§4105 — Title 12 Banks and Banking | U.S. Code

Summary

The Secretary must check whether a project's total preservation rents are higher than two cost limits. First, the Secretary compares the project's total rents to 120 percent of the fair market rent (set under section 1437f(c) of Title 42) times the number of units. Then the Secretary compares the total rents to 120 percent of the prevailing rents in a smaller, local rental area times the number of units. The rents only count as above the federal cost limit if they exceed both of those amounts. The Secretary can use the appraisal and other info to find the local area and rents. If the total rents do not exceed the federal cost limit, the owner generally may not prepay the mortgage or end the insurance, except as allowed under section 4114. The owner can file a plan of action to get incentives or file a second notice to transfer the property under section 4110. If the total rents do exceed the federal cost limit, the owner may file a plan for incentives or a second notice to transfer only if the incentives or sale price do not go above the federal cost limit, or the owner may file a second notice to prepay or end insurance but must follow the mandatory sale rules in section 4111.

Title 12, §4105

Banks and Banking — Source: USLM XML via OLRC

(a)(1)For each eligible low-income housing project appraised under section 4103(a) of this title, 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 exceed the amount determined by multiplying 120 percent of the fair market rental (established under section 1437f(c) of title 42) 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)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 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 areas and any other information the Secretary determines is appropriate.

(3)For purposes of this subchapter, the aggregate preservation rents shall be considered to exceed the Federal cost limits under this subsection only if the aggregate preservation rents exceed the amount determined under paragraph (1) and the amount determined under paragraph (2).

(b)(1)If the aggregate preservation rents for an eligible low-income housing project do not exceed the Federal cost limit, the owner may not prepay the mortgage on the housing or terminate the insurance contract with respect to the housing, except as permitted under section 4114 of this title. The owner may—

(A)file a plan of action under section 4107 of this title to receive incentives under section 4109 of this title; or

(B)file a second notice of intent under section 4106(d) of this title indicating an intention to transfer the housing under section 4110 of this title and take actions pursuant to such section.

(2)If the aggregate preservation rents for an eligible low-income housing project exceed the Federal cost limit, the owner may—

(A)file a plan of action under section 4107 of this title to receive incentives under section 4109 of this title if the owner agrees to accept incentives under such sections in an amount that shall not exceed the Federal cost limit;

(B)file a second notice of intent under section 4106(d) of this title indicating an intention to transfer the housing under section 4110 of this title and take actions pursuant to such section if the owner agrees to transfer the housing at a price that shall not exceed the Federal cost limit; or

(C)file a second notice of intent under section 4106(d) of this title indicating an intention to prepay the mortgage or voluntarily terminate the insurance, subject to the mandatory sale provisions under section 4111 of this title.

Editorial Notes

Amendments

1992—Subsec. (a)(2). Pub. L. 102–550 made technical amendment to reference to section 1437f(c)(1) of title 42 to reflect correction of corresponding provision of original act.

§4105 Federal cost limits and limitations on plans of action

Summary

Title 12, §4105

Notes & Related Subsidiaries

Editorial Notes

Amendments

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