Title 42 — The Public Health and WelfareRelease 119-73
§1437b Loans and commitments to make loans for low-income housing projects
Title 42 › Chapter CHAPTER 8— - LOW-INCOME HOUSING › Subchapter SUBCHAPTER I— - GENERAL PROGRAM OF ASSISTED HOUSING › § 1437b
Summary
The law lets the Secretary make loans or promise loans to public housing agencies to help pay for building, buying, or running low-income housing. The Secretary picks the interest rate, but it must be at least the rate the Secretary of the Treasury finds for similar U.S. government securities plus one-eighth of one percent (0.125%). Loans must be secured and repaid within a time the Secretary decides, but not more than 40 years (or 40 years from the date of the bonds for the loan). The Secretary can also require these loans to back bonds or other obligations that a housing agency issues. The Secretary may issue notes or other obligations for the Treasury to buy, up to $1,500,000,000 unless the President allows more. The Treasury sets their terms, can buy or sell them, and treats those actions like public debt. The Secretary can cancel (forgive) loans that still have unpaid principal or interest, except for loans not repaid from annual contributions or loans whose proceeds are owed to an agency by contractors. All notes the Treasury held were forgiven on April 7, 1986. Notes issued during a fiscal year are forgiven on September 30 of that year (starting September 30, 1986). Any budget authority freed by forgiveness is rescinded.
Full Legal Text
Title 42, §1437b
The Public Health and Welfare — Source: USLM XML via OLRC
(a)The Secretary may make loans or commitments to make loans to public housing agencies to help finance or refinance the development, acquisition, or operation of low-income housing projects by such agencies. Any contract for such loans and any amendment to a contract for such loans shall provide that such loans shall bear interest at a rate specified by the Secretary which shall not be less than a rate determined by the Secretary of the Treasury taking into consideration the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans, plus one-eighth of 1 per centum. Such loans shall be secured in such manner and shall be repaid within such period not exceeding forty years, or not exceeding forty years from the date of the bonds evidencing the loan, as the Secretary may determine. The Secretary may require loans or commitments to make loans under this section to be pledged as security for obligations issued by a public housing agency in connection with a low-income housing project.
(b)The Secretary may issue and have outstanding at any one time notes and other obligations for purchase by the Secretary of the Treasury in an amount which will not, unless authorized by the President, exceed $1,500,000,000. For the purpose of determining obligations incurred to make loans pursuant to this chapter against any limitation otherwise applicable with respect to such loans, the Secretary shall estimate the maximum amount to be loaned at any one time pursuant to loan agreements then outstanding with public housing agencies. Such notes or other obligations shall be in such forms and denominations and shall be subject to such terms and conditions as may be prescribed by the Secretary with the approval of the Secretary of the Treasury. The notes or other obligations issued under this subsection shall have such maturities and bear such rate or rates of interest as shall be determined by the Secretary of the Treasury. The Secretary of the Treasury is authorized and directed to purchase any notes or other obligations of the Secretary issued hereunder and for such purpose is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under chapter 31 of title 31, and the purposes for which securities may be issued under such chapter are extended to include any purchases of such obligations. The Secretary of the Treasury may at any time sell any of the notes or other obligations acquired by him under this section. All redemptions, purchases, and sales by the Secretary of the Treasury of such notes or other obligations shall be treated as public debt transactions of the United States.
(c)(1)At such times as the Secretary may determine, and in accordance with such accounting and other procedures as the Secretary may prescribe, each loan made by the Secretary under subsection (a) that has any principal amount outstanding or any interest amount outstanding or accrued shall be forgiven; and the terms and conditions of any contract, or any amendment to a contract, for such loan with respect to any promise to repay such principal and interest shall be canceled. Such cancellation shall not affect any other terms and conditions of such contract, which shall remain in effect as if the cancellation had not occurred. This paragraph shall not apply to any loan the repayment of which was not to be made using annual contributions, or to any loan all or part of the proceeds of which are due a public housing agency from contractors or others.
(2)(A)On April 7, 1986, each note or other obligation issued by the Secretary to the Secretary of the Treasury pursuant to subsection (b), together with any promise to repay the principal and unpaid interest that has accrued on each note or obligation, shall be forgiven; and any other term or condition specified by each such obligation shall be canceled.
(B)On September 30, 1986, and on any subsequent September 30, each such note or other obligation issued by the Secretary to the Secretary of the Treasury pursuant to subsection (b) during the fiscal year ending on such date, together with any promise to repay the principal and unpaid interest that has accrued on each note or obligation, shall be forgiven; and any other term or condition specified by each such obligation shall be canceled.
(3)Any amount of budget authority (and contract authority) that becomes available during any fiscal year as a result of the forgiveness of any loan, note, or obligation under this subsection shall be rescinded.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Prior Provisions
A prior section 4 of act Sept. 1, 1937, ch. 896, 50 Stat. 889, as amended, provided for assistance of officers, etc., of other agencies and transfer of property to the Authority and was classified to section 1404 of this title, prior to the general revision of this chapter by Pub. L. 93–383.
Amendments
1990—Subsec. (a). Pub. L. 101–625 substituted “low-income housing” for “lower income housing” wherever appearing. 1986—Subsec. (c). Pub. L. 99–272 added subsec. (c). 1984—Subsec. (b). Pub. L. 98–479 substituted “chapter 31 of title 31” for “the Second Liberty Bond Act, as amended” and “such chapter” for “such Act”. 1981—Subsec. (a). Pub. L. 97–35 substituted reference to lower income for reference to low-income in two places.
Statutory Notes and Related Subsidiaries
Effective Date
of 1981 AmendmentAmendment by Pub. L. 97–35 effective Oct. 1, 1981, see section 371 of Pub. L. 97–35, set out as an
Effective Date
note under section 3701 of Title 12, Banks and Banking. Carryover of Amounts of Budget Authority; Availability as Appropriation of Funds for Grants Pub. L. 99–500, § 101(g) [H.R. 5313, title I], Oct. 18, 1986, 100 Stat. 1783–242, and Pub. L. 99–591, § 101(g) [H.R. 5313, title I], Oct. 30, 1986, 100 Stat. 3341–242; Pub. L. 100–202, § 106, Dec. 22, 1987, 101 Stat. 1329–433, provided in part: “That the budget authority obligated under contracts for annual contributions shall be increased above amounts heretofore provided in appropriations Acts by $7,805,668,000: Provided further, That any part of the amount of the increase in budget authority provided for in the immediately foregoing proviso that is available under this Act for public housing development and acquisition costs or which is to be used for
Amendments
for such costs, shall be available as an appropriation of funds, to remain available until expended, for grants, which are hereby authorized in lieu of loans under section 4(a) of the United States Housing Act of 1937 (42 U.S.C. 1437b), and which the Secretary may make on substantially the same terms (except for repayment unless repayment is a properly imposed sanction) as those heretofore set forth in annual contributions contracts for loans and annual contributions: Provided further, That during 1987 and thereafter, any amounts of budget authority which are carried over from a prior year, or which are otherwise available for obligation, and which are available for public housing development and acquisition costs, together with any amounts of budget authority which are to be used for
Amendments
for such costs, in accordance with any Act, shall also be made available as an appropriation of funds for grants, under the same terms as those applying under the immediately preceding proviso”.
Reference
Citations & Metadata
Citation
42 U.S.C. § 1437b
Title 42 — The Public Health and Welfare
Last Updated
Apr 6, 2026
Release point: 119-73