Housing Affordability Statement



The Institute of Real Estate Management affirms the national goal of a decent home and a suitable living environment for every individual The Institute believes this commitment should encompass the entire housing ladder including the homeless and therefore urges any national housing policy to address a spectrum of housing needs. 

IREM believes financial appropriations which address homeless population housing initiatives should be broad enough to include social service programs which provide for the whole individual/family. Therefore, IREM strongly endorses federal funding and/or state and local initiatives and development of private and public partnerships for social service programs which might include development of personal "life skills" that empower individuals/families in such a way as to assist them from ever being homeless.

(6/89, updated 12/95, 10/06, 10/10, 1/14, 11/22)

Housing for Low-Income Families


IREM believes safe, affordable housing is a fundamental need for all families. IREM supports the development of housing which contributes to the well-being of low and moderately low-income households. IREM members advocate for funding for the development and management of housing to ensure the future economic viability and the households’ right to live in safe, accessible, and affordable housing.

(6/86, updated 4/05, 10/09, 11/22)

Housing Quality Standards


Managers of affordable/insured/subsidized housing must maintain certain housing quality standards in order to receive the subsidy on a unit as defined by the Section 8 Certificate Program and Housing Voucher Program administered by the U.S. Department of Housing and Urban Development (HUD). HUD has outlined 13 key aspects of housing quality:


  • Sanitary facilities
  • Food preparation and refuse disposal
  • Space and security
  • Thermal environment
  • Illumination and electricity
  • Structure and materials
  • Interior air quality
  • Water supply
  • Lead-based paint
  • Access
  • Site and neighborhood
  • Sanitary condition
  • Smoke Detector



Housing quality standards require that the unit is properly provided with utility service, among other requirements and standards. If utilities are discontinued, a unit will not meet the housing quality standards and subsidy will be discontinued. Unfortunately, housing managers are not always notified when a tenant's utilities have been turned off for failure to pay. This can result in a delay in eviction proceedings and a loss of subsidy. While eviction is an alternative to having the manager pay the utilities, a period of time can exist during which the subsidy has been discontinued and the tenant is still in occupancy. In some cases, managers may also be paying for the utilities of the tenant facing eviction in order to maintain service and prevent damage to the unit from loss of service. 


IREM believes that it is the responsibility of a subsidized tenant, and not the property manager, to ensure that utility service is maintained in the tenant's unit by providing regular and timely payment of utility bills when service is provided directly to the tenant. IREM also believes that tenants who fail to maintain utility service present a danger to themselves and the property and should be duly and expeditiously evicted. In order to comply with the housing quality standards associated with subsidy programs, managers of subsidized housing should be notified by utility companies when the utilities of a subsidized tenant are turned off for failure to pay. IREM believes that it is unfair for HUD or other agencies to discontinue the subsidy when housing managers are not notified by utility companies and are unaware that utilities have been discontinued. When utility companies refuse to notify managers that utilities have been turned off, HUD should continue the subsidy until the tenant is duly evicted for failure to maintain utility service.

(Adopted: 11/91. Updated: 4/07, 8/12, 10/17)

Housing Trust Funds


The Institute of Real Estate Management supports the concept of safe, decent and sanitary housing, the production of new low/moderate income housing, and the preservation of the existing housing inventory. IREM feels that the best and most efficient means of creating local low/moderate income housing is through state finance agencies, not through additional funding via interest-bearing escrow accounts. This issue is a broad-based social issue that has a funding opportunity through the use of local tax sources or a low income housing line item in the respective state's budget. The use of housing trust interest-bearing escrow accounts will have an adverse effect on rent pricing and will adversely affect the original intent of security deposits.

(Updated 11/04, 9/12)

HUD Reforms: Bankruptcy

HUD Reforms: Civil Money Penalties


The Secretary of HUD has the authority through federal court to impose civil money penalties against general partners and certain managing agents of multifamily mortgagors in addition to the current language (Section 537) of imposing civil money penalties on multifamily mortgagors. The current law in Section 537 authorizes the imposition of civil money penalties for certain violations of (A) an agreement entered into as a condition of a transfer of physical assets, a flexible subsidy loan, a capital improvement loan, a modification of the mortgage terms, or a work-out agreement; or (B) the regulatory agreement executed by the mortgagor. The penalties can even occur when the general partner of a mortgage or does not provide “management for the project that is acceptable to the Secretary” such as failing to maintain the property, and failing to provide access to accounting records of a property.

