PART 906—PUBLIC HOUSING HOMEOWNERSHIP PROGRAMS

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					                               Pt. 906                                                                24 CFR Ch. IX (4–1–04 Edition)

                                 (iii) Any limitation on the ability of                   902) (or the applicable performance
                               the PHA to obligate the amounts allo-                      evaluation program for public hous-
                               cated for the PHA from the Capital                         ing).
                               Fund in a timely manner as a result of                       (d) Expenditure of amounts—(1) In gen-
                               state or local law; or                                     eral. A PHA must spend any assistance
                                 (iv) Such other factors as HUD deter-                    received under this part not later than
                               mines to be relevant.                                      four years (plus the period of any ex-
                                 (2) Extension of obligation period. HUD                  tension approved by HUD under para-
                               may extend the time period under                           graph (b) of this section) after the date
                               paragraph (a) of this section for a PHA,                   on which funds become available to the
                               for such period as HUD determines to                       PHA for obligation.
                               be necessary, if HUD determines that                         (2) Enforcement. HUD will enforce the
                               the failure of the agency to obligate as-                  requirement of paragraph (d)(1) of this
                               sistance in a timely manner is attrib-                     section through default remedies up to
                               utable to:                                                 and including withdrawal of the CFP
                                 (i) Litigation;                                          funding.
                                 (ii) Obtaining approvals of the federal                    (e) Right of recapture. Any obligation
                               government or a state or local govern-                     entered into by a PHA is subject to the
                               ment;                                                      HUD’s right to recapture the obligated
                                 (iii) Complying with environmental                       amounts for violation by the PHA of
                               assessment and abatement require-                          the requirements of this section.
                               ments;
                                                                                          [68 FR 45731, Aug. 1, 2003]
                                 (iv) Relocating residents;
                                 (v) An event beyond the control of
                               the PHA; or                                                    PART 906—PUBLIC HOUSING
                                 (vi) Any other reason established by                        HOMEOWNERSHIP PROGRAMS
                               HUD by notice published in the FED-
                               ERAL REGISTER.                                                          Subpart A—General
                                 (3) Disregard of minimal unobligated                     Sec.
                               amounts. HUD will disregard the re-                        906.1 Purpose.
                               quirements of paragraph (a) of this sec-                   906.2 Definitions.
                               tion with respect to any unobligated                       906.3 Requirements applicable to home-
                               amounts made available to a PHA, to                            ownership programs previously approved
                               the extent that the total of such                              by HUD.
                               amounts does not exceed 10 percent of
                               the original amount made available to                       Subpart B—Basic Program Requirements
                               the PHA.                                                   906.5 Dwelling units and types of assistance
                                 (c) Effect of failure to comply—(1) Pro-                     that a PHA may make available under a
                               hibition of new assistance. A PHA will                         homeownership program under this part.
                               not be awarded CFP assistance for any                      906.7 Physical requirements that a property
                               month during any fiscal year in which                          offered for sale under this part must
                               the PHA has funds unobligated in vio-                          meet.
                                                                                          906.9 Title restrictions and encumbrances
                               lation of paragraph (a) or (b) of this
                                                                                              on properties sold under a homeowner-
                               section.                                                       ship program.
                                 (2) Withholding of assistance. During
                               any fiscal year described in paragraph                         Subpart C—Purchaser Requirements
                               (c)(1) of this section, HUD will with-
                               hold all assistance that would other-                      906.11 Eligible purchasers.
                                                                                          906.13 Right of first refusal.
                               wise be provided to the PHA. If the
                                                                                          906.15 Requirements applicable to a family
                               PHA cures its failure to comply during                         purchasing a property under a home-
                               the year, it shall be provided with the                        ownership program.
                               share attributable to the months re-                       906.17 PHA handling of homeownership ap-
                               maining in the year.                                           plications.
                                 (3) Redistribution. The total amount                     906.19 Requirements applicable to a pur-
                               of any funds not provided PHAs by op-                          chase and resale entity (PRE).
                               eration of this section shall be allo-
                                                                                              Subpart D—Program Administration
                               cated for PHAs determined to be high-
                               performing under the Public Housing                        906.23 Protections available to non-pur-
                               Assessment System (at 24 CFR part                              chasing public housing residents.

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                               Office of the Assistant Secretary, HUD                                                              § 906.3
                               906.24 Protections available to non-pur-                   development and modernization regu-
                                   chasing residents of housing other than                lations.
                                   public housing.
                               906.25 Ownership interests that may be con-
                                                                                            (b) Under a public housing home-
                                   veyed to a purchaser.                                  ownership program, a PHA makes
                               906.27 Limitations applicable to net pro-                  available for purchase by low-income
                                   ceeds on the sale of a property acquired               families for use as their principal resi-
                                   through a homeownership program.                       dences public housing dwelling units,
                               906.29 Below-Market sales and financing.                   public housing developments, and other
                               906.31 Requirements applicable to net pro-
                                                                                          housing units or developments owned,
                                   ceeds resulting from sale.
                               906.33 Reporting and recordkeeping require-                assisted, or operated, or otherwise ac-
                                   ments.                                                 quired by the PHA for sale under a
                               906.35 Inapplicability of section 18 of the                homeownership program in connection
                                   United States Housing Act of 1937.                     with the use of assistance provided
                               906.37 Davis-Bacon and HUD wage rate re-                   under the 1937 Act (1937 Act funds). A
                                   quirements.                                            PHA may sell all or a portion of a prop-
                                   Subpart E—Program Submission and                       erty for purposes of homeownership in
                                               Approval                                   accordance with a HUD-approved
                                                                                          homeownership program, and in ac-
                               906.38 Requirement of HUD approval to im-                  cordance with the PHA’s annual plan
                                   plement a homeownership program under                  under part 903 of this title.
                                   this part.
                               906.39 Contents of a homeownership pro-                    § 906.2     Definitions.
                                   gram.
                               906.40 Supporting documentation.                             Annual Contributions Contract (ACC)
                               906.41 Additional supporting documentation                 is defined in 24 CFR 5.403.
                                   for acquisition of non-public housing for                Low-income family is defined in the
                                   homeownership.
                               906.43 Where a PHA is to submit a home-
                                                                                          1937 Act, 42 U.S.C. 1437a(b)(2).
                                   ownership program for HUD approval.                      Non-public housing unit means a hous-
                               906.45 HUD criteria for reviewing a proposed               ing unit that does not receive assist-
                                   homeownership program.                                 ance under the 1937 Act (other than
                               906.47 Environmental requirements.                         Section 8 assistance).
                               906.49 HUD approval; implementing agree-
                                                                                            PHA Plan means the 5-year or annual
                                   ments.
                                                                                          plan required under section 5A of the
                                 AUTHORITY: 42 U.S.C. 1437z–4 and 3535(d).                1937 Act, 42 U.S.C. 1437c–1, and its im-
                                 SOURCE: 68 FR 1172, Mar. 11, 2003, unless                plementing regulations at 24 CFR part
                               otherwise noted.                                           903.
                                                                                            Purchase and Resale Entity (PRE)
                                           Subpart A—General                              means an entity that acquires units for
                                                                                          resale to low-income families in ac-
                               § 906.1 Purpose.                                           cordance with this part.
                                  (a) This part states the requirements
                               and procedures governing public hous-                      § 906.3 Requirements applicable to
                               ing homeownership programs involving                           homeownership     programs pre-
                                                                                              viously approved by HUD.
                               sales of individual dwelling units to
                               families or to purchase and resale enti-                     (a) Any existing section 5(h) or Turn-
                               ties (PREs) for resale to families car-                    key III homeownership program con-
                               ried out by public housing agencies                        tinues to be governed by the require-
                               (PHAs), as authorized by section 32 of                     ments of part 906 or part 904 of this
                               the United States Housing Act of 1937                      title, respectively, contained in the
                               (42 U.S.C. 1437z–4) (1937 Act). A PHA                      April 1, 2002, edition of 24 CFR, parts
                               may only transfer public housing units                     700 to 1699. The use of other program
                               for homeownership under a home-                            income for homeownership activities
                               ownership program approved by HUD                          continues to be governed by agree-
                               under this part, except as provided                        ments executed with HUD.
                               under § 906.3. This section does not gov-                    (b) A PHA may convert an existing
                               ern new construction or substantial re-                    homeownership program, or a specific
                               habilitation of units sold under this                      number of the units in such a program,
                               part. Such construction or rehabilita-                     to a homeownership program under
                               tion is governed by the public housing                     this part with HUD approval.

