Glossary - 2022 Advocates' Guide
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Glossary
ADVANCE APPROPRIATION. Budget authority than the median income, and 50% earn more.
or appropriation that becomes available in HUD calculates family AMI levels for different
one or more fiscal years after the fiscal year communities annually, with adjustments
for which the appropriation was enacted. For for family size. AMI is used to determine the
example, an advance appropriation in the “FY19 eligibility of applicants for both federally and
Appropriations Act” would become available for locally funded housing programs.
programs in FY20 or beyond. The amount is not
ASSISTED HOUSING. Housing where the monthly
included in the budget totals of the year for which
costs to the tenant are subsidized by federal or
the appropriation act is enacted but rather in
other programs.
those for the fiscal year in which the amount will
become available for obligation. AUTHORIZATION. Legislation that establishes
or continues operation of a federal program or
AFFORDABLE HOUSING. Housing that costs an
agency either indefinitely or for a specific period
owner or renter no more than 30% of household
of time, or that sanctions a particular type of
income.
obligation or expenditure within a program.
AMORTIZE. Decrease an amount gradually or in
BELOW MARKET INTEREST RATE (BMIR). See
installments, especially in order to write off an
Section 221(d)(3) BMIR.
expenditure or liquidate a debt.
BLOCK GRANTS. Grants made by the federal
AFFORDABLE HOUSING PROGRAM (AHP). A
government on a formula basis, usually to a state
program of the Federal Home Loan Bank system,
or local government.
AHP provides subsidized cash advances to
member institutions to permit them to make BORROWING AUTHORITY. The authority
below-market loans for eligible housing activities. to incur indebtedness for which the federal
government is liable, which is granted in advance
ANNUAL ADJUSTMENT FACTOR. The
of the provision of appropriations to repay such
mechanism for adjusting rents in certain types of
debts. Borrowing authority may take the form
Section 8-assisted properties, including Section
of authority to borrow from the Treasury or
8 New Construction/Substantial Rehab. HUD
authority to borrow from the public by means of
publishes annual percentage factors by unit type
the sale of federal agency obligations. Borrowing
and region.
authority is not an appropriation since it provides
“ANTI-DEFICIENCY ACT.” A federal law a federal agency only with the authority to incur
forbidding federal employees from spending a debt, and not the authority to make payments
money or incurring obligations that have not from Treasury under the debt. Appropriations are
been provided for in an appropriation. required to liquidate the borrowing authority.
APPROPRIATION. A provision of law providing BROOKE RULE. Federal housing policy that
budget authority that enables an agency to incur limits a tenant’s contribution to rent in public
obligations and to make payments out of the housing and under the Section 8 program to
U.S. Department of the Treasury for specified 30% of income. This amount is considered to
purposes. Non-entitlement programs are funded be the maximum that one should have to pay
through annual appropriations. for rent without becoming ‘burdened.’ The rule
is based on an amendment sponsored by then
AREA MEDIAN INCOME (AMI). The midpoint
Senator Edward Brooke (R-MA) to the public
in the income distribution within a specific
housing program in 1971. The original Brooke
geographic area. By definition, 50% of
amendment limited tenant contributions to 25%.
households, families, or individuals earn less
NATIONAL LOW INCOME HOUSING COALITION AP–5The limit was increased from 25% to 30% in low- and moderate-income people. The CDBG
1981. program is authorized by Title I of the “Housing
and Community Development Act of 1974.”
BUDGET AUTHORITY. The legal authority
to enter into obligations that will result in COMMUNITY DEVELOPMENT CORPORATIONS
immediate or future outlays of federal funds. (CDCs). Nonprofit, community-based
Budget authority is provided in appropriations organizations that work to revitalize the
acts. neighborhoods in which they are located by
building and rehabilitating housing, providing
“BUDGET ENFORCEMENT ACT” (BEA). An
services, developing community facilities,
expired 1990 act of Congress credited in part
and promoting or undertaking economic
with creating a budget surplus by establishing
development.
limits on discretionary spending, maximum
deficit amounts, pay-as-you-go rules for COMMUNITY DEVELOPMENT FINANCIAL
revenue and direct spending, new credit INSTITUTION (CDFI). A specialized financial
budgeting procedures, and other changes in institution that works in market niches that
budget practices. Congress has debated the have not been adequately served by traditional
re-establishment of pay-as-you-go rules and financial institutions. CDFIs provide a wide
whether such rules should apply to both spending range of financial products and services,
and taxation or only to spending. including mortgage financing, commercial
loans, financing for community facilities,
BUDGET RESOLUTION. A concurrent resolution
and financial services needed by low-income
passed by both houses of Congress that does
households. Some CDFIs also provide technical
not require the signature of the president. The
assistance. To be certified as a CDFI by the CDFI
budget resolution sets forth various budget totals
Fund of Treasury, an institution must engage
and functional allocations and may include
in community development, serve a targeted
reconciliation instructions to specific House or
population, provide financing, have community
Senate committees.
representatives on its board, and be a non-
COLONIAS. The rural, mostly unincorporated governmental organization.
communities located in California, Arizona,
“COMMUNITY REINVESTMENT ACT” (CRA).