HUD regulation 24 CFR Part 30.45 provides guidance on procedures for civil money penalties. The regulation states that a mortgagor may respond to a notice from HUD of possible penalty and, subsequent to the response, a review of the notice by the Housing Civil Penalties Panel may occur. A hearing process before an administrative law judge would occur next if a penalty was suggested by a majority vote of the Housing Civil Penalties Panel. A mortgagor may appeal the administrative law judge's decision to the Secretary. After the Secretary's final decision, judicial review is possible.

Prior to the penalty, the mortgagor may request an administrative hearing which is appealable to the U.S. Court of Appeals. Under the existing law, a civil money penalty may not exceed $25,000.


The Institute of Real Estate Management is aware that there are cases of "recalcitrant owners and managing agents" that HUD must address. However, the Institute believes that adding managing agents to the proposed civil penalties authority represents overkill on the part of HUD and is an inappropriate response to these problems for the following reasons:

A. General Comments:

Present remedies available to HUD adequately address these cases. Such remedies include HUD's current ability to initiate receivership hearings on a property. The Institute believes that placing a property in receivership is an extreme measure and a sufficient tool for HUD to use in extreme cases. Addressing managing agents, administrative sanctions such as suspension, termination, and debarment are current available options.

Use of this authority could be arbitrary. Adequate proof standards for administrative review must be assured. Due process should be afforded before civil money penalties are enforced on general partners or managing agents. During due process it must be determined which party is actually in control of making a specific decision. In most cases, managing agents take direction from general partners or mortgagors.

The application of civil penalties as proposed is open to abuse. The possibility exists that a difference of opinion could be deemed a "violation" by HUD and penalized. What constitutes a reasonable, proper, or necessary expense may be subject to interpretation or conflict between HUD and managing agents or owners, and may even vary from one HUD region to another. At a minimum, there should be ample notice to those deemed to be in violation to give them an opportunity to correct problems. Also, the Institute believes that it is difficult for HUD to keep informed of the current professional management practices needed for sophisticated decision-making given the shortage of staff.

If the managing agent identifies a problem that is under the control of the owner or general partner and, the managing agent documents that problem and informs HUD of that potential problem, the managing agent should be held harmless and civil money penalties should not be imposed on that managing agent. The managing agent shall only be liable for his or her own gross acts of unlawful misconduct or negligence.

The "identification of problem" action will build ill-will between the owner and agent and will provide for a negative working relationship and possible lawsuits against the managing agent.

When actions occur that may be questionable, the managing agent shall get written approval from HUD before the action is pursued. However, it’s unclear as to when and under what situations this procedure needs to be followed.

Any civil money penalties imposed should stay with the property and be used for the benefit of the property. When civil money penalties are imposed, where do the funds go?

When civil money penalties are imposed, they should not be punitive. The penalties should be only compensatory to recoup the cost of damages and, as stated above, should be used for the benefit of the property. In the case of the managing agent, punitive damages are, in essence, applied to the managing agents by potential loss of the management contract.

IREM believes that objectivity is of primary importance at each stage of the civil money penalties process including the deliberations of the Housing Civil Penalties Panel (HCPP). According to 24 CFR Part 30, the panel is composed of four individuals at the Assistant Secretary or Deputy Assistant Secretary level or their designees. With the composition of the panel only coming from this level of HUD employees, where is the objectivity? Is this a "preaching to the choir" situation? IREM feels that this panel will lack objectivity and that, under the current selection process, there is no way to make the panel objective.

The following comments refer to SS 30.325, "Under this subsection, the HCPP also may propose civil money penalties on any project mortgagor who knowingly and materially violates its regulatory agreement by:

"Paying out any funds except for reasonable operating expenses and necessary repairs, without the prior written approval of the Secretary."

