HUD Revamps Housing Voucher Program

The U.S. Department of Housing and Urban Development (HUD) has published new final rule implementing portions of the Housing Opportunity Through Modernization Act of 2016 (HOTMA).

“HUD is meeting the moment to address the nation’s affordable housing supply shortage. This Final Rule comprehensively modernizes our voucher programs to meet the needs of housing providers and deliver greater support for tenants,” said HUD Acting Secretary Adrianne Todman. “This effort represents collaboration between HUD and our stakeholders to build more affordable housing and make existing housing more affordable.”

The Housing Choice Voucher (HCV) and Project Based Voucher (PBV) programs help communities preserve and expand the supply of affordable housing for low-income families and streamline and accelerate processes to reduce the regulatory burdens on Public Housing Agencies (PHAs). These programs supply PHAs with the necessary tools to support activities that both preserve and expand the supply of affordable housing.

“These policy reforms help preserve and expand housing supply in our communities by making development actions easier and more flexible for housing agencies,” said HUD Principal Deputy Assistant Secretary for Public and Indian Housing, Richard J. Monocchio. “It also lays the groundwork for long-term improvements in our most vital programs, which ultimately benefit residents and the broader community.”

Outlining the new final rule

HUD’s new final rule aligns with and supports emerging national and local strategies to rapidly increase affordable housing supply, while ensuring families are able to successfully lease a decent, safe and sanitary unit with tenant based or project-based voucher assistance. Among other significant updates, HUD’s new policies:

  • Allow for PBV assistance to be paired with manufactured housing
  • Establish local project-specific waiting lists to help families move into units more quickly
  • Codify important tenant protections for families in the areas of inspections and property and contract dispositions
  • Ensure families are able to find units in the local rental markets by providing PHAs additional flexibilities to increase rents.

HUD’s voucher programs

HUD’s housing choice voucher program is the federal government’s major program for assisting very low-income families, the elderly, and the disabled to afford decent, safe, and sanitary housing in the private market. Since housing assistance is provided on behalf of the family or individual, participants are able to find their own housing, including single-family homes, townhouses, and apartments. The participant is free to choose any housing that meets the requirements of the program and is not limited to units located in subsidized housing projects. Housing choice vouchers are administered locally by PHAs receive federal funds from HUD to administer the voucher program. A housing subsidy is paid to the landlord directly by the PHA on behalf of the participating family. The family then pays the difference between the actual rent charged by the landlord and the amount subsidized by the program. Under certain circumstances, if authorized by the PHA, a family may use its voucher to purchase a modest home.

HUD’s PBVs are a component of a PHA’s Housing Choice Voucher (HCV) program. PHAs are not allocated additional funding for PBV units; the PHA uses its tenant-based voucher funding to allocate project-based units to a project. Projects are typically selected for PBVs through a competitive process managed by the PHA; although in certain cases projects may be selected non-competitively. A PHA can use up to 20% of its authorized voucher units to project-base units in a specific project if the owner agrees to either rehabilitate or construct the units, or the owner agrees to set-aside a portion of the units in an existing development. In certain cases, the PHA may use an additional 10% of its authorized voucher units for PBV assistance. Information as to whether a PHA manages the PBV program may be found by contacting the local PHA.

The PBV program was enacted in 1998, as part of the statutory merger of the certificate and voucher tenant-based assistance programs under the Quality Housing and Work Responsibility Act of 1998. Significant changes to the program were subsequently enacted in law in 2000, by the Fiscal Year 2001 Appropriations Act, and in 2008, by the Housing and Economic Recovery Act of 2008 (HERA).

The history of the Housing Opportunity Through Modernization Act

On July 29, 2016, HOTMA was signed into law. HOTMA makes numerous amendments to Sections 3, 8, and 16 of the United States Housing Act of 1937, including significant changes to income calculation, net family assets, and income reviews.

The HOTMA Final Rule makes important enhancements and reduces barriers in the HCV and PBV Program, which has become vital for communities to increase the supply of affordable housing. PHAs can choose to tie long term federal PBV rental assistance to specific units or developments rather than to a tenant. Project owners can secure additional private and public financing by leveraging PBV assistance.

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Eric C. Peck

Eric C. Peck has 25-plus years’ experience covering the mortgage industry, most recently serving as Editor-in-Chief for National Mortgage Professional Magazine. He graduated from the New York Institute of Technology, where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books, and has served as Copy Editor for
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