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                               § 906.5                                                                24 CFR Ch. IX (4–1–04 Edition)

                                      Subpart B—Basic Program                             CFR part 982 subpart M, a PHA may
                                           Requirements                                   make its housing choice voucher funds
                                                                                          available to provide assistance to a
                               § 906.5 Dwelling units and types of as-                    family purchasing a unit under this
                                   sistance that a PHA may make                           part. A family receiving assistance
                                   available under a homeownership                        under the Section 8(y) program and
                                   program under this part.
                                                                                          participating in a homeownership pro-
                                 (a) A homeownership program under                        gram under this part must meet the re-
                               this part may provide for sale of:                         quirements of both programs.
                                 (1) Units that are public housing                          (c) A PHA must not use 1937 Act
                               units; and                                                 funds to rehabilitate units that are not
                                 (2) Other units owned, operated, as-                     public housing units.
                               sisted, or acquired for homeownership
                               sale and that have received the benefit                    § 906.7 Physical requirements that a
                               of 1937 Act funds or are to be sold with                       property offered for sale under this
                               the benefit of 1937 Act funds (non-pub-                        part must meet.
                               lic housing units). In selecting such
                                                                                            (a) Property standards. A property of-
                               units to be sold in a homeownership
                                                                                          fered for sale under a homeownership
                               program under this part, the PHA shall
                               not select units such that it could not                    program must meet local code require-
                               comply with § 906.7(a).                                    ments (or, if no local code exists, the
                                 (b) A homeownership program under                        housing quality standards established
                               this part may provide for financing to                     by HUD for the Section 8 Housing
                               eligible families (see § 905.15 of this                    Choice Voucher Program, 24 CFR part
                               title) purchasing dwelling units eligi-                    982) and the relevant requirements of
                               ble under paragraph (a) of this section                    the Lead-Based Paint Poisoning Pre-
                               under the program, or for acquisition                      vention Act (42 U.S.C. 4821–4846), the
                               of housing units or developments by                        Residential Lead-Based Paint Hazard
                               the PHA for sale under the program.                        Reduction Act of 1992 (42 U.S.C. 4851–
                                 (1) Under this part, a PHA may use                       4856), and the implementing regula-
                               assistance from amounts it receives                        tions at 24 CFR part 35, subparts A, B,
                               under the Capital Fund under section                       L, and R of this title. When a prospec-
                               9(d) of the 1937 Act or from other in-                     tive purchaser who has known disabil-
                               come earned from its 1937 Act pro-                         ities, or who has a family member with
                               grams to provide assistance to public                      known disabilities requires accessible
                               housing residents only to facilitate the                   features, the features must be added as
                               purchase of homes (e.g., counseling,                       a reasonable accommodation to the
                               closing costs, that portion of the down                    disability, in accordance with the re-
                               payment not required to be supplied                        quirements of § 8.29 of this title. Fur-
                               from the purchaser’s funds under the                       ther, the property must be in good re-
                               provisions of § 906.15(c), financing, and                  pair, with the major components hav-
                               moving assistance). Public housing
                                                                                          ing a remaining useful life that is suffi-
                               residents may use such assistance to
                                                                                          cient to justify a reasonable expecta-
                               purchase the unit in which they reside,
                                                                                          tion that homeownership will be af-
                               another public housing unit, or a resi-
                               dence not located in a public housing                      fordable by the purchasers. These
                               development.                                               standards must be met as a condition
                                 (2) A PHA may provide financing as-                      for conveyance of a dwelling to an indi-
                               sistance for other eligible purchasers                     vidual purchaser.
                               from other income, i.e., funds not from                      (b) A unit in this program for which
                               1937 Act programs, such as proceeds                        the purchasing family is receiving as-
                               from selling public housing units, loan                    sistance under Section 8(y) must be an
                               repayments, and public housing debt                        eligible unit for purposes of the Home-
                               forgiveness funding not already com-                       ownership Option under 24 CFR part
                               mitted to another purpose.                                 982, subpart M.
                                 (3) In accordance with the rules and
                               regulations governing the Section 8(y)
                               Homeownership Option, found in 24

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                               Office of the Assistant Secretary, HUD                                                            § 906.15