Under this part, who determines reasonable and necessary? These terms are unclear, are too broad, and interpretation by HUD tends to be extremely subjective.

"The interest of any general partner in any right to manage or receive the rents and profits from the mortgaged property, without the prior written approval of the Secretary."

Some general partner interests in a property are extremely small and, consequently, insignificant. Under current operating procedures at HUD, the Department is not a consenting party to the contract between the owner and the managing agent. Under this section, the verbiage implies that HUD is a consenting party. With this said, the right to manage now starts to get clouded. IREM's viewpoint is that HUD should be concerned in situations where the general partner has majority interests in the property.

"Remodeling, adding to, reconstructing, or demolishing any part of the mortgaged property or subtracting from any real or personal property of the project, without the prior written approval of the Secretary."

IREM does not understand the intent of this section because general remodeling and, to some extent, reconstruction are normal processes in operating a property and are done on a weekly or even daily basis. Will a new process be required by HUD to provide written approval for every remodeling or reconstruction done to the property?

"Paying for services, supplies, or materials which exceed $500 and substantially exceed the amount ordinarily paid for such services, supplies, or materials in the area where the services are rendered or the supplies or materials furnished."

The key words here are "ordinarily paid." Who at HUD will determine what is ordinarily paid?

"Failing to maintain at any time the mortgaged property, equipment, buildings, plans, offices, apparatus, devices, books, contracts, records, documents, and other related papers (including failure to keep copies of all written contracts or other instruments) in reasonable condition for proper audit and for examination and inspection at any reasonable time by the Secretary or any duly authorized agents of the Secretary."

Many managing agents could be in violation of one or more of these items.

For example, it is nearly impossible to find a set of "as-built plans" for a given property. With the number of mechanical equipment or apparatus requirements on a given property, someone could find one or more that aren't properly maintained. This item appears to be a "catch all" category to provide a greater degree of subjective discrimination for HUD.

"Failing to furnish the Secretary, by the expiration of the 60-day period beginning on the first day after the completion of each fiscal year, with a complete annual financial report based upon an examination of the books and records of the mortgagor prepared and certified to by an independent public accountant or a certified public accountant and certified by an officer of the mortgagor unless the Secretary has approved an extension of the 60-day period in writing which extension shall be granted the mortgagor demonstrates that failure to comply is due to events beyond its control."

The managing agent has influence but no control over the auditor. Where it is clear that the audit will be late, a managing agent can ask for an extension, however, HUD could still rule that the managing agent is in violation. Again, this is a situation where a managing agent has responsibility but no control.

(Adopted 11/93, updated 4/05, 8/12)

HUD Reforms: Excess Income


HUD's current system for reporting and filing excess income allows the excess income to be used to offset uncollectible rents in Section 236 Projects. This has been very beneficial to operators of the 236 projects who are particularly affected by uncollectible rents. The problem of uncollectible rents is compounded by HUD regulations which require an additional ten days to be given to a tenant before evicting the tenant for unpaid rent.

During this time, expenses for the operator continue but there is still no rent being collected. Higher basic rents also add to the problem. On September 1, 2008 it became mandatory that owners and management agents of Section 236 projects must submit form HUD-93104, “Monthly Report of Excess Income,” to HUD on a monthly basis. All owners and agents must file this form regardless of actual excess income collected.


The Institute recommends that HUD make no changes to the existing policy dealing with Section 236 "Excess Income." At the same time, the Institute further recommends that all existing statutes and regulations continue to be enforced to see that all excess income is remitted to HUD in a timely fashion.

(Adopted 11/90, updated 4/05, 8/12)

Low-Income Housing Tax Credits


The Low Income Housing Tax Credit (LIHTC or Housing Credit) program was created by the Tax Reform Act of 1986 as an alternate method of funding housing for low- and moderate-income households, and has been in operation since 1987. Every year, each state is limited to a total annual housing tax credit allocation of $1.75 per resident, which they, in turn, allocate to qualified affordable rental properties that are either newly constructed or substantially rehabilitated. Tax Credits must be used for new construction, rehabilitation, or acquisition and rehabilitation.