New Mexico, and Texas along the U.S.-Mexico
The act prohibits lending institutions from
border. Colonias are characterized by high poverty
discriminating against low- and moderate-
rates and substandard living conditions and are
income and minority neighborhoods. CRA
defined primarily by what they lack, such as
also imposes an affirmative obligation on
potable drinking water, water and wastewater
banks to serve these communities. Banks
systems, paved streets, and standard mortgage
must proactively assess community needs,
financing.
conduct marketing and outreach campaigns in
COMMUNITY HOUSING DEVELOPMENT all communities, and consult with community
ORGANIZATION (CHDO). A federally defined type stakeholders in developing financing options for
of nonprofit housing provider that must receive a affordable housing and economic development
minimum of 15% of all federal HOME Investment activities. CRA has formal mechanisms for
Partnership Funds. banks and regulators to seriously consider
COMMUNITY DEVELOPMENT BLOCK GRANT community needs and input. Community
(CDBG). The annual formula grants administered members can comment at any time on a bank’s
by HUD that are distributed to states, cities with CRA performance in a formal or informal
populations of 50,000 or more and counties manner. When federal agencies conduct CRA
with populations of 200,000 or more. CDBG examinations of banks’ lending, investing, and
funds are to be used for housing and community service activities in low- and moderate-income
development activities, principally benefiting communities, federal agencies are required
AP–6 2022 ADVOCATES’ GUIDEto consider the comments of members of the outlays provided in annual appropriations acts.
public concerning bank performance. Likewise, The Budget Resolution sets limits or caps on
federal agencies are required to consider public discretionary budget authority and outlays.
comments when deciding whether to approve a
EARMARKS. Appropriations that are dedicated
bank’s application to merge or open and relocate
for a specific, particular purpose. The funding of
branches.
the Community Development Fund typically has
CONGRESSIONAL BUDGET OFFICE (CBO). An earmarks as part of the Economic Development
organization created by Congress that provides Initiative.
staff assistance to Congress on the federal
“EMERGENCY LOW-INCOME HOUSING
budget.
PRESERVATION ACT” (ELIHPA). The 1987 statute
CONSOLIDATED PLAN (ConPlan). The ConPlan authorizing the original federal program to
merges into one process and one document all preserve federally assisted multifamily housing.
the planning and application requirements of The program was active from 1987 to 1992.
four HUD block grants: Community Development
ENHANCED VOUCHERS. The tenant-based
Block Grants (CDBG), HOME Investment
Section 8 assistance provided to eligible residents
Partnerships, Emergency Solutions Grants (ESG),
when owners prepay their subsidized mortgages
and Housing Opportunities for Persons With AIDS
or opt out of project-based Section 8 contracts.
(HOPWA) grants.
Rents are set at market comparable levels,
CONTINUING RESOLUTION (CR). A spending bill instead of the regular voucher payment standard,
that provides funds for government operations as long as the tenant elects to remain in the
for a short period of time until Congress and the housing.
president agree on an appropriations bill.
ENTITLEMENT JURISDICTION. Under the
“Coronavirus Aid, Relief, and Economic Security Community Development Block Grant (CDBG),
Act (CARES Act).” A Federal relief bill passed cities with populations of 50,000 or more and
in March 2020 in response to the coronavirus counties with populations of 200,000 or more are
pandemic. The “CARES Act” provided roughly $2 ‘entitled’ to receive funding under the program.
trillion in assistance to individuals, businesses,
ENTITLEMENTS. Entitlements are benefits
state and local governments, healthcare systems,
available to people if they meet a certain set
and safety net programs.
of criteria. Entitlement programs, such as
Coronavirus Relief Funds (CRF). Emergency Social Security, are not constrained by the
funds passed in the “CARES Act” providing appropriations process.
