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Vouchers for Low-Vacancy Areas: HUD Issues Guidance, Seeks Comments

by Published On: Sep 21, 2012

Notice H 2012-15: Funding for Tenant-Protection Vouchers for Certain At-Risk Households in Low-Vacancy Areas – Request for Comments was issued by the U.S. Department of Housing and Urban Development (HUD) on Sept. 5. The 55-page notice: 

  1. Offers instructions, eligibility, and selection criteria on the funding process for tenant-protection vouchers for certain at-risk households in low-vacancy areas, as provided for in the “Consolidated and Further Continuing Appropriations Act, 2012” (PL112-55), enacted on Nov. 18, 2011.
  2. Seeks comment to inform a final rule, which may include revisions to the instructions, eligibility, and selection criteria  in effect now.

The notice is in effect until amended, revoked, or superseded. Following receipt and consideration of public comment, HUD has indicated that another notice (Final Notice) will be issued with final instructions, eligibility, and selection criteria, which may include revisions to the instructions and criteria contained in this notice.

Eligibility for Tenant-Protection Vouchers

Details regarding eligibility are very project-specific, so determining whether or not your property is eligible will depend heavily on access to and familiarity with project originating documents. The notice provides guidance on where to find governing language that will help you make the necessary determinations.

The following are certain notice extracts related to availability and eligibility that may help owners to determine if they might be eligible.

The 2012 Appropriations Act provides that up to $10 million of the $75 million appropriated for tenant-protection actions may be made available to provide housing-choice voucher rental assistance to residents who are living in low-vacancy areas and who may have to pay rents greater than 30% of household income, as the result of:

  1. The maturity of a HUD-insured, HUD-held or section 202 loan that requires the permission of the Secretary prior to loan prepayment.
  2. The expiration of a rental assistance contract for which the tenants are not eligible for enhanced voucher or tenant protection assistance under existing law.
  3. The expiration of affordability restrictions accompanying a mortgage or preservation program administered by the Secretary.

An owner is eligible to request assistance for unassisted households/units at the property if: 

  • The owner is in compliance [with] civil rights threshold requirements (as described in the notice).
  • The property is in a low-vacancy area.
  • There are at-risk households residing at the property.
  • These at-risk households are not currently receiving other project-based or tenant-based rental assistance under Section 8 of the United States Housing Act.
  • The property experienced (or will experience) 1 of the following 3 events listed above in FY 2012 or prior to FY 2012:

    1. Category 1 includes only properties with maturing/matured Section 202 Direct Loans, FHA-insured primary mortgages, or HUD-held primary mortgages. Please note that maturity of any mortgage instrument other than a Section 202 Direct Loan, FHA-insured primary mortgage, or HUD-held primary mortgage (for example, the maturity of a mortgage made by a state Housing Finance Agency) does not qualify as a maturing/matured mortgage for purposes of this Notice under Category 1 of the 2012 Appropriations Act. Furthermore, only the maturing/matured properties where the secretary’s consent to prepayment is required are eligible under Category 1. The Direct Loan or FHA-insured mortgage note will specify if the approval of HUD is a requirement for the prepayment.
    2. Category 2 includes only properties where a Rental Assistance Payments (RAP) contract expired prior to FY 2012, or where a Rent Supplement contract expired prior to 2001. RAP contract expirations in FY 2012 and Rent Supplement contract expirations in 2001 or later are not eligible for assistance under this notice because tenants in such properties are/were eligible for enhanced voucher or tenant protection assistance under existing law and, therefore, do not meet the criteria under category 2 of the 2012 Appropriations Act. Please note that some properties with RAP contract expirations prior to FY 2012 already received tenant protection assistance, and are therefore not eligible for assistance under this Notice.
    3. Category 3 includes 2 groups of properties:

      • Maturing/matured FHA-insured or direct mortgages, where permission of the secretary is not required prior to mortgage prepayment (in such properties, tenant-based voucher assistance is provided to eligible residents of unassisted units at the time of prepayment, but, outside of the process described in this notice, is not provided at the time of mortgage maturity). To be eligible under Category 3, the underlying affordability restrictions at the property must expire/have expired along with maturity of the mortgage. Where mortgages have matured, the use agreement must have expired prior to the owner’s request under this notice. Where the maturity will occur in FY2012, the underlying affordability restrictions must expire concurrently with the mortgage maturity.
      • Expiring “Stand Alone” Use Agreements: This includes only those properties that have HUD-imposed affordability use agreements expiring/expired but no Active Section 202 Direct Loan, FHA-insured primary mortgage, or HUD-held primary mortgage expiring/expired (properties with expiring/expired “stand alone use agreements”).

Please note that the expiring/expired use agreement must be a HUD-imposed use agreement that restricts the property to operate as affordable housing to very low, low, and/or moderate income households. 

This may include, but is not limited to, the preservation programs under the Title II Emergency Low Income Housing Preservation Act (ELIHPA) and the Title VI Low-Income Housing Preservation and Resident Homeownership Act (LIHPRHA). 

An Interest Reduction Payments Agreement associated with a state non-insured 236 mortgage also meets the criteria under category 3 of the 2012 Appropriations Act. The expiration of a project use agreement imposed by another agency or funder does not meet the criteria under category 3 of the 2012 Appropriations Act.

Please send your feedback to HUD and/or to LeadingAge via my email: Colleen Bloom. All comments are greatly appreciated.


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