Title 42 — The Public Health and WelfareRelease 119-73
§1437aaa–3 Homeownership program requirements
Title 42 › Chapter CHAPTER 8— - LOW-INCOME HOUSING › Subchapter SUBCHAPTER II–A— - HOPE FOR PUBLIC HOUSING HOMEOWNERSHIP › § 1437aaa–3
Summary
A homeownership program must let eligible families buy at least one-half of the units in a public housing project. The program can use different forms of ownership, like cooperatives or traditional home ownership. Sales prices must be set so a family does not have to spend more than 30 percent of its adjusted monthly income to buy a unit, and prices must account for mortgage payments and related costs. The program must explain how families are chosen, how people who move will get help, how units will stay affordable, how buyers and owners will get training and counseling, and how replaced units will be handled. If a project has more than one building, the program must usually cover the whole project unless the Secretary allows selling fewer buildings and finds no harm to tenants. Applications must show how rehab and purchases will be paid for, and loans can include grants, cash, or insured mortgages. Property may not be used as loan collateral except under strict conditions to protect long‑term low‑income use and project finances, and lenders must give a reasonable chance to fix defaults before foreclosing. Units must be safe before transfer and must meet minimum housing standards within 2 years. Tenants living in a unit when the program is approved cannot be evicted because of the program. If they do not buy, qualified tenants may stay at affordable rents or, if they move, be offered another public unit or housing assistance when funding allows; they must be told about relocation help. Tenants keep their usual public housing rights.
Full Legal Text
Title 42, §1437aaa–3
The Public Health and Welfare — Source: USLM XML via OLRC
(a)A homeownership program under this subchapter shall provide for acquisition by eligible families of ownership interests in, or shares representing, at least one-half of the units in a public housing project under any arrangement determined by the Secretary to be appropriate, such as cooperative ownership (including limited equity cooperative ownership) and fee simple ownership (including condominium ownership), for occupancy by the eligible families.
(b)A homeownership program under this subchapter shall provide for the establishment of sales prices (including principal, insurance, taxes, and interest and closing costs) for initial acquisition of the property from the public housing agency if the applicant is not a public housing agency, and for sales to eligible families, such that an 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 program.
(c)A homeownership program under this subchapter shall provide, and include a plan, for—
(1)identifying and selecting eligible families to participate in the homeownership program;
(2)providing relocation assistance to families who elect to move;
(3)ensuring continued affordability by tenants, homebuyers, and homeowners in the project;
(4)providing ongoing training and counseling for homebuyers and homeowners; and
(5)replacing units in eligible projects covered by a homeownership program.
(d)Acquisition or rehabilitation of public housing projects under a homeownership program under this subchapter may not consist of acquisition or rehabilitation of less than the whole public housing project in a project consisting of more than 1 building. The provisions of this subsection may be waived upon a finding by the Secretary that the sale of less than all the buildings in a project is feasible and will not result in a hardship to any tenants of the project who are not included in the homeownership program.
(e)(1)The application shall identify and describe the proposed financing for (A) any rehabilitation, and (B) acquisition (i) of the project, where applicable, by an entity other than the public housing agency for transfer to eligible families, and (ii) by eligible families of ownership interests in, or shares representing, units in the project. Financing may include use of the implementation grant, sale for cash, or other sources of financing (subject to applicable requirements), including conventional mortgage loans and mortgage loans insured under title II of the National Housing Act [12 U.S.C. 1707 et seq.].
(2)Property transferred under this subchapter shall not be pledged as collateral for debt or otherwise encumbered except when the Secretary determines that—
(A)such encumbrance will not threaten the long-term availability of the property for occupancy by low-income families;
(B)neither the Federal Government nor the public housing agency will be exposed to undue risks related to action that may have to be taken pursuant to paragraph (3);
(C)any debt obligation can be serviced from project income, including operating assistance; and
(D)the proceeds of such encumbrance will be used only to meet housing standards in accordance with subsection (f) or to make such additional capital improvements as the Secretary determines to be consistent with the purposes of this subchapter.