$150 billion to state, local, territorial, and tribal
EXIT TAX. The taxes paid on the recapture of
governments to address to coronavirus-related
depreciation and other deductions experienced
needs.
upon sale of a property. In some affordable
CREDIT UNION. A nonprofit financial institution housing transactions, sellers may face a
typically formed by employees of a company, significant exit tax even when they do not receive
labor union, or religious group and operated net cash at sale.
as a cooperative. Credit unions may offer a full
EXPIRING USE RESTRICTIONS. The low- and
range of financial services and pay higher rates
moderate-income affordability requirements
on deposits and charge lower rates on loans than
associated with subsidized mortgages under
commercial banks. Federally chartered credit
Section 221(d)3 BMIR and Section 236, which
unions are regulated and insured by the National
terminate when the mortgage is prepaid.
Credit Union Administration.
EXTREMELY LOW INCOME (ELI). A household
DISCRETIONARY SPENDING. Budget authority,
income below 30% of area median income (AMI),
other than for entitlements, and ensuing
as defined by HUD.
NATIONAL LOW INCOME HOUSING COALITION AP–7FAIR MARKET RENTS (FMR). HUD’s estimate of FEDERAL RESERVE BOARD (FRB). The governing
the actual market rent for a modest apartment board of the Federal Reserve System. Its seven
in the conventional marketplace. FMRs include members are appointed by the president, subject
utility costs (except for telephones). Every year, to Senate confirmation, and serve 14-year
HUD develops and publishes FMRs for every terms. The board establishes Federal Reserve
MSA and apartment type. FMRs are currently System policies on such key matters as reserve
established at the 40th percentile rent, the top requirements and other bank regulations, sets
of the range that renters pay for 40% of the the discount rates, and tightens or loosens the
apartments being surveyed, with the exception of availability of credit in the economy.
some high-cost jurisdictions, where it is set at the
FEDERAL RESERVE SYSTEM. The system
50th percentile.
established by the “Federal Reserve Act of 1913”
FANNIE MAE (FEDERAL NATIONAL MORTGAGE to regulate the U.S. monetary and banking
ASSOCIATION). A federally chartered systems. The Federal Reserve System (‘the Fed’)
government-sponsored enterprise that purchases consists of 12 regional Federal Reserve Banks,
mortgages from originators to facilitate new their 24 branches, and all national and state
mortgage lending. Similar to Freddie Mac. banks that are part of the system. National banks
are stockholders of the Federal Reserve Bank in
FARMERS HOME ADMINISTRATION (FmHA). The
their region. The Federal Reserve System’s main
former name of the Rural Housing Service.
functions are to regulate the national money
FEDERAL DEPOSIT INSURANCE CORPORATION supply, set reserve requirements for member
(FDIC). The federal agency established in 1933 banks, supervise the printing of currency at
that guarantees (within limits) funds on deposits the mint, act as clearinghouse for the transfer
in member banks and thrift institution, and that of funds throughout the banking system, and
performs other functions such as making loans examine member banks’ compliance with
to or buying assets from member institutions to Federal Reserve regulations.
facilitate mergers or prevent failures.
FINANCIAL INSTITUTION. An institution that
FEDERAL HOUSING ADMINISTRATION (FHA). A collects funds from the public to place in financial
part of HUD that insures lenders against loss on assets such as stocks, bonds, money market
residential mortgages. It was founded in 1934 to instruments, bank deposits, or loans. Depository
execute the provisions of the “National Housing institutions (banks, savings and loans, saving
Act” in response to the Great Depression. banks, credit unions) pay interest on deposits and
FEDERAL HOUSING FINANCE AGENCY (FHFA). invest the deposit money, mostly in loans. Non-
Created in 2008 to take over the functions of the depository institutions (insurance companies,
Office of Federal Housing Enterprise Oversight pension plans) collect money by selling insurance
(OFHEO) and the Federal Housing Finance Board policies or receiving employer contributions and
(FHFB). OFHEO was the regulator for Freddie pay it out for legitimate claims or for retirement
Mac and Fannie Mae, and the FHFB regulated the benefits. Increasingly, many institutions are
Federal Home Loan Banks. performing both depository and non-depository
functions.
FEDERAL HOUSING FINANCE BOARD (FHFB).
Federal agency created by Congress in 1989 FISCAL YEAR (FY). The accounting period for
to assume oversight of the Federal Home Loan the federal government. The fiscal year for the
Bank System from the dismantled Federal Home federal government begins on October 1 and
Loan Bank Board. The FHFB was merged into the ends the next September 30. It is designated by
Federal Housing Finance Agency (FHFA) in 2008. the calendar year in which it ends; for example,
The FHFA also regulates Freddie Mac and Fannie FY16 began on October 1, 2015, and ends on
Mae. September 30, 2016.
