
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 23, 2000]
[Document affected by Public Law 106-569 Section 904]
[CITE: 42USC12745]

 
                 TITLE 42--THE PUBLIC HEALTH AND WELFARE
 
                CHAPTER 130--NATIONAL AFFORDABLE HOUSING
 
             SUBCHAPTER II--INVESTMENT IN AFFORDABLE HOUSING
 
                  Part A--HOME Investment Partnerships
 
Sec. 12745. Qualification as affordable housing


(a) Rental housing

                          (1) Qualification

        Housing that is for rental shall qualify as affordable housing 
    under this subchapter only if the housing--
            (A) bears rents not greater than the lesser of (i) the 
        existing fair market rent for comparable units in the area as 
        established by the Secretary under section 1437f of this title, 
        or (ii) a rent that does not exceed 30 percent of the adjusted 
        income of a family whose income equals 65 percent of the median 
        income for the area, as determined by the Secretary, with 
        adjustment for number of bedrooms in the unit, except that the 
        Secretary may establish income ceilings higher or lower than 65 
        percent of the median for the area on the basis of the 
        Secretary's findings that such variations are necessary because 
        of prevailing levels of construction costs or fair market rents, 
        or unusually high or low family incomes;
            (B) has not less than 20 percent of the units (i) occupied 
        by very low-income families who pay as a contribution toward 
        rent (excluding any Federal or State rental subsidy provided on 
        behalf of the family) not more than 30 percent of the family's 
        monthly adjusted income as determined by the Secretary, or (ii) 
        occupied by very low-income families and bearing rents not 
        greater than the gross rent for rent-restricted residential 
        units as determined under section 42(g)(2) of title 26;
            (C) is occupied only by households that qualify as low-
        income families;
            (D) is not refused for leasing to a holder of a voucher or 
        certificate of eligibility under section 1437f of this title 
        because of the status of the prospective tenant as a holder of 
        such voucher or certificate of eligibility;
            (E) will remain affordable, according to binding commitments 
        satisfactory to the Secretary, for the remaining useful life of 
        the property, as determined by the Secretary, without regard to 
        the term of the mortgage or to transfer of ownership, or for 
        such other period that the Secretary determines is the longest 
        feasible period of time consistent with sound economics and the 
        purposes of this Act, except upon a foreclosure by a lender (or 
        upon other transfer in lieu of foreclosure) if such action (i) 
        recognizes any contractual or legal rights of public agencies, 
        nonprofit sponsors, or others to take actions that would avoid 
        termination of low-income affordability in the case of 
        foreclosure or transfer in lieu of foreclosure, and (ii) is not 
        for the purpose of avoiding low income affordability 
        restrictions, as determined by the Secretary; and
            (F) if newly constructed, meets the energy efficiency 
        standards promulgated by the Secretary in accordance with 
        section 12709 of this title.

                  (2) Adjustment of qualifying rent

        The Secretary may adjust the qualifying rent established for a 
    project under subparagraph (A) of paragraph (1), only if the 
    Secretary finds that such adjustment is necessary to support the 
    continued financial viability of the project and only by such amount 
    as the Secretary determines is necessary to maintain continued 
    financial viability of the project.

                   (3) Increases in tenant income

        Housing shall qualify as affordable housing despite a temporary 
    noncompliance with subparagraph (B) or (C) of paragraph (1) if such 
    noncompliance is caused by increases in the incomes of existing 
    tenants and if actions satisfactory to the Secretary are being taken 
    to ensure that all vacancies are filled in accordance with paragraph 
    (1) until such noncompliance is corrected. Tenants who no longer 
    qualify as low-income families shall pay as rent the lesser of the 
    amount payable by the tenant under State or local law or 30 percent 
    of the family's adjusted monthly income, as recertified annually. 
    The preceding sentence shall not apply with respect to funds made 
    available under this Act for units that have been allocated a low-
    income housing tax credit by a housing credit agency pursuant to 
    section 42 of title 26.

                      (4) Mixed-income project

        Housing that accounts for less than 100 percent of the dwelling 
    units in a project shall qualify as affordable housing if such 
    housing meets the criteria of this section.

                        (5) Mixed-use project

        Housing in a project that is designed in part for uses other 
    than residential use shall qualify as affordable housing if such 
    housing meets the criteria of this section.

(b) Homeownership

    Housing that is for homeownership shall qualify as affordable 
housing under this subchapter only if the housing--
        (1) has an initial purchase price that does not exceed 95 
    percent of the median purchase price for the area, as determined by 
    the Secretary with such adjustments for differences in structure, 
    including whether the housing is single-family or multifamily, and 
    for new and old housing as the Secretary determines to be 
    appropriate;
        (2) is the principal residence of an owner whose family 
    qualifies as a low-income family--
            (A) in the case of a contract to purchase existing housing, 
        at the time of purchase;
            (B) in the case of a lease-purchase agreement for existing 
        housing or for housing to be constructed, at the time the 
        agreement is signed; or
            (C) in the case of a contract to purchase housing to be 
        constructed, at the time the contract is signed;

        (3) is subject to resale restrictions that are established by 
    the participating jurisdiction and determined by the Secretary to be 
    appropriate to--
            (A) allow for subsequent purchase of the property only by 
        persons who meet the qualifications specified under paragraph 
        (2), at a price which will--
                (i) provide the owner with a fair return on investment, 
            including any improvements, and
                (ii) ensure that the housing will remain affordable to a 
            reasonable range of low-income homebuyers; or

            (B) recapture the investment provided under this subchapter 
        in order to assist other persons in accordance with the 
        requirements of this subchapter, except where there are no net 
        proceeds or where the net proceeds are insufficient to repay the 
        full amount of the assistance; and

        (4) if newly constructed, meets the energy efficiency standards 
    promulgated by the Secretary in accordance with section 12709 of 
    this title.