                               § 906.9 Title restrictions and encum-                      U.S.C. 1437a), at the time the contract
                                    brances on properties sold under a                    to purchase the property is executed.
                                    homeownership program.                                  (b) Principal residence requirement.
                                  (a) If the property is subject to in-                   The dwelling unit sold to an eligible
                               debtedness under the Annual Contribu-                      family must be used as the principal
                               tions Contract (ACC), HUD will con-                        residence of the family.
                               tinue to make any debt service con-                          (c) Financial capacity requirement. Eli-
                               tributions for which it is obligated                       gibility must be limited to families
                               under the ACC, and the property sold                       who are capable of assuming the finan-
                               will not be subject to the encumbrance                     cial obligations of homeownership,
                               of that indebtedness.                                      under minimum income standards for
                                  (b) Upon sale of a public housing unit                  affordability, taking into account the
                               to a public housing tenant or eligible                     unavailability of public housing oper-
                               family, or to a PRE operating the units                    ating subsidies and modernization
                               as non-public housing, in accordance                       funds after conveyance of the property
                               with the HUD-approved homeownership                        by the PHA. A homeownership program
                               program, HUD will execute a release of                     may, however, take account of any
                               the title restrictions prescribed by the                   available subsidy from other sources.
                               ACC. Because the property will no                          Under this affordability standard, an
                               longer be subject to the ACC after sale,                   applicant must meet the following re-
                               it will cease to be eligible for public                    quirements:
                               housing Operating Fund or Capital
                                                                                            (1) Cost/income ratio. On an average
                               Fund payments.
                                                                                          monthly estimate, the amount of the
                                                                                          applicant’s payments for mortgage
                                           Subpart C—Purchaser                            principal and interest, plus insurance,
                                              Requirements                                real estate taxes, utilities, mainte-
                                                                                          nance, and other regularly recurring
                               § 906.11 Eligible purchasers.
                                                                                          homeownership costs (such as condo-
                                  Entities that purchase units from the                   minium, cooperative, or other home-
                               PHA for resale to low-income families                      ownership association fees) will not ex-
                               (purchase and resale entities or PREs)                     ceed the sum of:
                               and low-income families are eligible to                      (i) 35 percent of the applicant’s ad-
                               purchase properties made available for                     justed income as defined in 24 CFR part
                               sale under a PHA homeownership pro-                        913; and
                               gram.
                                                                                            (ii) Any subsidy that will be available
                               § 906.13 Right of first refusal.                           for such payments;
                                                                                            (2) Down payment requirement. Each
                                  (a) In selling a public housing unit
                               under a homeownership program, the                         family purchasing housing under a
                               PHA or PRE must initially offer the                        homeownership program must provide
                               unit to the resident occupying the                         a down payment in connection with
                               unit, if any, notwithstanding the re-                      any loan for acquisition of the housing,
                               quirements of §§ 906.15(a) and 906.15(c).                  in an amount determined by the PHA
                                  (b) This program does not require the                   or PRE, in accordance with an ap-
                               PHA, when selling a unit that is a non-                    proved homeownership program. Ex-
                               public housing unit, to offer the unit                     cept as provided in paragraph (c)(3) of
                               for sale first to the current resident of                  this section, the PHA or PRE must per-
                               the unit.                                                  mit the family to use grant amounts,
                                                                                          gifts from relatives, contributions from
                               § 906.15 Requirements applicable to a                      private sources, and other similar
                                    family purchasing a property under                    amounts in making the down payment;
                                    a homeownership program.                                (3) The family must use its own re-
                                  (a) Low-income requirement. Except in                   sources other than grants, gifts, con-
                               the case of a PHA’s offer of first refusal                 tributions, or similar amounts, to con-
                               to a resident occupying the unit under                     tribute an amount of the down pay-
                               § 906.13, a family purchasing a property                   ment that is not less than one percent
                               under a PHA homeownership program                          of the purchase price of the housing.
                               must be a low-income family, as de-                        The PHA or PRE must maintain
                               fined in section 3 of the 1937 Act (42                     records that are verifiable by HUD

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                               § 906.17                                                               24 CFR Ch. IX (4–1–04 Edition)

                               through audits regarding the source of                     families, in accordance with the HUD-
                               this one percent contribution.                             approved homeownership program, or
                                 (d) Other requirements established by                    by reconveyance to the PHA, and that
                               the PHA. A PHA may establish require-                      the property will not be encumbered by
                               ments or limitations for families to                       the PRE without the written consent
                               purchase housing under a homeowner-                        of the PHA;
                               ship program, including but not lim-                         (3) Protection against fraud or mis-
                               ited to requirements or limitations re-                    use of funds or other property on the
                               garding:                                                   part of the PRE, its employees, and
                                 (1) Employment or participation in                       agents;
                               employment counseling or training ac-                        (4) Assurances that the resale pro-
                               tivities;                                                  ceeds will be used only for the purposes
                                 (2) Criminal activity;                                   specified by the HUD-approved home-
                                 (3) Participation in homeownership                       ownership program;
                               counseling programs; and                                     (5) Limitation of the PRE’s adminis-
                                 (4) Evidence of regular income.                          trative and overhead costs, and of any
                                                                                          compensation or profit that may be re-
                               § 906.17 PHA handling of homeowner-                        alized by the PRE, to amounts that are
                                   ship applications.                                     reasonable in relation to its respon-
                                  Families who are interested in pur-                     sibilities and risks;
                               chasing a unit must submit applica-                          (6) Accountability to the PHA and
                               tions to the PHA or PRE for that spe-                      residents for the recordkeeping, report-
                               cific purpose, and those applications                      ing, and audit requirements of § 906.33;
                               must be handled separately from appli-                       (7) Assurances that the PRE will ad-
                               cations for other PHA programs. Appli-                     minister its responsibilities under the
                               cation for homeownership must not af-                      plan on a nondiscriminatory basis, in
                               fect an applicant’s place on any other                     accordance with the Fair Housing Act,
                               PHA waiting list for rental units.                         its implementing regulations, and
                                                                                          other applicable civil rights statutes
                               § 906.19 Requirements applicable to a                      and authorities, including the authori-
                                    purchase and resale entity (PRE).                     ties cited in § 5.105(a) of this title; and
                                  (a) In general. In the case of a pur-                     (8) Adequate legal remedies for the
                               chase of units for resale to low-income                    PHA and residents, in the event of the
                               families by a PRE, the PHA must have                       PRE’s failure to perform in accordance
                               an approved homeownership program                          with the agreement.
                               that describes the use of a PRE to sell                      (c) Sale to low-income families. The re-
                               the units to low-income families with-                     quirement for a PRE to sell units
                               in 5 years from the date of the PRE’s                      under a homeownership program only
                               acquisition of the units.                                  to low-income families must be re-
                                  (b) PRE requirements. The PHA must                      corded as a deed restriction at the time
                               demonstrate in its homeownership pro-                      of purchase by the PRE.
                               gram that the PRE has the necessary                          (d) Resale within five years. A PRE
                               legal capacity and administrative ca-                      must agree that, with respect to any
                               pability to carry out its responsibil-                     units it acquires under a homeowner-
                               ities under the program. The PHA’s                         ship program under this part, it will
                               homeownership program also must                            transfer ownership to the PHA if the
                               contain a written agreement (not re-                       PRE fails to resell the unit to a low-in-
                               quired to be submitted as part of the                      come family within 5 years of the
                               homeownership plan) that specifies the                     PRE’s acquisition of the unit.
                               respective rights and obligations of the
                               PHA and the PRE, and which includes:                                   Subpart D—Program
                                  (1) Assurances that the PRE will                                       Administration
                               comply with all provisions of the HUD-
                               approved homeownership program;                            § 906.23 Protections available to non-
                                  (2) Assurances that the PRE will be                          purchasing public housing resi-
                               subject to a title restriction providing                        dents.
                               that the property must be resold or                           (a) If a public housing resident does
                               otherwise transferred only by convey-                      not exercise the right of first refusal
                               ance of individual dwellings to eligible                   under § 906.13, and the PHA determines