AP–8 2022 ADVOCATES’ GUIDEFLEXIBLE SUBSIDY. A direct HUD loan or grant Veterans Administration, or the Rural Housing
for rehabilitation or operating losses, available Service (RHS).
to eligible owners of certain HUD-subsidized
GOVERNMENT SPONSORED ENTERPRISE
properties. Owners must continue to operate the
(GSE). An enterprise established by the federal
project as low- and moderate-income housing for
government but privately owned and operated.
the original mortgage term. Not currently active.
Fannie Mae and Freddie Mac are GSEs, as are the
FORECLOSURE. The process by which a mortgage Federal Home Loan Banks.
holder who has not made timely payments of
GUARANTEED LOAN. A loan in which a private
principal and interest on a mortgage loses title to
lender is assured repayment by the federal
the home. The holder of the mortgage, whether
government of part or all of the principal, interest,
it is a bank, a savings and loan, or an individual,
or both, in the event of a default by the borrower.
uses the foreclosure process to satisfy the
mortgage debt either by obtaining the proceeds HOME INVESTMENT PARTNERSHIPS PROGRAM
from the sale of the property at foreclosure or (HOME). Administered by HUD’s Office of
taking the title to the property and selling it at a Community Planning and Development, this
later date. Foreclosure processes vary from state program provides formula grants to states
to state and can be either judicial or non-judicial. and localities (see also PARTICIPATING
JURISDICTIONS) to fund a wide range of activities
FORMULA ALLOCATION. The method by which
that build, buy, and/or rehabilitate affordable
certain programs distribute appropriated funds
housing for rent or homeownership, or to provide
to state and local governments. The parameters
direct rental assistance to low-income people.
for the formula are established by statute and
The HOME program is authorized by Title II of
are generally based on demographics (poverty)
the 1990 “Cranston-Gonzalez National Affordable
and housing conditions (overcrowding) in the
Housing Act.”
jurisdiction. CDBG and HOME are formula
allocation programs. “HOME MORTGAGE DISCLOSURE ACT” (HMDA).
Created in 1975, HMDA requires most financial
FREDDIE MAC (FEDERAL HOME LOAN
institutions that make mortgage loans, home
MORTGAGE CORPORATION). A federally
improvement loans, or home refinance loans
chartered government-sponsored enterprise
to collect and disclose information about their
that purchases mortgages from originators to
lending practices.
facilitate new mortgage lending. Similar to Fannie
Mae. “HOMELESS EMERGENCY ASSISTANCE AND
RAPID TRANSITION TO HOUSING (HEARTH)
“FREEDOM OF INFORMATION ACT” (FOIA). The
Act of 2009.” This law revises the McKinney-
law providing for a means of public access to
Vento Homeless Assistance Grant programs and
documents from HUD or other federal agencies.
provides communities with new resources and
GOVERNMENT ACCOUNTABILITY OFFICE (GAO). better tools to prevent and end homelessness.
Formerly known as the General Accounting The legislation increases priority on homeless
Office, the GAO is a Congressional agency that families with children, significantly increases
monitors the programs and expenditures of the resources to prevent homelessness, provides
federal government. incentives for developing permanent supportive
housing, and creates new tools to address
GINNIE MAE (GOVERNMENT NATIONAL
homelessness in rural areas.
MORTGAGE ASSOCIATION). An agency of HUD,
Ginnie Mae guarantees payment on mortgage- HOUSING ASSISTANCE PAYMENTS (HAP). HAP
backed securities, which represent pools of is the payment made according to a HAP contract
residential mortgages insured or guaranteed by between HUD and an owner to provide Section
the Federal Housing Administration (FHA), the 8 rental assistance. The term applies to both
NATIONAL LOW INCOME HOUSING COALITION AP–9the Housing Choice Voucher (HCV) Program treatment and for improving quality of life.
and Section 8 Project-Based Rental Assistance
HOUSING STARTS. An indicator of residential
Program. The local voucher program is
construction activity, housing starts represent
administered by a public housing agency (PHA),
the start of construction of a house or apartment
whereas a Section 8 contract administrator
building, which means the digging of the
makes payments in the Multifamily Housing
foundation. Other measures of construction
Programs.
activity include housing permits, housing
HOUSING BONDS. Bonds that are generally completions, and new home sales.
issued by states and secured by mortgages on
HOUSING TRUST FUNDS. Distinct funds, usually
homes or rental properties. Although homeowner
established by state or local governments that
housing financed by bonds are typically targeted
receive ongoing public revenues that can only be
to families or individuals with incomes below the
spent on affordable housing initiatives, including
median for the area or the state, rental housing is
new construction, preservation of existing
targeted to lower income families or individuals.
housing, emergency repairs, homeless shelters,
HOUSING CHOICE VOUCHERS (HCV). Also and housing-related services.
known as Section 8 or Section 8 vouchers, this
HUD INSPECTOR GENERAL. The HUD official
is a rental assistance program funded by HUD.
appointed by the president who is responsible
The program helps some families, primarily
for conducting audits and investigations of HUD’s
extremely low-income (ELI) families, rent private
programs and operations.
housing. Families pay a percentage of their
monthly adjusted income toward monthly rent INCLUSIONARY ZONING. A requirement or
and utilities (generally not more than 30%); the incentive to reserve a specific percentage of units
balance of the rent to the owner is paid with the in new residential developments for moderate
federal subsidy. income households.
