42 U.S.C. § 1437z–4: Resident homeownership…

Summary

Lets public housing agencies run homeownership programs that let low‑income families buy public housing units or other agency‑owned houses to use as their main home, if the program is part of the agency plan and approved by the federal Housing Secretary. The program can cover existing public housing and other units the agency owns or assists. Only low‑income families (including those the agency already helps), or groups set up to buy and quickly resell to low‑income families, may buy. The agency can set extra rules, like income, work, counseling, or criminal‑history checks. If an entity buys to resell, it must sell to low‑income families within 5 years and must use net proceeds for housing purposes like funding resident groups or capital reserves. The agency must first offer any unit for sale to the person living there. If a resident does not buy, the agency must give 90 days’ notice before moving them (except in urgent health or safety cases), pay reasonable moving costs, provide counseling, and offer comparable housing that meets quality and location rules. Agencies can help finance sales and decide what kind of ownership to sell. Buyers must make a downpayment set by the agency and must put in at least 1% of the purchase price from their own non‑gift funds. Resales are allowed, but the agency can limit resale to recapture some economic gain during the first 5 years; after 5 years the agency may recapture only amounts equal to its assistance. Sale proceeds must be used for low‑income housing under the agency plan. Agencies may also use Capital Fund or other income to help residents buy homes.

Title 42, §1437z–4

The Public Health and Welfare, Source: USLM XML via OLRC

(a)In general

A public housing agency may carry out a homeownership program in accordance with this section and the public housing agency plan of the agency to make public housing dwelling units, public housing projects, and other housing projects available for purchase by low-income families for use only as principal residences for such families. An agency may transfer a unit pursuant to a homeownership program only if the program is authorized under this section and approved by the Secretary.

(b)Participating units

A program under this section may cover any existing public housing dwelling units or projects, and may include other dwelling units and housing owned, assisted, or operated, or otherwise acquired for use under such program, by the public housing agency.

(c)Eligible purchasers

(1)Low-income requirement

Only low-income families assisted by a public housing agency, other low-income families, and entities formed to facilitate such sales by purchasing units for resale to low-income families shall be eligible to purchase housing under a homeownership program under this section.

(2)Other requirements

A public housing agency may establish other requirements or limitations for families to purchase housing under a homeownership program under this section, including requirements or limitations regarding employment or participation in employment counseling or training activities, criminal activity, participation in homeownership counseling programs, evidence of regular income, and other requirements. In the case of purchase by an entity for resale to low-income families, the entity shall sell the units to low-income families within 5 years from the date of its acquisition of the units. The entity shall use any net proceeds from the resale and from managing the units, as determined in accordance with guidelines of the Secretary, for housing purposes, such as funding resident organizations and reserves for capital replacements.

(d)Right of first refusal

In making any sale under this section, the public housing agency shall initially offer the public housing unit at issue to the resident or residents occupying that unit, if any, or to an organization serving as a conduit for sales to any such resident.

(e)Protection of nonpurchasing residents

If a public housing resident does not exercise the right of first refusal under subsection (d) with respect to the public housing unit in which the resident resides, the public housing agency—

(1)shall notify the resident residing in the unit 90 days prior to the displacement date except in cases of imminent threat to health or safety, consistent with any guidelines issued by the Secretary governing such notifications, that—

(A)the public housing unit will be sold;

(B)the transfer of possession of the unit will occur until the resident is relocated; and

(C)each resident displaced by such action will be offered comparable housing—

(i)that meets housing quality standards;

(ii)that is located in an area that is generally not less desirable than the location of the displaced resident’s housing; and

(iii)which may include—

(I)tenant-based assistance, except that the requirement under this subclause regarding offering of comparable housing shall be fulfilled by use of tenant-based assistance only upon the relocation of such resident into such housing;

(II)project-based assistance; or

(III)occupancy in a unit owned, operated, or assisted by the public housing agency at a rental rate paid by the resident that is comparable to the rental rate applicable to the unit from which the resident is vacated;

(2)shall provide for the payment of the actual and reasonable relocation expenses of the resident to be displaced;

(3)shall ensure that the displaced resident is offered comparable housing in accordance with the notice under paragraph (1);

(4)shall provide any necessary counseling for the displaced resident; and

(5)shall not transfer possession of the unit until the resident is relocated.

(f)Financing and assistance

A homeownership program under this section may provide financing for acquisition of housing by families purchasing under the program, or for acquisition of housing by the public housing agency for sale under the program, in any manner considered appropriate by the agency (including sale to a resident management corporation).

(g)Downpayment requirement

(1)In general

Each family purchasing housing under a homeownership program under this section shall be required to provide from its own resources a downpayment in connection with any loan for acquisition of the housing, in an amount determined by the public housing agency. Except as provided in paragraph (2), the agency shall permit the family to use grant amounts, gifts from relatives, contributions from private sources, and similar amounts as downpayment amounts in such purchase.

(2)Direct family contribution

In purchasing housing pursuant to this section, each family shall contribute an amount of the downpayment, from resources of the family other than grants, gifts, contributions, or other similar amounts referred to in paragraph (1), that is not less than 1 percent of the purchase price.

(h)Ownership interests

A homeownership program under this section may provide for sale to the purchasing family of any ownership interest that the public housing agency considers appropriate under the program, including ownership in fee simple, a condominium interest, an interest in a limited dividend cooperative, a shared appreciation interest with a public housing agency providing financing.

(i)Resale

(1)Authority and limitation

A homeownership program under this section shall permit the resale of a dwelling unit purchased under the program by an eligible family, but shall provide such limitations on resale as the agency considers appropriate (whether the family purchases directly from the agency or from another entity) for the agency to recapture—

(A)some or all of the economic gain derived from any such resale occurring during the 5-year period beginning upon purchase of the dwelling unit by the eligible family; and

(B)after the expiration of such 5-year period, only such amounts as are equivalent to the assistance provided under this section by the agency to the purchaser.

(2)Considerations

The limitations referred to in paragraph (1)(A) may provide for consideration of the aggregate amount of assistance provided under the program to the family, the contribution to equity provided by the purchasing eligible family, the period of time elapsed between purchase under the homeownership program and resale, the reason for resale, any improvements to the property made by the eligible family, any appreciation in the value of the property, and any other factors that the agency considers appropriate.

(j)Net proceeds

The net proceeds of any sales under a homeownership program under this section remaining after payment of all costs of the sale shall be used for purposes relating to low-income housing and in accordance with the public housing agency plan of the agency carrying out the program.

(k)Homeownership assistance

From amounts distributed to a public housing agency under the Capital Fund under section 1437g(d) of this title, or from other income earned by the public housing agency, the public housing agency may provide assistance to public housing residents to facilitate the ability of those residents to purchase a principal residence, including a residence other than a residence located in a public housing project.

(l)Inapplicability of disposition requirements

The provisions of section 1437p of this title shall not apply to disposition of public housing dwelling units under a homeownership program under this section.

Notes & Related Subsidiaries

Statutory Notes and Related Subsidiaries

Effective Date

Section effective and applicable beginning upon Oct. 1, 1999, except as otherwise provided, with provision that Secretary may implement section before such date except to extent otherwise provided, see section 503 of Pub. L. 105–276, set out as an

Effective Date

of 1998 Amendment note under section 1437 of this title.

§1437z–4 Resident Homeownership Programs

Summary

Title 42, §1437z–4

Notes & Related Subsidiaries

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Citations & Metadata