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                               Office of the Assistant Secretary, HUD                                                            § 906.27

                               to move the tenant for the purpose of                      § 906.24 Protections available to non-
                               transferring possession of the unit, the                       purchasing residents of housing
                               PHA must provide the notice stated in                          other than public housing.
                               this section 90 days before the date the                     Residents of non-public housing that
                               resident is displaced, and may not dis-                    would be displaced by a homeownership
                               place the resident, except as stated in                    program are eligible for assistance
                               paragraph (a)(1) of this section, for the                  under the Uniform Relocation Act and
                               full 90-day period. The PHA:                               part 42 of this title. For purposes of
                                 (1) Must notify the resident residing                    this part, a family that was over-in-
                               in the unit 90 days prior to the dis-                      come (i.e., an individual or family that
                               placement date, except in cases of im-                     is not a low-income family) at the time
                               minent threat to health or safety, that:                   of initial occupancy of public housing
                                 (i) The public housing unit will be                      and was admitted in accordance with
                               sold;                                                      section 3(a)(5) of the 1937 Act, is treat-
                                 (ii) The transfer of possession of the                   ed as a non-purchasing resident of non-
                               unit will not occur until the resident is                  public housing.
                               relocated; and
                                 (iii) Each resident displaced by such                    § 906.25 Ownership interests that may
                               action will be offered comparable hous-                        be conveyed to a purchaser.
                               ing (as defined in paragraph (b) of this
                                                                                            A homeownership program may pro-
                               section);
                                                                                          vide for sale to the purchasing family
                                 (2) Must provide for the payment of
                                                                                          of any ownership interest that the PHA
                               the actual costs and reasonable reloca-
                                                                                          considers appropriate under the home-
                               tion expenses of the resident to be dis-
                                                                                          ownership program, including but not
                               placed;
                                                                                          limited to:
                                 (3) Must ensure that the resident is
                               offered comparable housing under para-                       (a) Ownership in fee simple;
                               graph (a)(1)(iii) of this section;                           (b) A condominium interest;
                                 (4) Must provide counseling for dis-                       (c) An interest in a limited dividend
                               placed residents regarding their rights                    cooperative;
                               to comparable housing, including their                       (d) A shared appreciation interest
                               rights under the Fair Housing Act to                       with a PHA providing financing; or
                               choice of a unit on a nondiscriminatory                      (e) A leasehold under a bona fide
                               basis, without regard to race, color, re-                  lease-purchase arrangement.
                               ligion, national origin, disability, age,
                               sex, or familial status; and                               § 906.27 Limitations applicable to net
                                 (5) Must not transfer possession of                          proceeds on the sale of a property
                                                                                              acquired through a homeownership
                               the unit until the resident is relocated.                      program.
                                 (b) For purposes of this section, the
                               term ‘‘comparable housing’’ means                             (a) Where the family has owned a
                               housing:                                                   unit under this part, the following
                                 (1) That meets housing quality stand-                    rules apply:
                               ards;                                                         (1) In this section, the term gain from
                                 (2) That is located in an area that is                   appreciation means the financial gain
                               generally not less desirable than the                      on resale attributable solely to the
                               displaced resident’s original develop-                     home’s appreciation in value over
                               ment; and                                                  time, and not attributable to govern-
                                 (3) Which may include:                                   ment-provided assistance or any below-
                                 (i) Tenant-based assistance (tenant-                     market      financing    provided   under
                               based assistance must only be provided                     § 906.29.
                               upon the relocation of the resident to                        (2) In this section, the term net pro-
                               the comparable housing);                                   ceeds means the financial gain on re-
                                 (ii) Project-based assistance; or                        sale received by the seller after satis-
                                 (iii) Occupancy in a unit owned, oper-                   fying all amounts owing under mort-
                               ated, or assisted by the PHA at a rental                   gages, paying closing costs, and receiv-
                               rate paid by the resident that is com-                     ing an amount equal to the down pay-
                               parable to the rental rate applicable to                   ment (made from the seller’s own
                               the unit from which the resident is                        funds) and principal payments on the
                               vacating.                                                  mortgage(s).

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                               § 906.29                                                               24 CFR Ch. IX (4–1–04 Edition)

                                 (3) A PHA must have a policy that                        § 906.29 Below-Market sales and fi-
                               provides for the recapture of net pro-                         nancing.
                               ceeds in an amount that the PHA con-                          A homeownership plan may provide
                               siders appropriate under the guidelines                    for below-market purchase prices or
                               in this section.                                           below-market financing to enable
                                 (4) A PHA must have a policy that                        below-market purchases, or a combina-
                               provides the recapture of the following                    tion of the two. Discounted purchase
                               amounts, if a family resells a home-                       prices may be determined on a unit-by-
                               ownership unit it purchased under this                     unit basis, based on the particular pur-
                               part during the 5-year period beginning                    chaser’s ability to pay, or may be de-
                               upon purchase of the dwelling unit:                        termined by any other fair and reason-
                                 (i) All or a portion of the gain from                    able method (e.g., uniform prices for a
                               appreciation; and                                          group of comparable dwellings, within
                                 (ii) All or a portion of the assistance                  a range of affordability by potential
                               provided (which includes below-market                      purchases). Below-market financing
                               financing, but which does not include                      may include any lawful type of public
                               Section 8(y) assistance used for mort-                     or private financing, including but not
                               gage payments under this part) under                       limited to purchase-money mortgages,
                               the homeownership program to the                           non-cash second mortgages, promissory
                               family to the extent there are net pro-                    notes, guarantees of mortgage loans
                               ceeds, considering the factors the PHA                     from other lenders, shared equity, or
                               establishes under paragraphs (b)(1)–(7)                    lease-purchase arrangements.
                               of this section.
                                 (b) The PHA’s program under this                         § 906.31 Requirements applicable to
                               part may provide for consideration of                           net proceeds resulting from sale.
                               any factors the PHA considers appro-                          (a) PHA use of net proceeds. The PHA
                               priate in determining how much of the                      must use any net proceeds of any sales
                               gain from appreciation and assistance                      under a homeownership program re-
                               to recapture, including but not limited                    maining after payment of all costs of
                               to the following:                                          the sale for purposes relating to low-in-
                                 (1) The aggregate amount of assist-                      come housing and in accordance with
                               ance provided under the homeowner-                         its PHA plan.
                               ship program to the family;                                   (b) PRE use of resale net proceeds. The
                                 (2) The contribution of equity by the                    PHA may require the PRE to return
                               purchasing family;                                         the net proceeds from the resale of the
                                 (3) The period of time elapsed be-                       units to the PHA. If the PHA permits
                               tween purchase by the homebuyer                            the PRE to retain the net proceeds, the
                               under the homeownership program and                        PRE must use these proceeds for low-
                               resale by the homebuyer;                                   income housing purposes.
                                 (4) The reason for resale;                                  (c) Transfer of unsold unit to PHA. In
                                 (5) Any improvements made by the                         a situation where the PRE fails to sell
                               family purchasing under the home-                          a unit to an eligible family within 5
                               ownership program;                                         years, and the provision of § 906.19(d)
                                 (6) Any appreciation in the value of                     requiring that the unit be transferred
                               the property; and                                          to the PHA applies:
                                 (7) Any other factors that the PHA                          (1) If the unit has not been operated
                               considers appropriate in making the re-                    by the PRE as a public housing unit at
                               capture determination under this sec-                      any time during the 5-year period, the
                               tion.                                                      PHA may resell the unit in accordance
                                 (c) After the expiration of the 5-year                   with this part or any successor home-
                               period in paragraph (a)(4) of this sec-                    ownership program of the department,
                               tion, the PHA must recapture all or a                      or apply to have the unit included in
                               portion of the assistance provided                         its public housing program, if it meets
                               under the homeownership program to                         all statutory and regulatory require-
                               the family to the extent there are net                     ments of the public housing program;
                               proceeds.                                                  or
                                 (d) The PHA must enforce its recap-                         (2) If the unit has been operated by
                               ture policy through an appropriate                         the PRE as a public housing unit with-
                               form of title restriction.                                 in such a 5-year period, the PHA must