The housing credit works by providing a dollar-for-dollar reduction in the federal tax liability of corporations and individuals that invest equity in these qualifying properties. Property developers use the credit to attract equity investments by private sector investors - usually corporations - that, in turn, use the credits to offset their federal tax liability. The investors are at risk of losing these federal tax credit benefits if the properties are not well maintained and not reserved for low income families who do not exceed established income limits. The housing credit has been a permanent part of the tax code since 1993.


IREM supports federal programs that encourage the development and preservation of affordable housing. We support the development and enactment of tax incentives that encourage economic growth while making capital available at an affordable cost.

Since 1986, the Low-Income Housing Tax Credit program has produced nearly one million safe, decent and affordable homes. It is also a cornerstone of the revitalization of low-income communities and contributes substantially to economic growth, generating thousands of jobs and billions of dollars in wages and federal taxes annually.

IREM supports the continuation of the Low-Income Housing Tax Credit, and encourages legislation that will increase this valuable development tool.

(Adopted 10/07. Updated: 3/12, 10/17)

Management and Occupancy Review (MOR)


Project Based Section 8 properties are required to be reviewed annually by the Performance-Based Contract Administrator (PBCA). The reports, called Management and Occupancy Reviews (MORs), include a look at general appearance; security; follow up from inspections; maintenance and operating procedures; tenant files; leasing processes; and document review. Within 30-days a completed report is sent to the owner/management agent.

IREM members have used these reports for internal processing and to improve performance. They are also used to demonstrate to Congress that the HUD portfolio is well managed so as to ensure continued support of the program.

The MOR program was temporarily suspended due to a lack of staff able to carry our inspections but was reinstated in 2016.


IREM believes that MORs are an important part of the management review process. MORs help the performance of a property and demonstrate strong management operations and areas for improvements. They are also helpful in demonstrating to Congress that the HUD portfolio is well managed so as to ensure continued support of the program. HUD should ensure that MORs are conducted on a regular basis, and reports provided to owner/managers in a timely manner.

(Adopted: 10/12. Updated: 10/17)

Mark-to-Market HUD Multifamily Portfolio Re-engineering


The Institute of Real Estate Management (IREM) generally supports the concept of debt reduction combined with restructured rent subsidy levels on FHA-insured projects which receive project-based assistance in order to reduce the federal government's escalating long-term costs of maintaining such programs and to achieve debt reduction and reduced federal spending. However, our support for the so-called "mark-to-market" process is contingent upon the preservation of viable existing affordable housing opportunities for low-income families and individuals, limits on tenant dislocation, and protections of the rights of project owners and managers.

IREM believes HUD-assisted portfolio re-engineering should be conducted with the following principles in mind:

The federal government should be responsible for ensuring the maintenance of the stock of properly-operated Section 8 low-income housing. Private investors would have neither created nor maintained the valuable Section 8 housing resource were it not for the proactive involvement of the federal government. HUD's desire to abruptly end its commitments to these programs represents a profound change in the delivery of low-income housing and could result in owner disinvestment and tenant displacement.

Neither the private sector nor state and local governments are necessarily equipped nor willing to accept responsibility for preserving this valuable housing stock created by federal programs. For HUD to abandon these projects would be irresponsible and unfair to tenants, owners, managers, and the surrounding communities. IREM believes the federal government should maintain its commitment to these programs in a manner conducive to achieving reduced spending and limited bureaucratic interference.

Section 8 rental subsidy contracts should be abrogated. "Mark-to-Market" activities should coincide with contract expiration and should be conducted with the consent and cooperation of project owners and managers allowing for consideration of unique physical and financial project characteristics. Upon Section 8 contract expiration, projects should have the option to convert to conventional housing at the owner’s discretion. The physical and financial condition, tenant make-up, local government affordable housing plans, and community characteristics should all be factors in determining the future of the project.