HOUSING COSTS. Essentially, they are the INDEPENDENT AGENCY. An agency of the United
costs of occupying housing. Calculated on States government that is created by an act of
a monthly basis, housing costs for renters Congress and is independent of the executive
include items such as contract rent, utilities, departments. The Securities and Exchange
property insurance, and mobile home park Commission is an example of an independent
fees. For homeowners, monthly housing costs agency.
include monthly payments for all mortgages LEVERAGING. The maximization of the effects
or installment loans or contracts, as well as of federal assistance for a project by obtaining
real estate taxes, property insurance, utilities, additional project funding from non-federal
and homeowner association, cooperative, sources.
condominium, or manufactured housing park
“LOW-INCOME HOUSING PRESERVATION AND
fees. Utilities include electricity, gas, fuels, water,
RESIDENT HOMEOWNERSHIP ACT” (LIHPRHA).
sewage disposal, garbage, and trash collection.
The 1990 statute prohibiting the sale of older
HOUSING FINANCE AGENCY (HFA). The HUD-assisted properties for market rate
state agency responsible for allocating and use, compensating the owners with financial
administering federal Low-Income Housing Tax incentives. The program was active from 1990 to
Credits (LIHTC) as well as other federal and state 1996.
housing financing sources.
LOW-INCOME HOUSING TAX CREDITS (LIHTC).
HOUSING FIRST. A proven model for addressing Enacted by Congress in 1986 to provide the
homelessness that prioritizes access to private market with an incentive to invest in
permanent, stable housing as a prerequisite affordable rental housing. Federal housing tax
for effective psychiatric and substance abuse credits are awarded to developers of qualified
AP–10 2022 ADVOCATES’ GUIDEprojects. Developers then sell these credits The flexibilities, regarding key programmatic
to investors to raise capital (equity) for their features such as rent affordability and income
projects, which reduces the debt that the targeting requirements, can impact residents
developer would otherwise have to borrow. in both the public housing and Housing Choice
Because the debt is lower, a tax credit property Voucher (HCV) Programs. Authorized in 1996, the
can in turn offer lower, more affordable rents. demonstration program continues even though it
Provided the property maintains compliance has not been evaluated on a broad scale.
with the program requirements, investors receive
“MULTIFAMILY ASSISTED HOUSING REFORM
a dollar-for-dollar credit against their federal
AND AFFORDABILITY ACT” (MAHRA). The 1997
tax liability each year throughout a period of 10
statute authorizing the Mark-to-Market program
years. The amount of the annual credit is based
and renewals of expiring Section 8 contracts.
on the amount invested in the affordable housing.
MULTIFAMILY. A building with five or more
LOW INCOME. As applied to most housing
residential units.
programs, household income below 80% of
metropolitan area median, as defined by HUD, is NON-ELDERLY DISABLED (NED) VOUCHERS.
classified as low income. See also EXTREMELY Since 1997, Housing Choice Vouchers (HCVs)
LOW INCOME (ELI), VERY LOW INCOME (VLI). have been awarded under different special
purpose voucher program types to serve non-
MARK-TO-MARKET. HUD program that reduces
elderly persons with disabilities (NED). NED HCVs
above-market rents to market levels at certain
enable non-elderly disabled families to lease
HUD-insured properties that have project-
affordable private housing of their choice. NED
based Section 8 contracts. Existing debt is
vouchers also assist persons with disabilities
restructured so that the property may continue to
who often face difficulties in locating suitable and
be financially viable with the reduced Section 8
accessible housing on the private market.
rents.
NEW CONSTRUCTION/SUBSTANTIAL REHAB.
MARK-UP-TO-MARKET. A federal program to
A form of project-based Section 8 assistance
adjust rents on Section 8 assisted housing up to
used in the original development and financing
the market rate.
of some multifamily housing. Projects could be
METROPOLITAN STATISTICAL AREA (MSA). The both insured and uninsured (with conventional
basic census unit for defining urban areas and or state/local bond financing). These contracts
rental markets. were long-term (20-40 years). Active from 1976
to 1985.
