Housing Assistance for Needy Families (HANF) Status Update
December 2003
The President's FY04 Budget proposed changing the Section 8 rental voucher program, so that vouchers would be allocated to states, rather than PHAs. States would contract with PHAs or other entities to administer the vouchers. Other than several hearings, filled with opponents of the proposal, there was no further action on this legislation. However, it is expected that the Administration will again propose this, or a similar program, early next year.

HUD/RHS October Meeting Update
December 2003
On October 31, 2003 IREM's National Federal Housing Liaison Advisory Board met in Washington , DC for their bi-annual meetings with HUD and RHS. The HUD meeting included lengthy discussions on REAC and the physical inspections protocol. On one item of concern, clearing of flags due to under 60 scores, HUD said they were working to speed this process up, and owners who need expedited service due to refinancing or other reasons should let HUD know. The new web-based 2530 process will begin early next year. Owners/agents should be prepared to enter all of their information online, but once it is in the system, it only needs to be updated on an as-needed basis. Lead paint, insurance and the future of OHMAR were also discussed.

Art Garcia, Administrator of RHS, chaired the meeting at the Department of Agriculture. Discussion with RHS focused on the 538 program, preservation, and automation. There was also a discussion about the consolidated multifamily regulations, which were out for comment this summer. RHS received over 3000 comments (including those from IREM), and is in the process of reviewing these. A final rule is not expected until next summer. IREM also asked if there had been a policy change with the use of reserves. RHS said that no, these were still to be used for capital improvements, which includes appliances, renovation, and those activities that are outside the scope of maintenance.

Proposal to Block-Grant the Section 8 Program Likely Dead
July 2003
In late April, legislation (HR 1841 and S. 947) was introduced in the House and Senate to implement HUD's proposed Housing Assistance for Needy Families (HANF) program. The legislation would block-grant the Section 8 voucher program to the states. HUD first unveiled this proposal with their FY04 budget request and IREM, along with other industry groups, sent a letter to HUD opposing the idea. Several hearings have been held in the House, with virtually all witnesses (with the exception of HUD staff) opposing the program. Since the hearings there has been no activity on the legislation, and Congress is not expected to proceed with this proposal.

FHA Multifamily Mortgage Insurance Premiums Lowered
July 2003
For the second time in as many years, HUD has reduced the MIP for many FHA multifamily mortgage insurance programs for FY04. The MIP will be reduced from 80 basis points to 50 basis points for the following programs: Section 207 (used to finance construction or rehab of rental housing and manufactured home parks, Section 220 (used to finance mortgages for housing in urban renewal areas), Section 221(d)(4) which is used to finance construction or substantial rehab of multifamily rental or cooperative housing and Section 231 (used to finance construction or rehab of rental housing for elderly). The effective date of these changes is October 1, 2003.

House Holds Hearing on Rural Housing Program
July 2003
In June, The House Subcommittee on Housing and Community Opportunity held a hearing on the state of rural housing in America . This was the first hearing on this subject in almost 10 years. On behalf of themselves and IREM, NAR submitted a statement for the record, supporting increased federal support of programs for rural housing - both homeownership and rental assistance. The statement focused on the 502 direct loan program, 515 multifamily loans, 538 guaranteed loans, and rental assistance. NAR also encouraged support for the affordable housing development tax credit, which could help attract development to rural communities.

HUD Announces Availability of Lead Hazard Reduction Grant Funds
July 2003
On July 1, the Department of Housing and Urban Development (HUD) issued a Notice of Funding Availability for the Lead Paint Hazard Reduction Grant Program. This program is designed to assist areas with the highest lead paint abatement needs by providing grants to local units of government for abatement, inspections, risk assessments, temporary relocations, and interim control of lead-based paint hazards in eligible privately owned single family homes and multifamily buildings that are occupied by low-income families. For fiscal year 2003, nearly $50 million will be available under the program.

HUD Rule on Tenant Participation in State-Financed Housing Developments Takes Effect
July 2003
On May 27, regulations proposed by the Department of Housing and Urban Development (HUD) in June, 2002 regarding tenant participation in state-financed housing developments that receive assistance under certain HUD programs went into effect. State-financed developments had been excluded from previous regulations allowing tenants to form tenants' organizations and to participate in the management of the properties. The rule extends those regulations to these properties as well.

Long-Awaited Rural Housing Multifamily Regulations Proposed
July 2003
More than 5 years ago, IREM members participated in a number of stakeholder meetings to discuss changes to the Rural Housing Service's Multifamily housing programs. Finally, this summer, RHS has published the proposed regulations which would consolidate and streamline the Section 515 rural rental housing, Section 514 and 516 farm labor housing, and Section 521 rural rental assistance program regulations. The proposal would consolidate 13 regulations into one, with additional guidance to be provided in handbooks. The proposal includes a number of substantive changes, including revisions to the prepayment process that will limit the time owners have to wait for incentives, an increase in reserve requirements for project improvements, and the use of rent comparability to limit project rents. IREM will be submitting comments on the proposal, which are due August 1.

