42 U.S.C. § 12875 — Other program requirements

Page 8493 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 12875 of the Act is classified principally to subchapter II (§ 1707 et seq.) of chapter 13 of Title 12, Banks and Bank- ing. For complete classification of this Act to the Code, see section 1701 of Title 12 and Tables. This title, referred to in subsec. (f)(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, 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 sec- tion 1437aaa of this title and Tables. Section 1437f of this title, referred to in subsec. (g)(2), was in the original ‘‘section 8’’, and was translated as reading ‘‘section 8 of the United States Housing Act of 1937’’ to reflect the probable intent of Congress. § 12875. Other program requirements (a) Preferences In selecting eligible families for homeowner- ship, the recipient shall give a first preference to otherwise qualified current tenants and a sec- ond preference to otherwise qualified eligible families who have completed participation in an economic self-sufficiency program specified by the Secretary. (b) Cost limitations The Secretary may establish cost limitations on eligible activities under this part, subject to the provisions of this part. (c) Use of proceeds from sales to eligible families The entity that transfers ownership interests in, or shares representing, units to eligible fami- lies, or another entity specified in the approved application, shall 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. (d) 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 (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- Page 8494 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 12876 1 See References in Text note below. retary all records necessary to calculate accu- rately payments due the Secretary under this subsection. (e) 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. (f) Dollar limitation on economic development activities Not more than an aggregate of $250,000 from amounts made available under sections 12872 and 12873 of this title may be used for economic development activities under sections 12872(b)(6) and 12873(b)(9) 1 of this title for any project. (g) Timely homeownership Recipients shall transfer ownership of the property to tenants within a specified period of time that the Secretary determines to be rea- sonable. During the interim period when the property continues to be operated and managed as rental housing, the recipient shall utilize written tenant selection policies and criteria that are approved by the Secretary as consistent with the purpose of improving housing opportu- nities for low-income families. The recipient shall promptly notify in writing any rejected ap- plicant of the grounds for any rejection. (h) Records and audit of recipients of assistance (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 (c) and (d)), 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. (i) Certain entities not eligible Any entity that assumes, as determined by the Secretary, a mortgage covering eligible prop- erty in connection with the acquisition of the property from an owner under this section must comply with any low-income affordability re- strictions for the remaining term of the mort- gage. This requirement shall only apply to an entity, such as a cooperative association, that, as determined by the Secretary, intends to own the housing on a permanent basis. (Pub. L. 101–625, title IV, § 425, Nov. 28, 1990, 104 Stat. 4168.) Editorial Notes REFERENCES IN TEXT Sections 12872(b)(6) and 12873(b)(9) of this title, re- ferred to in subsec. (f), were redesignated sections 12872(b)(7) and 12873(b)(10) of this title, respectively, by Pub. L. 102–550, title X, § 1012(i), Oct. 28, 1992, 106 Stat. 3906. § 12876. Definitions For purposes of this part: (1) The term ‘‘applicant’’ means the fol- lowing entities that may represent the tenants of the housing: (A) A resident management corporation established in accordance with the require- ments of the Secretary under section 1437r of this title. (B) A resident council. (C) A cooperative association. (D) A public or private nonprofit organiza- tion. (E) A public body (including an agency or instrumentality thereof). (F) A public housing agency (including an Indian housing authority). (G) A mutual housing association. (2) The term ‘‘eligible family’’ means a fam- ily or individual— (A) who is a tenant of the eligible property on the date the Secretary approves an imple- mentation grant; or (B) whose income does not exceed 80 per- cent of the median income for the area, as determined by the Secretary with adjust- ments for smaller and larger families. (3) The term ‘‘eligible property’’ means a multifamily rental property, containing 5 or more units, that is— (A) owned or held by the Secretary; (B) financed by a loan or mortgage held by the Secretary or insured by the Secretary; (C) determined by the Secretary to have serious physical or financial problems under the terms of an insurance or loan program administered by the Secretary; or (D) owned or held by the Secretary of Agri- culture, the Resolution Trust Corporation, the Federal Deposit Insurance Corporation, the Secretary of Defense, the Secretary of Transportation, the General Services Ad- ministration, any other Federal agency, or a State or local government or an agency or instrumentality thereof.