MORTGAGE INTEREST DEDUCTION. The federal
tax deduction for mortgage interest paid in a NOTICE OF FUNDING AVAILABILITY (NOFA). A
taxable year. Interest on a mortgage to acquire, notice by a federal agency, including HUD, used to
construct, or substantially improve a residence is inform potential applicants that program funding
deductible for indebtedness of up to $1 million. is available.
MORTGAGE. The debt instrument by which OFFICE OF AFFORDABLE HOUSING
the borrower (mortgagor) gives the lender PRESERVATION. Formerly the Office of
(mortgagee) a lien on the property as security for Multifamily Housing Assistance Restructuring
the repayment of a loan. The borrower has use of (OMHAR), HUD established this office to oversee
the property, and the lien is removed when the the continuation of the Mark-to-Market program
obligation is fully paid. and provide assistance in the oversight and
preservation of a wide spectrum of affordable
MOVING TO WORK (MTW). A demonstration
housing programs.
program for public housing agencies (PHAs) that
provides them with enormous flexibility from OUTLAYS. Payments made (usually through the
most HUD statutory and regulatory requirements. issuance of checks or disbursement of cash) to
NATIONAL LOW INCOME HOUSING COALITION AP–11liquidate obligations. Outlays during a fiscal year units in a property can be subsidized with PBVs.
(FY) may be for payment of obligations incurred
RENTAL ASSISTANCE DEMONSTRATION (RAD).
in the previous year or in the same year.
Congress authorized RAD as part of its FY12 and
PARTICIPATING JURISDICTION (PJ). A HUD- FY15 HUD appropriations bills. There are two
recognized entity that is an eligible recipient of RAD components. The first component allows
HOME funding. HUD to approve the conversion of up to 185,000
public housing and moderate rehabilitation (Mod
PAY-AS-YOU-GO or PAYGO. A requirement that
Rehab) units into either project-based Section
Congress offset the costs of tax cuts or increases
8 rental assistance (PBRA) contracts or project-
in entitlement spending with increased revenue
based vouchers (PBVs) by September 30, 2018.
or savings elsewhere in the budget.
The second component allows an unlimited
PAYMENT STANDARD. Payment standards are number of units in three smaller programs
used to calculate the housing assistance payment administered by HUD’s Office of Multifamily
(HAP) that a public housing agency (PHA) pays Housing Programs to convert tenant protection
to an owner on behalf of a family leasing a unit. vouchers to PBVs or PBRAs. There is no deadline
Each PHA has latitude in establishing its schedule for the three second component programs –
of payment standard amounts by bedroom Rent Supplement (Rent Supp), Rental Assistance
size. The range of possible payment standard Program (RAP), and Mod Rehab.
amounts is based on HUD’s published fair market
REAL ESTATE ASSESSMENT CENTER (REAC).
rent (FMR) for the area in which the PHA has
The office within HUD responsible for assessing
jurisdiction. A PHA may set its payment standard
the condition of HUD’s portfolio, both public
amounts from 90% to 110% of the published
housing and private, HUD-assisted multifamily
FMRs and may set them higher or lower with
housing. REAC oversees physical inspections and
HUD approval.
analysis of the financial soundness of all HUD
PERFORMANCE FUNDING SYSTEM. Developed housing, and REAC scores reflect physical and
by HUD to analyze costs of operating public financial condition.
housing developments, used as the basis for
REAL ESTATE INVESTMENT TRUST (REIT). A
calculating the need for operating subsidies.
business trust or corporation that combines
PERMANENT SUPPORTIVE HOUSING. Decent, the capital of many investors to acquire or
safe, and affordable permanent community- finance real estate, which may include assisted
based housing targeted to vulnerable very low- housing. Cash flow generated by the properties
income (VLI) households with serious and long is distributed to investors in the form of stock
term disabilities that is linked with an array dividends. The REIT can also provide an
of voluntary and flexible services to support attractive tax deferral mechanism by enabling
successful tenancies. investors to exchange their partnership shares for
PREPAYMENT PENALTY. A fee that may be levied interests in the REIT, a nontaxable transfer.
for repayment of a loan before it falls due. “REAL ESTATE SETTLEMENT PROCEDURES
PROJECT-BASED VOUCHERS (PBVs). A ACT” (RESPA). A statute that prohibits kickbacks
component of a public housing agency’s (PHAs) and referral fees that unnecessarily increase the
housing choice voucher program. A PHA can costs of certain settlement services in connection
attach up to 20% of its voucher assistance to with real estate transactions and provides for
specific housing units if the owner agrees to disclosures in connection with such transactions.