(3)Any lender that provides financing in connection with a homeownership program under this subchapter shall give the public housing agency, resident management corporation, individual owner, or other appropriate entity a reasonable opportunity to cure a financial default before foreclosing on the property, or taking other action as a result of the default.
(f)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 Secretary for the purposes of this subchapter.
(g)
(h)(1)No tenant residing in a dwelling unit in a public housing project on the date the Secretary approves an application for an implementation grant may be evicted by reason of a homeownership program approved under this subchapter.
(2)If the tenant decides not to purchase a unit, or is not qualified to do so, the recipient shall, during the term of any operating assistance under the implementation grant, permit each otherwise qualified tenant to continue to reside in the project at rents that do not exceed levels consistent with section 1437a(a) of this title or, if an otherwise qualified tenant chooses to move (at any time during the term of such operating assistance contract), the public housing agency shall, to the extent approved in appropriations Acts, offer such tenant (A) a unit in another public housing project, or (B) section 8 [42 U.S.C. 1437f] assistance for use in other housing.
(3)The recipient shall also inform each such tenant that if the tenant chooses to move, the recipient will pay relocation assistance in accordance with the approved homeownership program.
(4)Tenants renting a unit in a project transferred under this subchapter shall have all rights provided to tenants of public housing under this chapter.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
References in Text
The National Housing Act, referred to in subsec. (e)(1), is act June 27, 1934, ch. 847, 48 Stat. 1246. Title II of the Act is classified principally to subchapter II (§ 1707 et seq.) of chapter 13 of Title 12, Banks and Banking. For complete classification of this Act to the Code, see section 1701 of Title 12 and Tables. This subchapter, referred to in subsec. (e)(3), was in the original “this subtitle”, and was translated as reading “this title”, meaning title III of act Sept. 1, 1937, ch. 896, as added by Pub. L. 101–625, to reflect the probable intent of Congress, because title III of act Sept. 1, 1937, does not contain subtitles.
Amendments
1998—Subsec. (g). Pub. L. 105–276 struck out subsec. (g) which prohibited transfer of projects without plan for replacement housing. See 1995 Amendment note below. 1995—Subsec. (g). Pub. L. 104–19 struck out subsec. (g) which prohibited transfer of projects without plan for replacement housing. 1992—Subsec. (d). Pub. L. 102–550 struck out “(not including scattered site single family housing of a public housing agency)” after “housing project”.
Statutory Notes and Related Subsidiaries
Effective Date
of 1998 AmendmentAmendment by section 531(b)(1) of Pub. L. 105–276 effective with respect to any plan for the demolition, disposition, or conversion to homeownership of public housing that is approved by Secretary after Sept. 30, 1995, see section 531(b)(2) of Pub. L. 105–276, set out as a note below.
Effective Date
of 1995 AmendmentAmendment by Pub. L. 104–19 effective for applications for demolition, disposition, or conversion to homeownership of public housing approved by the Secretary, and other consolidation and relocation activities of public housing agencies undertaken on, before, or after Sept. 30, 1995, and on or before Sept. 30, 1998, see section 1002(d) of Pub. L. 104–19, as amended, set out as a note under section 1437c of this title. Homeownership Replacement Plan Pub. L. 105–276, title V, § 531(b), Oct. 21, 1998, 112 Stat. 2573, provided that: “(1) In general.—Notwithstanding subsections (b) and (c) of section 1002 of the Emergency Supplemental Appropriations for Additional Disaster Assistance, for Anti-terrorism Initiatives, for Assistance in the Recovery from the Tragedy that Occurred At Oklahoma City, and Rescissions Act, 1995 [amending this section and enacting provision set out as a note under section 1437c of this title] (Public Law 104–19; 109 Stat. 236), subsection (g) of section 304 of the United States Housing Act of 1937 (42 U.S.C. 1437aaa–3(g)) is repealed. “(2)
Effective Date
.—The amendment made by paragraph (1) shall be effective with respect to any plan for the demolition, disposition, or conversion to homeownership of public housing that is approved by the Secretary after September 30, 1995.”
Reference
Citations & Metadata
Citation
42 U.S.C. § 1437aaa–3
Title 42 — The Public Health and Welfare
Last Updated
Apr 6, 2026
Release point: 119-73