HOME Investment Partnerships Program: Program Updates and Streamlining
Published Date: 1/6/2025
Rule
Summary
Starting February 5, 2025, HUD is updating the HOME program to make it simpler and better aligned with other housing programs. These changes affect states and local governments that get grants to build and maintain affordable homes and help low-income renters. The updates streamline rules, reflect recent law changes, and tweak related programs, aiming to speed up and improve affordable housing efforts.
Analyzed Economic Effects
8 provisions identified: 7 benefits, 0 costs, 1 mixed.
Rule Effective Date and Transition
The rule takes effect February 5, 2025. Projects with HOME funds committed on or after February 5, 2025 must follow the new rules, but participating jurisdictions (PJs) may continue to use the previous HOME regulations for commitments made up to one year after February 5, 2025 to give time to update policies and systems.
Expanded Income Safe Harbor Option
PJs may accept an income determination from other Federal, State, or local public assistance programs (for example, TANF, Medicaid, or LIHTC) as a safe harbor if the statement shows family size and annual income and was made within the previous 12 months. HUD changed the word from "must" to "may," so PJs have the option to use this safe harbor for initial and certain later income determinations, including tenant-based rental assistance.
Pre-Commitment Soft Costs Reimbursable
HUD allows certain project soft costs incurred no more than 24 months before a HOME commitment to be reimbursed if included in the written agreement. Examples now explicitly allowed include private lender origination fees, credit reports, title evidence, legal fees, private appraisal fees, independent cost estimates, accounting fees, zoning/planning filing fees, and other lender-required third-party reporting fees.
Tenant Protections Limited to New Commitments
HUD strengthened tenant protections in the HOME tenancy addendum but the new tenant protections in Sec. 92.253 will not be imposed on owners or tenants under written agreements or rental assistance contracts that were in place prior to the effective date. The tenant protections apply only to projects with HOME funds committed on or after February 5, 2025 (and may only be applied to commitments made within one year after that date).
CHDO Board and Capacity Rule Changes
HUD revised the Community Housing Development Organization (CHDO) definition to (1) explicitly allow "low-income beneficiaries of HUD programs" as eligible board members, (2) require CHDOs to have paid employees with housing development experience who will work on HOME projects (volunteers may supplement but not replace paid staff), and (3) prohibit an organization from qualifying as a CHDO if its service area is the entire State. The CHDO-related flexibilities in Sec. 92.300 apply only when CHDO set-aside funds are committed on or after the effective date.
Rental Assistance Contract Parties Changed
The HOME tenant-based rental assistance rental assistance contract must be entered into with the owner and the tenant, either as separate agreements or as a single tri-party agreement. The definition of "Commit to a specific local project" was updated to reflect that the committing document is the contract with the owner and the tenant.
Community Land Trust Definition Updated
HUD revised the Community Land Trust (CLT) definition to require that a CLT's primary purpose be acquiring, developing, or holding land to provide housing that is permanently affordable to low-income persons, and removed the requirement that CLTs serve moderate-income persons. The CLT definition now better recognizes CLT ownership models that may not perform maintenance or development but hold land for affordability.
Homeownership Definition Clarified
HUD replaced the term describing single-family dwellings with a defined term "single family housing" that explicitly includes manufactured homes. HUD also clarified ground lease minimum terms (for example, a CLT-developed project must have a minimum ground lease term of 50 years; insular areas may have a 40-year minimum).
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