either rehabilitate or construct the units, or the HUD enforces RESPA.
owner agrees to set-aside a portion of the units RECONCILIATION BILL. A bill containing
in an existing development for lower income changes in law recommended by House or
families. In general, no more than 25% of the Senate committees pursuant to reconciliation
AP–12 2022 ADVOCATES’ GUIDEinstructions in a budget resolution. a minimum population of 50,000.” The Census
Bureau defines rural as an area with a population
RENT SUPPLEMENT (Rent Supp). An older HUD
of less than 2,500. The U.S. Department of
project-based rental subsidy program used
Agriculture (USDA) definition of rural has several
for some Section 221(d)(3) and Section 236
factors, including population: under 20,000 in
properties. The subsidy contract is coterminous
non-metro areas, under 10,000 in metro areas,
with the mortgage. Most rent supplement
or under 35,000 if the area was at one time
contracts in HUD-insured projects were
defined as rural but the populations has grown (a
converted to Section 8 in the 1970s.
“grandfathered” area).
RESIDUAL RECEIPTS. Cash accounts maintained
SAVINGS AND LOAN ASSOCIATION (S&L). A
under joint control of the owner and HUD [or
depository financial institution, federally or
Housing Finance Agency (HFA)] into which is
state chartered, that obtains the bulk of its
deposited all surplus cash generated in excess
deposits from consumers and holds the majority
of the allowable limited dividend or profit. The
of its assets as home mortgage loans. In 1989,
disposition of residual receipts at the end of the
responding to a massive wave of insolvencies
Section 8 contract and/or mortgage is governed
caused by mismanagement, corruption, and
by the Regulatory Agreement.
economic factors, Congress passed a savings and
RIGHT OF FIRST REFUSAL. The right of first loan “bailout bill” that revamped the regulatory
refusal means the right to match the terms and structure of the industry under a newly created
conditions of a third-party offer to purchase a agency, the Office of Thrift Supervision.
property, within a specified time period.
SAVINGS BANK. A depository financial institution
RURAL DEVELOPMENT (RD). A mission area of that primarily accepts consumer deposits and
the U.S. Department of Agriculture (USDA), RD makes home mortgage loans. Historically, savings
administers grant and loan programs to promote banks were of the mutual (depositor-owned) form
and support housing, public facilities and and chartered in only 16 states; the majority of
services such as water and sewer systems, health savings banks were located in the New England
clinics, emergency service facilities, and electric states, New York, and New Jersey.
and telephone service in rural communities.
SECONDARY MARKET. The term secondary
RD also promotes economic development by
market refers to the market in which loans and
supporting loans to businesses and provides
other financial instruments are bought and
technical assistance to help agricultural
sold. Fannie Mae (the Federal National Mortgage
producers and cooperatives.
Association) and Freddie Mac (the Federal Home
RURAL HOUSING SERVICE (RHS). An agency Loan Mortgage Corporation), for example, operate
of the U.S. Department of Agriculture’s (USDA) in the secondary market because they do not deal
Rural Development (RD), RHS is responsible for directly with the borrower, but instead purchase
administering a number of rural housing and loans from lenders.
community facilities programs, such as providing
SECTION 202. A HUD program created in 1959
loans and grants for single-family homes,
to provide direct government loans or grants to
apartments for low-income people, housing for
nonprofits to develop housing for the elderly and
farm workers, child care centers, fire and police
handicapped. Currently, the program provides
stations, hospitals, libraries, nursing homes, and
capital grants and project rental assistance
schools.
contracts.
RURAL. As used in this Guide, areas that are
SECTION 221(d)(3) BELOW MARKET INTEREST
not urbanized. The Census Bureau defines an
RATES (BMIR). A HUD program under which the
urbanized area as “an incorporated place and
federal government provided direct loans at a
adjacent densely settled (1.6 or more people
BMIR (3%) and Federal Housing Administration
per acre) surrounding area that together have
NATIONAL LOW INCOME HOUSING COALITION AP–13(FHA) mortgage insurance to private developers subsidies. Project-Based Assistance limits tenant
of low and moderate-income housing. Active contributions to 30% of the household’s adjusted
from 1963 to 1970. income. Assistance may be provided to some or
all of the units in a project occupied by eligible
SECTION 236. A program under which HUD
tenants. Assistance is attached to the unit and
provided interest subsidies (known as Interest
stays with the unit after the tenant moves.