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                               Office of the Assistant Secretary, HUD                                                            § 906.38

                               return the unit to operation in its reg-                   § 906.37 Davis-Bacon and HUD wage
                               ular public housing program.                                     rate requirements.
                                  (d) Transfer of unsold unit operated as                    (a) Wage rates applicable to laborers
                               public housing to PHA. Where the PRE                       and mechanics. Wage rate requirements
                               operates the unit as public housing                        in accordance with § 968.110(e) of this
                               during the 5-year interim period under                     title apply to the following activities:
                               § 960.40, and fails to sell the unit to an                    (1) Rehabilitation, repairs, and acces-
                               eligible family within such 5-year pe-                     sibility modifications performed under
                               riod and the provision of § 906.19(d) ap-                  an agreement or contract with the
                               plies, the PHA must return the unit to                     PHA or by the PHA, pursuant to § 906.7.
                               operation in its regular public housing                    Davis-Bacon or HUD-determined wage
                               program.                                                   rates apply as follows:
                                                                                             (i) Existing public housing units that
                               § 906.33 Reporting and recordkeeping                       will be sold under a homeownership
                                   requirements.                                          program: Davis-Bacon rates apply, ex-
                                                                                          cept that HUD rates apply to nonrou-
                                 The PHA is responsible for the main-
                                                                                          tine maintenance as defined in § 968.105
                               tenance of records (including sale and                     of this title;
                               financial records) for all activities inci-                   (ii) Non-public housing units ac-
                               dent to implementation of the HUD-ap-                      quired by a PHA using Capital Funds
                               proved homeownership program. Where                        that will be sold under a homeowner-
                               a PRE is responsible for the sale of                       ship program: Davis-Bacon rates apply;
                               units, the PHA must ensure that the                        and
                               PRE’s responsibilities include proper                         (iii) Non-public housing units owned
                               recordkeeping and accountability to                        or acquired by a PHA with the intent
                               the PHA, sufficient to enable the PHA                      to use 1937 Act funds to finance the
                               to monitor compliance with the ap-                         sale of the units, or otherwise provide
                               proved homeownership program and to                        assistance to purchasers of the units:
                               meet its audit responsibilities. All                       Davis-Bacon rates apply;
                               books and records must be subject to                          (2) New construction of non-public
                               inspection and audit by HUD and the                        housing units pursuant to a contract
                               General Accounting Office (GAO). The                       for acquisition by a PHA for the pur-
                               PHA must report annually to HUD on                         pose of sale under a homeownership
                               the progress of each program approved                      program: Davis-Bacon rates apply;
                               under this part. The PHA must report                          (3) Operation, rehabilitation, and re-
                               as part of the Annual Plan process                         pair of units operated as public housing
                                                                                          units by a PRE: HUD rates apply to
                               under § 903.7(k) of this title, except for
                                                                                          nonroutine maintenance, as defined in
                               those PHAs under §§ 903.11(c)(1) and (2)
                                                                                          § 968.105 of this title, and routine main-
                               of this title who are not required to in-
                                                                                          tenance. Davis-Bacon rates apply to re-
                               clude information on their public hous-                    habilitation and repair that does not
                               ing homeownership programs in their                        qualify as nonroutine maintenance.
                               Annual Plan. Those PHAs must report                           (b) Technical wage rates. All archi-
                               by providing a description of the home-                    tects, technical engineers, draftsmen,
                               ownership program to HUD, including                        and technicians employed in the devel-
                               the cumulative number of units sold.                       opment of units under a homeowner-
                                                                                          ship program shall be paid not less
                               § 906.35 Inapplicability of section 18 of                  than the HUD-determined wage rates
                                   the United States Housing Act of
                                                                                          in accordance with § 968.100(f) of this
                                   1937.
                                                                                          title.
                                 The provisions of section 18 of the
                               1937 Act (42 U.S.C. 1437p) do not apply                     Subpart E—Program Submission
                               to disposition of public housing dwell-                             and Approval
                               ing units under a homeownership pro-
                               gram approved by HUD under this part,                      § 906.38 Requirement of HUD approval
                               or to the sale of a unit to a PRE to op-                        to implement a homeownership pro-
                               erate as public housing and sell to a                           gram under this part.
                               low-income family within 5 years,                             A PHA must obtain HUD approval be-
                               under the requirements of § 906.19.                        fore implementing a homeownership

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                               § 906.39                                                               24 CFR Ch. IX (4–1–04 Edition)