(Pub. L. 101-625, title II, Sec. 215, Nov. 28, 1990, 104 Stat. 4101; 
Pub. L. 102-550, title II, Secs. 208, 209, Oct. 28, 1992, 106 Stat. 
3754; Pub. L. 103-233, title II, Sec. 203, Apr. 11, 1994, 108 Stat. 364; 
Pub. L. 105-276, title V, Sec. 599B(b), Oct. 21, 1998, 112 Stat. 2660.)

                       References in Text

    This Act, referred to in subsec. (a)(1)(E), (3), is Pub. L. 101-625, 
Nov. 28, 1990, 104 Stat. 4079, known as the Cranston-Gonzalez National 
Affordable Housing Act. For complete classification of this Act to the 
Code, see Short Title note set out under section 12701 of this title and 
Tables.


                               Amendments

    1998--Subsec. (b)(2). Pub. L. 105-276 amended par. (2) generally. 
Prior to amendment, par. (2) read as follows: ``is the principal 
residence of an owner whose family qualifies as a low-income family at 
the time of purchase;''.
    1994--Subsec. (b)(3). Pub. L. 103-233, Sec. 203(a), redesignated 
par. (4) as (3) and struck out former par. (3) which read as follows: 
``is made available for initial purchase only to first-time 
homebuyers;''.
    Subsec. (b)(3)(B). Pub. L. 103-233, Sec. 203(b), substituted 
``subchapter'' for ``subsection'' after ``requirements of this''.
    Subsec. (b)(4), (5). Pub. L. 103-233, Sec. 203(a)(2), redesignated 
pars. (4) and (5) as (3) and (4), respectively.
    1992--Subsec. (a)(1)(A). Pub. L. 102-550, Sec. 208(a)(1), 
substituted ``number of bedrooms in the unit'' for ``smaller and larger 
families''.
    Subsec. (a)(1)(E). Pub. L. 102-550, Sec. 208(b), inserted before 
semicolon ``, except upon a foreclosure by a lender (or upon other 
transfer in lieu of foreclosure) if such action (i) recognizes any 
contractual or legal rights of public agencies, nonprofit sponsors, or 
others to take actions that would avoid termination of low-income 
affordability in the case of foreclosure or transfer in lieu of 
foreclosure, and (ii) is not for the purpose of avoiding low income 
affordability restrictions, as determined by the Secretary''.
    Subsec. (a)(3). Pub. L. 102-550, Sec. 208(a)(2), (3), substituted 
``the lesser of the amount payable by the tenant under State or local 
law or'' for ``not less than'' in second sentence and inserted at end 
``The preceding sentence shall not apply with respect to funds made 
available under this Act for units that have been allocated a low-income 
housing tax credit by a housing credit agency pursuant to section 42 of 
title 26.''
    Subsec. (b)(4). Pub. L. 102-550, Sec. 209, added par. (4) and struck 
out former par. (4) which read as follows: ``is made available for 
subsequent purchase only--
        ``(A) to persons who meet the qualifications specified under 
    paragraph (2), and
        ``(B) at a price consistent with guidelines that are established 
    by the participating jurisdiction and determined by the Secretary to 
    be appropriate--
            ``(i) to provide the owner with a fair return on investment, 
        including any improvements, and
            ``(ii) to ensure that the housing will remain affordable to 
        a reasonable range of low income homebuyers; and''.


                    Effective Date of 1998 Amendment

    Amendment by Pub. L. 105-276 made on, and applicable beginning upon, 
Oct. 21, 1998, see section 599B(c) of Pub. L. 105-276, set out as a note 
under section 12744 of this title.


                    Effective Date of 1994 Amendment

    Amendment by Pub. L. 103-233 applicable with respect to any amounts 
made available to carry out this subchapter after Apr. 11, 1994, and any 
amounts made available to carry out this subchapter before that date 
that remain uncommitted on that date, with Secretary to issue any 
regulations necessary to carry out such amendment not later than end of 
45-day period beginning on that date, see section 209 of Pub. L. 103-
233, set out as a note under section 5301 of this title.


                    Effective Date of 1992 Amendment

    Amendment by Pub. L. 102-550 applicable to unexpended funds 
allocated under subchapter II of this chapter in fiscal year 1992, 
except as otherwise specifically provided, see section 223 of Pub. L. 
102-550, set out as a note under section 12704 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 4851b, 12705, 12750 of this 
title.