"Mark-to Market" should be limited to Section 8 New Construction/Substantial Rehabilitation (NC/SR) projects whose contract rents are higher than local prevailing rents for similar housing units. Section 8 project-based contracts on older assisted properties are the first contracts scheduled to expire. Nearly half of these older assisted units (Loan Management Set-Aside Units) are occupied by elderly and disabled residents. Rent levels for these units are generally below market rent. Marking up to market rent level produces no cost savings to the federal government and provides no benefits to tenants, owners, managers, or communities. Residents face being priced out of such units if rents are raised.

Mark-to-Market should be limited to NC/SR projects whose rents, through no fault of the owner, are above market rent levels and whose contracts begin to expire in 1998. This group of projects is the most suitable candidate for mark-to-market due to their anticipated ability to survive after experiencing debt restructuring coupled with rent reduction.

Project-based Section 8 assistance should be maintained. Owners should be allowed to determine whether project-based or tenant-based assistance shall be provided after debt restructuring. While IREM supports a reformed tenant-based rental assistance program, we are opposed to the total elimination of project-based housing assistance which would prove detrimental to many existing projects, cause tenant dislocation, and discourage future development of additional low-income housing units.

It is unclear how savings will be achieved by converting project-based assistance to tenant-based subsidies, especially after rents are adjusted to reflect market rent levels. IREM members' experience reveals that tenant-based subsidies actually cost more than project-based assistance to administer. At best, there is not significant savings with the use of certificates and vouchers versus project-based assistance. Overly-bureaucratic requirements associated with existing certificate and voucher programs have resulted in owners choosing not to participate, further limiting housing options for low-income individuals and families.

The project-based subsidy has traditionally provided unique housing opportunities for low-income tenants. Many projects offer special services and were designed to meet the housing needs of special populations like the elderly and disabled. Such housing accommodations are unavailable or cost-prohibitive in the private rental market. In addition, lenders will choose not to participate in project debt restructuring without the guarantee of project-based assistance attached to housing units.

FHA mortgage insurance should be provided on restructured mortgages. FHA mortgage insurance is essential for financing projects whose cash flow is supported by HUD rental subsidies. Private mortgage insurers have chosen not to participate in subsidized housing projects in the past due to the perceived risk associated with such housing. Investors and private mortgage insurers will be increasingly unwilling to participate in deals involving federal government subsidies due to the uncertainty of the future of such funding.

Owners should be protected from adverse tax consequences associated with mark-to-markets. Depending on how debt restructuring is accomplished, owners may face significant tax consequences associated with mark-to-market. "Cancellation of indebtedness" income tax penalties may apply to owners of projects whose debt is restructured. HUD should work with Congress to fashion legislation that protects owners from "cancellation of indebtedness" income treatment before any mark-to-market process is begun. Alternatively, mark-to-market should be conducted in such a manner to avoid any negative tax implications for project owners. Absent protection from adverse tax treatment, owners will resist participation in mark-to-market and/or will undoubtedly engage in litigation to achieve such protection.

Mark-to-market demonstration projects should be conducted to test various debt restructuring methods. IREM supports the concept of a mark-to-market demonstration program like that included in the FY 1996 VA, HUD and Independent Agencies Appropriations bill. The demonstration, conducted on a limited number of varied projects, would allow for an examination of the results of this untested concept. The uncertainty of the results of mark-to-market is partly responsible for the concern expressed by all stakeholders. Demonstration projects will allow for program adjustments and will help build support for mark-to-market.

HUD should use available tools to identify and sanction "bad" owners. IREM believes the vast majority of project-based Section 8 apartments is properly managed and provides safe, decent and affordable housing for low-income individuals and families. An inordinate amount of negative publicity associated with a small portion of the entire project-based portfolio has skewed the perception of privately-owned, federally-assisted affordable housing projects. HUD currently has the authority to bring appropriate sanctions and penalties against owners and managers who fail to properly operate their properties. However, in many instances, the Department has failed or has been slow to use these tools to protect residents from poorly performing owners and managers.

IREM members have a great interest in the maintenance of HUD-assisted multifamily housing programs which were created to provide quality housing to the nation’s neediest citizens. We believe this goal will only be achieved through the provision of proper, ethical and professional property management of the existing housing stock. We look forward to working with HUD to ensure the continuation of successful federal affordable housing programs.

