the unit from the home- owner for the amount specified in a firm contract between the homeowner and a pro- spective buyer. If such an entity does not have jurisdiction over the unit or elects not to purchase and if the prospective buyer is not a low-income family, the public housing agency or the implementation grant recipi- ent shall have the right to purchase the own- ership interest in, or shares representing, the unit for the same amount. (C) Promissory note required The homeowner shall execute a promissory note equal to the difference between the market value and the purchase price, pay- able to the public housing agency or other entity designated in the homeownership plan, together with a mortgage securing the obligation of the note. (2) 6 years or less In the case of a transfer within 6 years of the acquisition under the program, the home- ownership program shall provide for appro- priate restrictions to assure that an eligible family may not receive any undue profit. The plan shall provide for limiting the family’s consideration for its interest in the property to the total of— (A) the contribution to equity paid by the family; (B) the value, as determined by such means as the Secretary shall determine through regulation, of any improvements in- stalled at the expense of the family during the family’s tenure as owner; and Page 8500 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 12896 1 So in original. Probably should be ‘‘(f)’’. (C) the appreciated value determined by an inflation allowance at a rate which may be based on a cost-of-living index, an income index, or market index as determined by the Secretary through regulation and agreed to by the purchaser and the entity that trans- fers ownership interests in, or shares rep- resenting, units to eligible families (or an- other entity specified in the approved appli- cation), at the time of initial sale, and ap- plied against the contribution to equity. Such an entity may, at the time of initial sale, enter into an agreement with the family to set a maximum amount which this appre- ciation may not exceed. (3) 6–20 years In the case of a transfer during the period beginning 6 years after the acquisition and ending 20 years after the acquisition, the homeownership program shall provide for the recapture by the Secretary or the program of an amount equal to the amount of the declin- ing balance on the note described in paragraph (1)(C). (4) Use of recaptured funds Fifty percent of any portion of the net sales proceeds that may not be retained by the homeowner under the plan approved pursuant to this subsection shall be paid to the entity that transferred ownership interests in, or shares representing, units to eligible families, or another entity specified in the approved ap- plication, for use for improvements to the project, business opportunities for low-income families, supportive services related to the homeownership program, additional home- ownership opportunities, and other activities approved by the Secretary. The remaining 50 percent shall be returned to the Secretary for use under this part, subject to limitations con- tained in appropriations Acts. Such entity shall keep and make available to the Sec- retary all records necessary to calculate accu- rately payments due the Secretary under this subsection. (d) Third party rights The requirements under this part regarding quality standards, resale, or transfer of the own- ership interest of a homeowner shall be judi- cially enforceable against the grant recipient with respect to actions involving rehabilitation, and against purchasers of property under this subsection or their successors in interest with respect to other actions by affected low-income families, resident management corporations, resident councils, public housing agencies, and any agency, corporation, or authority of the United States Government. The parties specified in the preceding sentence shall be entitled to reasonable attorney fees upon prevailing in any such judicial action. (e) Protection of nonpurchasing families No tenant residing in a dwelling unit in a property on the date the Secretary approves an application for an implementation grant may be evicted by reason of a homeownership program approved under this part. (h) 1 Records and audit of recipients of assist- ance (1) In general Each recipient shall keep such records as may be reasonably necessary to fully disclose the amount and the disposition by such recipi- ent of the proceeds of assistance received under this part (and any proceeds from financ- ing obtained or sales under subsections (b) and (c)), the total cost of the homeownership pro- gram in connection with which such assist- ance is given or used, and the amount and na- ture of that portion of the program supplied by other sources, and such other sources as will facilitate an effective audit. (2) Access by Secretary The Secretary shall have access for the pur- pose of audit and examination to any books, documents, papers, and records of the recipi- ent that are pertinent to assistance received under this part. (3) Access by Comptroller General The Comptroller General of the United States, or any of the duly authorized rep- resentatives of the Comptroller General, shall also have access for the purpose of audit and examination to any books, documents, papers, and records of the recipient that are pertinent to assistance received under this part. (Pub. L. 101–625, title IV, § 445, Nov. 28, 1990, 104 Stat. 4177.) § 12896. Definitions For purposes of this part: (1) The term ‘‘applicant’’ means a private nonprofit organization, cooperative associa- tion, or a public agency (including an agency or instrumentality thereof) in cooperation with a private nonprofit organization. (2) The term ‘‘displaced homemaker’’ has the same meaning as in section 12704 of this title. (3) The term ‘‘eligible family’’ means a fam- ily or individual who— (A) has an income that does not exceed 80 percent of the median income for the area, as determined by the Secretary with adjust- ments for smaller and larger families; and (B) is a first-time homebuyer. (4) The term ‘‘eligible property’’ means a single family property, containing no more than four units, that is owned or held by the Secretary, the Secretary of Veterans Affairs, the Secretary of Agriculture, the Resolution Trust Corporation, the Federal Deposit Insur- ance Corporation, the Secretary of Defense, the Secretary of Transportation, the General Services Administration, any other Federal agency, a State or local government (includ- ing any in rem property), or a public housing agency or an Indian housing authority (ex- cluding public or Indian housing under the United States Housing Act of 1937 [42 U.S.C. 1437 et seq.] and including properties held by institutions within the jurisdiction of the Res- olution Trust Corporation). (5) The term ‘‘first-time homebuyer’’ has the same meaning as in section 12704 of this title.