                               program under this part. A home-                           of § 906.7, based on the assessment of
                               ownership program under this part                          the physical condition of the property
                               must be carried out in accordance with                     that is included in the supporting docu-
                               the requirements of this part and the                      mentation. The restriction in 906.5(c) of
                               PHA Plan submitted under part 903 of                       this part applies to such repair or reha-
                               this title.                                                bilitation;
                                                                                             (d) Purchaser eligibility and selection.
                               § 906.39 Contents of a homeownership                       The standards and procedures to be
                                    program.
                                                                                          used for homeownership applications
                                  A homeownership program must in-                        and the eligibility and selection of pur-
                               clude the following matters, as applica-                   chasers, consistent with the require-
                               ble to the particular factual situation:                   ments of § 906.15. If the homeownership
                                  (a) Method of Sale: The PHA should                      program allows application for pur-
                               indicate how units will be sold, includ-                   chase of units by families who are not
                               ing a description of the exact method                      presently public housing or Section 8
                               of sale, such as, for example, fee simple                  residents and not already on the PHA’s
                               conveyance, lease-purchase, or sale of a                   waiting lists for those programs, the
                               cooperative share. PHAs may sell units                     program must include an affirmative
                               directly to a tenant or eligible family                    fair housing marketing strategy for
                               directly or via a bona fide lease-pur-                     such families, including specific steps
                               chase arrangement. The PHA must in-                        to inform them of their eligibility to
                               dicate whether it, or a PRE will sell                      apply, and to solicit applications from
                               units to families directly or via such                     those in the housing market who are
                               lease-purchase method. If the PHA or                       least likely to apply for the program
                               PRE will use a lease-purchase method                       without special outreach, including
                               the proposal should indicate the terms                     persons with disabilities;
                               of the lease-purchase arrangement. The                        (e) Sale and financing. Terms and con-
                               terms of the lease-purchase arrange-
                                                                                          ditions of sale and financing, including
                               ment shall include, but are not limited
                                                                                          any below-market financing under
                               to the periodic documentation to be
                                                                                          § 906.29;
                               provided to the family regarding the
                               amount they have accrued toward the                           (f) Consultation with residents and pur-
                               down payment, and the length of the                        chasers. A description of resident input
                               lease period (with regard to PREs the                      obtained during the resident consulta-
                               sales must be completed within the                         tion process required by the PHA Plan
                               statutory 5-year period.);                                 under part 903 of this title. If the PHA
                                  (b) Property description. (1) If the pro-               is one whose Plan does not require in-
                               gram involves only financing assist-                       formation regarding homeownership
                               ance to the family purchasing the unit,                    under § 903.11(b)(1) of this title, the
                               the PHA need not specify property ad-                      PHA must consult with the Resident
                               dresses, but it must describe the                          Advisory Board or Boards regarding
                               area(s) in which the assistance is to be                   the homeownership plan, and provide
                               used;                                                      the information required in this para-
                                  (2) If the PHA is selling existing pub-                 graph;
                               lic housing, it must describe the prop-                       (g) Counseling. Counseling, training,
                               erty, including identification of the                      and technical assistance to be provided
                               property by project number, or street                      to purchasers;
                               address if there is no project number,                        (h) Sale via PRE. If the program con-
                               and the specific dwellings to be sold,                     templates sale to residents by an enti-
                               with bedroom distribution by size and                      ty other than the PHA, a description of
                               type broken down by development;                           that entity’s responsibilities and infor-
                                  (3) If the PHA is acquiring units with                  mation demonstrating that the re-
                               1937 Act funds to sell under the pro-                      quirements of § 906.19 have been met or
                               gram, it must comply with the provi-                       will be met in a timely fashion;
                               sions of § 906.40 concerning this element                     (i) Non-purchasing residents. If appli-
                               of the program;                                            cable, a plan for non-purchasing resi-
                                  (c) Repair or rehabilitation. If applica-               dents, in accordance with § 906.23;
                               ble, a plan for any repair or rehabilita-                     (j) Sale proceeds. An estimate of the
                               tion needed to meet the requirements                       sale proceeds and an explanation of

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                               Office of the Assistant Secretary, HUD                                                            § 906.40

                               how they will be used, in accordance                          (8) A bond for repairs or proof of in-
                               with § 906.31;                                             surance to cover any damage to the
                                  (k) Records, accounts, and reports. A                   property during the period of PRE own-
                               description of the recordkeeping, ac-                      ership and operation;
                               counting, and reporting procedures to                         (9) Such other materials as may be
                               be used, including those required by                       required by HUD.
                               § 906.33;                                                     (b) Physical assessment. An assess-
                                  (l) Budget. A budget estimate, show-                    ment of the physical condition of the
                               ing any rehabilitation or repair cost,                     properties, based on the standards
                               any financing assistance, and the costs                    specified in § 906.7;
                               of implementing the program, and the                          (c) Feasibility. A statement dem-
                               sources of the funds that will be used;                    onstrating the practical feasibility of
                                  (m) Timetable. An estimated time-                       the program, based on analysis of data
                               table for the major steps required to                      on such elements as purchase prices,
                               carry out the program;                                     costs of repair or rehabilitation, acces-
                                  (n) Deed restrictions. A deed restric-                  sibility costs, if applicable, home-
                               tion or covenant running with the land                     ownership costs, family incomes, avail-
                               that will assure to HUD’s satisfaction                     ability of financing, and the extent to
                               that the requirements of §§ 906.27 and                     which there are eligible residents who
                               906.15(b) are met.                                         are expected to be interested in pur-
                                                                                          chase (See § 906.45(a));
                               § 906.40     Supporting documentation.                        (d) PHA performance in homeowner-
                                 The following supporting documenta-                      ship. A statement of the commitment
                               tion must be submitted to HUD with                         and capability of the PHA (and any
                               the proposed homeownership program,                        other entity with substantial responsi-
                               as appropriate for the particular pro-                     bility for implementing the home-
                               gram:                                                      ownership program) to successfully
                                 (a) Supporting documentation—PREs.                       carry out the homeownership program.
                               In approving homeownership programs                        The statement must describe the
                               in which the PHA contemplates selling                      PHA’s (and other entity’s) past experi-
                               public housing units to a PRE for oper-                    ence in carrying out homeownership
                               ation as public housing during the 5                       programs for low-income families, and
                               year interim period the department                         (if applicable) its reasons for consid-
                               will require evidentiary materials in-                     ering such programs to have been suc-
                               cluding but not limited to:                                cessful. A PHA that has not previously
                                 (1) Organizational documents of the                      implemented a homeownership pro-
                               PRE;                                                       gram for low-income families instead
                                 (2) Regulatory and operating agree-                      must submit a statement describing its
                               ment between the PHA and PRE re-                           experience in carrying out public hous-
                               garding the provision of operating sub-                    ing modernization and development
                               sidy and the operation of the public                       projects under part 905 of this title, re-
                               housing units in accordance with all                       spectively;
                               applicable public housing require-                            (e) Nondiscrimination certification. The
                               ments;                                                     PHA’s or PRE’s certification that it
                                 (3) Management agreement and plan;                       will administer the plan on a non-
                                 (4) Financing documents, if any;                         discriminatory basis, in accordance
                                 (5) A description of the use of oper-                    with the Fair Housing Act, Title VI of
                               ating subsidy during the PRE’s period                      the Civil Rights Act of 1964, Executive
                               of ownership, in the form of an oper-                      Order 11063, other authorities cited in
                               ating pro forma;                                           § 5.105(a) of this title, and the imple-
                                 (6) A mixed-finance ACC amendment                        menting regulations, and will assure
                               governing these units;                                     compliance with those requirements by
                                 (7) A deed restriction or covenant                       any other entity that may assume sub-
                               running with the land that will assure                     stantial responsibilities for imple-
                               to HUD’s satisfaction that the PRE                         menting the program;
                               will operate the units in accordance                          (f) Legal opinion. An opinion by legal
                               with public housing laws and regula-                       counsel to the PHA, stating that coun-
                               tions, including § 906.19.                                 sel has reviewed the program and finds