HUD Changes Management Review Form
July 2003
HUD has released a new 9834 Management Review Form for federally-assisted properties. IREM has joined other industry groups to send formal comments to HUD opposing the new form. While the form needed revisions and updates, the proposed document is not only duplicative of HUD's other assessment and oversight functions, but includes requests for information that are unrelated to the assessment of Section 8 program compliance. The comments discuss the proposed form in great detail and we have asked for a meeting with HUD to review the form and discuss the scope and purpose of a management review itself.

RHS Proposes Changes to 538 Program
July 2003
RHS has issued proposed regulations to amend the Section 538 Guaranteed Rural Rental Housing Program (GRRHP) program. Under the GRRHP, RHS guarantees loans for the development of housing and related facilities for low- or moderate-income families in rural areas. RHS is seeking the changes to allow it to buy back guaranteed loans from investors in the event of a default. They also want to lower the minimum level of rehabilitation work when guaranteed loans are used for acquisition and rehabilitation. Both of these changes are expected to increase participation in the GRRHP by the secondary mortgage market.

IREM Opposes REAC Change
April 2003
Last November HUD changed the threshold for physical inspections at which it refers properties to enforcement. Under this current instruction, field offices are to refer any property that receives a score under 60 to enforcement. The HUD regulations only require properties that score below 30 to be referred to enforcement. In coalition with other affected groups, IREM sent a letter to HUD demanding they retract this new instruction. HUD responded by saying that they believe the regulations give them the flexibility to refer any properties to enforcement at their discretion. They also believe that properties that score below 60 are substandard, and must be treated as such. IREM is working with its coalition partners to change this policy. If you have an example where this policy negatively impacted your business or prohibited you from getting further business, please contact Megan Booth at Mbooth@Realtors.org.

Terrorism Insurance Not Required by the FHA
April 2003
HUD Secretary Martinez announced on March 11, 2003 that FHA will not require terrorism insurance for multifamily mortgages of less than $50 million. The requirement for properties over $50m will only apply to new mortgage applications and not existing mortgages. This threshold will be debated in a proposed rule to be released this spring.

New Law Indexes FHA Multifamily Loan Limits
January 2003
In the final days of the 107th Congress, legislators passed a bill to index the FHA multifamily loan limits. Last year Congress increased the loan limits for the first time in ten years. With the new law, which was signed by the President, the limits will now increase with inflation, rather than having to pass legislation.

Section 8 Voucher Funds Threatened
January 2003
Before adjourning for the year, the House Appropriations Committee proposed legislation that would reduce funding for Section 8 vouchers and change the allocation formula used to determine the annual voucher funding levels that local housing agencies receive. It is believed the change will reduce the number of families that can be served by vouchers by nearly 125,000 and would provide insufficient funds to renew all of the vouchers currently authorized and funded. IREM and NAR, in coalition with other real estate groups, sent a letter to the Appropriations Committees in the House and Senate urging them to reject this proposal when they reconvene in January.

REAC Changes Inspection Thresholds for Enforcement
January 2003
Recently HUD sent an internal memo to its field offices instructing them as of November 1, 2002 to refer any property that receives a REAC score below 60 to enforcement. HUD existing regulations require only those properties that score below 30 to be sent to the Departmental Enforcement Center . Not only does this new guidance conflict with the regulations, the revised guidance will allow owners and agents of any property scoring below 60 to be flagged as part of the 2530 previous participation certification review process. A flag could occur immediately, before any appeals of the score are made, or prior to an opportunity to cure any physical deficiencies. IREM and NAR, in coalition with 12 real estate groups, sent a strong letter to HUD, demanding they rescind the new policy, pending a new rulemaking procedure.

HUD Receives Comments on their Strategic Plan
January 2003
This fall, HUD published their five-year Strategic Plan for public comment. IREM submitted comments in conjunction with NAR in early December. Our comments focused on several points related to federally-assisted housing. First, we urged the Department to ensure that expiring Section 8 contracts are renewed at a level that will continue to make them viable assets. Second, we supported the Department's plan to review the process used to determine Fair Market Rents. We urged the Department to expand the survey of comparable rents, and to ensure that these “comparable” properties meet HUD's physical condition standards. HUD has undertaken a “Rental Housing Integrity Improvement Project”, to better determine rental payment standards for residents. While the industry was involved at the start of the project, no industry input has been accepted in the last 18 months. We urged the Department to further involve industry in this process, as it evolves. Lastly, we urged the Department support changes to the Section 8 voucher program that would incentivize landlord participation in that program.

HUD Clarifies Screening and Eviction Procedures
January 2003
On October 29, 2002 , HUD published Notice H 2002-22, providing clarification and guidance for Multifamily Housing Programs on the requirements mandated by the Screening and Eviction for Drug Abuse and Other Criminal Activity Final Rule, which was effective in June of 2001. The Notice includes information about how and when to conduct background checks, information on sex offenders and provisions for termination of tenancy.