(2/96, Updated 4/08)

National Housing Trust Fund


The National Housing Trust Fund was created through a provision in the Housing and Economic Recovery Act (HERA) of 2008. The NHTF, under the Department of Housing and Urban Development, aims to provide neighborhoods and communities with monies to build, preserve, and rehabilitate affordable homes for low income families and households. It is a permanent program and at least 80% of the funds must be utilized for preserving and rehabilitating rental housing. Units funded through the NHTF are required to maintain affordability for at least 30 years. The remaining 20% can be used for other various home ownership activities, such as closing costs, down payment assistance, administrative costs and rehabilitation.

HERA requires Fannie Mae and Freddie Mac to transfer a certain percentage of their new business to help fund the Trust. Since enactment of the legislation in 2008, Fannie Mae and Freddie Mac have been placed into conservatorship. With the Federal Housing Finance Agency (FHFA) acting as their conservator, Fannie Mae and Freddie Mac were directed to halt contributions to the Trust indefinitely due to their own respective undercapitalization issues.

In 2016 HUD announced that $174 million would be available through the NHTF. This marked the first allocation of funds since the creation of the Fund.


IREM supports the development and preservation of affordable housing. IREM supports the creation of a National Housing Trust Fund that does not take money from other federal, state, or local housing programs. Further, IREM supports placing these funds in a lockbox that cannot be borrowed against for other federal budgetary purposes. IREM opposes Trusts whose sources of funding negatively impact housing prices or transaction fees. IREM also supports putting for-profits and non-profits on equal footing as eligible trust fund recipients.

(Adopted: 10/07. Updated: 3/12, 10/17)

Rent Control


We are opposed to government control of rents. We believe that a property owner has the right to strive for rents that will encourage investment in new construction ventures and existing property. While we are equally opposed to excessive rent increases, we firmly believe that a property should be allowed to produce sufficient income to accommodate the basic needs of its residents.

Rent controls create problems more serious than those they are intended to resolve. Rent control legislation threatens not only the traditional rights of citizens, but significantly affects the housing inventory by hastening the deterioration and loss of existing housing, while it discourages the construction of new housing.

Furthermore, by lowering the value of multifamily property, rent controls affect a community's tax base by causing a disproportionate shift of the tax burden to other types of real estate, especially single-family homes and commercial properties. This shift can potentially curtail vital municipal services. The expense of complying with rent control laws and regulations inevitably increases the cost of housing to the consumer, and the expense of enforcing rent control adds to the cost of local government.


We support the availability of affordable housing for all as a responsibility of the total society, and we defend the right of Americans to own property free of unreasonable controls. Congress, HUD and numerous other agencies have invested many billions of dollars in urban areas as a means of satisfying taxpayers' needs for growth and development.

Wherever local rent controls have been initiated, the history of each impacted community has been to change growth to no-growth and development to economic malaise. In these communities the already massive infusion of federal funds is threatened; accordingly, we believe Congress and the Administration could assist in discouraging further controls by imposing a cap on housing fund allotments to those municipalities that choose to implement rent controls.

We also urge elected officials at all levels of government to oppose rent control as being counterproductive to the best interests of all segments of society and the economic well-being of the nation.

(6/86, updated 4/05, 10/09, 10/13, 8/15)

Rental Housing


Rental housing is expected to continue to be needed, even as the single family housing continues to strengthen. According to the U.S. Census Bureau, the nationwide vacancy rate for apartment buildings peaked at 11% in 2009 following the recession, but has since dropped to 7% in the first quarter of 2017. In view of national housing growth projections and anticipated removal of dilapidated structures, our nation urgently needs to encourage the creation of additional safe, decent and sanitary housing units for a better housed America.


We call on all levels of government to meet this demand by removing disincentives to financing, production and improvement of rental housing for citizens of all income levels. In this way, solutions to the rental housing crisis are attainable without reducing homeownership opportunities or interfering in the property rights of all Americans.

 (6/86, updated 11/04, 10/09, 4/12)


Our site uses cookies to improve your visiting experience. Please view our Cookie and Privacy Policy.
Got it