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                               § 906.41                                                               24 CFR Ch. IX (4–1–04 Edition)

                               it consistent with all applicable re-                         (2) Certification. If the housing units
                               quirements of federal, state, and local                    were constructed under a contract or
                               law, including regulations as well as                      an agreement that they be sold to the
                               statutes. At a minimum, the attorney                       PHA, a certification that the devel-
                               must certify that the documents to be                      oper/owner complied with all Davis-
                               used will ensure sales only to eligible                    Bacon wage rate requirements under
                               families under § 906.15, compliance with                   § 906.37, including all required contrac-
                               the 5-year PRE sale guarantee in                           tual provisions and compliance meas-
                               § 906.19(d), and compliance with the re-                   ures, and that the PHA received all ap-
                               striction of use of resale proceeds of                     plicable HUD environmental approvals
                               § 906.27;                                                  and all applicable HUD releases of
                                  (g) Board resolution. A resolution by                   funds before executing the contract or
                               the PHA’s Board of Commissioners, ev-                      agreement,        in    accordance    with
                               idencing its approval of the program;                      § 906.47(d).
                                  (h) Section 8(y). In any case where the                    (3) Site information. A description of
                               PHA plans to provide families with as-                     the proposed general location of the
                               sistance under the Section 8(y) home-                      properties to be acquired, or where spe-
                               ownership option in connection with                        cific properties have been identified,
                               homeownership under this part, a cer-                      street addresses of the properties;
                               tification that the PHA will comply                           (4) Property costs. The detailed budget
                               with the requirements of the Section                       of costs for acquiring the properties,
                               8(y) statute and implementing regula-                      including relocation and closing costs,
                               tions;                                                     and an identification of the sources of
                                  (i) Other information. Any other infor-                 funding;
                               mation that may reasonably be re-                             (5) Appraisal. An appraisal of the pro-
                               quired for HUD review of the program.
                                                                                          posed properties by an independent,
                               Except for the PHA–HUD imple-
                                                                                          state-certified appraiser (when the
                               menting agreement under § 906.49 and
                                                                                          sites have been identified);
                               the deed restriction required by
                                                                                             (6) Property acquisition schedule. A
                               § 906.39(n), HUD approval is not re-
                                                                                          copy of the PHA acquisition schedule;
                               quired for documents to be prepared
                               and used by the PHA in implementing                           (7) Environmental information. (i) The
                               the program (such as contracts, appli-                     environmental information required by
                               cations, deeds, mortgages, promissory                      § 906.47(f), where HUD will perform the
                               notes, and cooperative or condominium                      environmental review under 24 CFR
                               documents), if their essential terms                       part 50, or a statement identifying the
                               and conditions are described in the pro-                   responsible entity that has performed
                               gram. Consequently, those documents                        or will perform the review under 24
                               need not be submitted as part of the                       CFR part 58. This paragraph (a)(7)(i)
                               program or the supporting documenta-                       does not apply to a property where a
                               tion.                                                      contract or agreement for sale to the
                                                                                          PHA has already been executed and
                               § 906.41 Additional supporting docu-                       HUD has already given prior approval
                                   mentation for acquisition of non-                      of the property following environ-
                                   public housing for homeownership.                      mental review under 24 CFR part 50.
                                 (a) Proposal contents. The PHA must                         (ii) Where the PHA’s homeownership
                               submit an acquisition proposal to the                      program is submitted for approval to
                               HUD field office for review and ap-                        HUD and contemplates acquisition of
                               proval before its homeownership plan                       properties not identified at the time of
                               containing acquisition of non-public                       submission or approval, the procedures
                               housing can be approved. This proposal                     at § 906.47(e) apply.
                               must contain the following:                                   (8) Market analysis. An analysis of the
                                 (1) Property description. A description                  potential market of eligible purchasers
                               of the properties, including the number                    for the homeownership units.
                               of housing units, unit types, and num-                        (9) Additional HUD-requested informa-
                               ber of bedrooms, and any non-dwelling                      tion. Any additional information that
                               facilities on the properties to be ac-                     may be needed for HUD to determine
                               quired;                                                    whether it can approve the proposal.

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                               Office of the Assistant Secretary, HUD                                                            § 906.47

                                 (b) Cost limit. The acquisition cost of                    (b) Assistance to facilitate the purchase
                               each property is limited by the housing                    of homes. Where the PHA’s homeowner-
                               cost cap limit, as determined by HUD.                      ship program involves assistance pro-
                                                                                          vided under the 1937 Act solely to as-
                               § 906.43 Where a PHA is to submit a                        sist homebuyers to purchase existing
                                   homeownership program for HUD                          dwelling units or dwelling units under
                                   approval.                                              construction, an environmental review
                                  A PHA must submit its proposed                          is not required under part 58 or part 50
                               homeownership program together with                        of this title. However, the require-
                               supporting documentation, in a format                      ments of § 58.6 or § 50.19(b)(15) of this
                               prescribed by HUD, to the Special Ap-                      title are still applicable.
                               plications Center with a copy to the                         (c) Public housing units in the PHA’s
                               appropriate HUD field office.                              inventory. Before the PHA rehabilitates
                                                                                          or repairs units in its inventory for use
                               § 906.45 HUD criteria for reviewing a                      for homeownership, or expends or com-
                                    proposed homeownership program.                       mits HUD or local funds for such ac-
                                  HUD will use the following criteria in                  tivities, the responsible entity must
                               reviewing a homeownership program:                         comply with part 58 and the PHA,
                                  (a) Feasibility. The program must be                    where required, must submit and re-
                               practically feasible, with sound poten-                    ceive HUD approval of its request for
                               tial for long-term success. Financial                      release of funds, or HUD must have
                               viability, including the capability of                     completed any part 50 environmental
                               purchasers to meet the financial obli-                     review and notified the PHA of its ap-
                               gations of homeownership, is a critical                    proval of the property. HUD may not
                               requirement.                                               release funds under this part before the
                                  (b) Legality. Counsel for the PHA                       appropriate approval is obtained.
                               shall certify that the homeownership                         (d) Units to be acquired with federal
                               program is consistent with applicable                      funds and used for public housing home-
                               law, including the requirements of this                    ownership. A PHA may not enter into
                               part and any other applicable federal,                     any contract for acquisition of real
                               state, and local statutes and regula-                      property to be used in a homeowner-
                               tions, including existing contracts, and                   ship program unless the required envi-
                               HUD shall accept such certification un-                    ronmental reviews have been per-
                               less HUD has information indicating                        formed and approvals have been ob-
                               that the certification is incorrect.                       tained.
                                  (c) Documentation. The program must                       (e) Specific units unidentified. Where
                               be clear and complete enough to serve                      the PHA’s homeownership program
                               as a working document for implemen-                        contemplates acquisition of properties
                               tation, as well as a basis for HUD re-                     not identified at the time of submis-
                               view.                                                      sion, the PHA must certify that it will
                                  (d) PHA performance in homeowner-                       comply with this section, including
                               ship. The PHA (and any other entity                        paragraph (f) of this section, prior to
                               with substantial responsibility for im-                    such acquisition or construction. HUD
                               plementing the homeownership pro-                          may conditionally approve such a
                               gram) must have demonstrated the                           homeownership        program;     however,
                               commitment and capability to success-                      HUD will not give final approval of any
                               fully implement the homeownership                          site or unit until the required environ-
                               program based upon the criteria stated                     mental review has been completed.
                               in § 906.41(d).                                              (f) Information. The PHA shall supply
                                                                                          all relevant information necessary for
                               § 906.47 Environmental requirements.                       the responsible entity, or HUD, if ap-
                                  (a) General. HUD environmental regu-                    plicable, to perform the environmental
                               lations at 24 CFR part 58 apply to this                    review for each property included in
                               part, unless, under § 58.11 of this title,                 the homeownership program, and, if
                               HUD itself performs the environmental                      necessary, shall carry out mitigating
                               review under 24 CFR part 50. The PHA                       measures or select alternate eligible
                               conducting a homeownership program                         properties. Where HUD performs the
                               under this part must comply with this                      environmental review, the PHA shall
                               section and part 50 or 58, as applicable.                  comply with 24 CFR 50.3(h).

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                               § 906.49                                                               24 CFR Ch. IX (4–1–04 Edition)

                                 (g) Non-exclusivity. Nothing in this                     public housing, Indian housing, or Sec-
                               section relieves the participating PHA,                    tion 8 Rental Certificate, Rental
                               and its partners and contractors, from                     Voucher and Moderate Rehabilitation
                               complying with all requirements of 24                      programs to electronically submit cer-
                               CFR part 50 or part 58, as applicable.                     tain data to HUD for those programs.
                                                                                          This electronically submitted data is
                               § 906.49 HUD approval; implementing                        required for HUD Forms HUD–50058,
                                   agreement.                                             Family Report, and HUD–50058–FSS,
                                  HUD may approve a homeownership                         Family Self-Sufficiency Addendum.
                               program as submitted, conditionally
                               approve it under § 906.47(e), or return it                 § 908.104 Requirements.
                               to the PHA for revision and resubmis-                         (a) Automated HAs. Housing agencies
                               sion. Where such conditional approval                      that currently use automated software
                               is given, the PHA, partners, and con-                      packages to transmit Forms HUD–50058
                               tractors remain subject to the restric-                    and HUD–50058–FSS information by
                               tions in § 906.47. Upon HUD notification                   tape or diskette to the Department’s
                               to the PHA that the homeownership                          data processing contractor must con-
                               program is approvable (in final form                       vert to telephonic electronic trans-
                               that satisfies all applicable require-                     mission of that data in a HUD specified
                               ments of this part), the PHA and HUD                       format by June 30, 1995.
                               will execute a written implementing                           (b) Nonautomated HAs. Housing agen-
                               agreement, in a form prescribed by                         cies that currently prepare and trans-
                               HUD, to evidence HUD approval and                          mit the HUD–50058 and HUD–50058–FSS
                               authorization for implementation. The                      information to HUD paper must:
                               program itself, as approved by HUD,                           (1) Complete a vendor search and ob-
                               must be incorporated in the imple-                         tain either:
                               menting agreement. Any of the items                           (i) The necessary hardware and soft-
                               of supporting documentation may also                       ware required to develop and maintain
                               be incorporated, if agreeable to the                       an in-house automated data processing
                               PHA and HUD. The PHA is obligated to                       system (ADP) used to generate elec-
                               carry out the approved homeownership                       tronic submission of the data for these
                               program and other provisions of the                        forms via telephonic network; or
                               implementing        agreement     without                     (ii) A service contract for the oper-
                               modification, except with written ap-                      ation of an automated system to gen-
                               proval by HUD.                                             erate electronic submission of the data
                                                                                          for these forms via telephonic network;
                               PART 908—ELECTRONIC TRANS-                                    (2) Complete their data loading; and
                                 MISSION OF REQUIRED FAMILY                                  (3) Begin electronic transmission by
                                 DATA FOR PUBLIC HOUSING, IN-                             March 2, 1996.
                                                                                             (c) Electronic transmission of data.
                                 DIAN HOUSING, AND THE SEC-                               Electronic transmission of data con-
                                 TION 8 RENTAL CERTIFICATE,                               sists of submission of all required data
                                 RENTAL VOUCHER, AND MOD-                                 fields (correctly formatted) from the
                                 ERATE  REHABILITATION  PRO-                              forms HUD–050058 and HUD–50058–FSS
                                 GRAMS                                                    telephonically, in accordance with
                                                                                          HUD instructions. Regardless of wheth-
                               Sec.                                                       er an HA obtains the ADP system itself
                               908.101     Purpose.                                       or contracts with a service bureau to
                               908.104     Requirements.                                  provide the system, the software must
                               908.108     Cost.
                                                                                          be periodically updated to incorporate
                               908.112     Extension of time.
                                                                                          changes or revisions in legislation, reg-
                                 AUTHORITY: 42 U.S.C. 1437f, 3535(d), 3543,               ulations, handbooks, notices, or HUD
                               3544, and 3608a.                                           electronic transmission data format re-
                                 SOURCE: 60 FR 11628, Mar. 2, 1995, unless                quirements.
                               otherwise noted.                                              (d) Service contract. HAs that deter-
                                                                                          mine that the purchase of hardware
                               § 908.101 Purpose.                                         and/or software is not cost effective
                                  The purpose of this part is to require                  may contract out the electronic data
                               Housing Agencies (HAs) that operate                        transmission function to organizations

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