Reduction Payments or IRP subsidies) and
mortgage insurance to private developers of SECTION 8 PROJECT-BASED VOUCHERS (PBV).
low- and moderate-income housing. The interest Public housing agencies (PHAs) are allowed to
subsidy effectively reduced the interest rate on use up to 20% of their housing choice voucher
the loan to 1%. Active from 1968 to 1975. funding allocation to project base, or tie, vouchers
to a property. PHAs may contract with property
SECTION 514 LOANS AND SECTION 516
owners to project base vouchers to up to 25% of
GRANTS. Administered by USDA RD’s Rural
the units in a property. These vouchers remain
Housing Service (RHS) and may be used to
with the project even if the assisted tenant moves.
buy, build, improve or repair housing for farm
The effect is similar to the project-based section
laborers. Authorized by the “Housing Act of
8 program in that the place-based funding
1949.”
helps preserve the affordability of the units.
SECTION 515 RURAL RENTAL HOUSING One difference between the two programs is the
PROGRAM. Provides funds for loans made mobility feature of the project-based voucher
by USDA RD’s Rural Housing Service (RHS) program that allows a tenant to move with
to nonprofit, for profit, cooperatives, and continued assistance in the form of a housing
public entities for the construction of rental or choice voucher. This program is administered by
cooperative housing in rural areas for families, HUD’s Office of Public and Indian Housing (PIH)
elderly persons, persons with disabilities, or for and local PHAs.
congregate living facilities. Authorized by the
SECTION 8 VOUCHERS. Administered by
“Housing Act of 1949.”
HUD’s Office of Public and Indian Housing
SECTION 533 HOUSING PRESERVATION GRANT (PIH) and local public housing agencies (PHAs),
PROGRAM (HPG). This program, administered by housing choice vouchers (HCVs) are allocated to
USDA RD’s Rural Housing Service (RHS), provides individual households, providing a rent subsidy
grants to promote preservation of Section 515 that generally limits tenant contribution to rent
properties. Authorized by the “Housing Act of to 30% of adjusted household income. PHAs can
1949.” attach a limited number of their housing choice
SECTION 538 RENTAL HOUSING LOAN vouchers to individual units, thereby ‘project
GUARANTEES. U.S. Department of Agriculture’s basing’ them. See Section 8 project-based
(USDA) Rural Development (RD) Rural Housing vouchers (PBVs).
Service (RHS) may guarantee loans made by SECTION 811. The Section 811 Supportive
private lenders for the development of affordable Housing for Persons with Disabilities is a
rural rental housing. This program serves a federal program that assists the lowest income
higher income population than that served by the people with the most significant and long-
Section 515 program. Authorized the “Housing term disabilities to live independently in the
Act of 1949.” community by providing affordable housing
SECTION 8 PROJECT-BASED RENTAL linked with voluntary services and supports.
ASSISTANCE (PBRA). Administered by HUD’s The program provides funds to nonprofit
Office of Multifamily Housing, Section 8 PBRA organizations to develop rental housing, with
takes the form of a contract between HUD and supportive services, for very low-income (VLI)
building owners who agree to provide housing adults with disabilities, and it provides rent
to eligible tenants in exchange for long-term subsidies for the projects to help make them
AP–14 2022 ADVOCATES’ GUIDEaffordable. Two new approaches to creating to improve housing for the poor and homeless.
integrated permanent supportive housing were The act was revised in 2002 and again in 2009.
recently introduced: the Modernized Capital See “Homeless Emergency Assistance and Rapid
Advance/Project Rental Assistance Contract Transition to Housing (HEARTH) Act of 2009.”
(PRAC) multi-family option and the Project Rental
TAX CREDIT. A provision of the tax code that
Assistance (PRA) option. Both options require
specifies an amount by which a taxpayer’s taxes
that properties receiving Section 811 assistance
will be reduced in return for some specific
limit the total number of units with permanent
behavior or action.
supportive housing use restrictions to 25% or
less. Congress directed that all FY12, FY13, TEMPORARY ASSISTANCE FOR NEEDY
and FY14 funding for new Section 811 units be FAMILIES (TANF). Provides block grants to states
provided solely through the PRA option. administered under the “Personal Responsibility
and Work Opportunity Reconciliation Act of
SEVERE HOUSING PROBLEMS. As used by HUD
1996,” which established a new welfare system.
in defining priorities, severe housing problems
The TANF block grant replaced Aid to Families
are homelessness, displacement, housing cost
with Dependent Children (AFDC). The chief
burden above 50% of income, and occupancy
feature of TANF was the abolition of a federal
of housing with serious physical problems. Data
entitlement to cash assistance.
on severe housing problems drawn from the
American Housing Survey measures only cost THRIFT. See SAVINGS AND LOAN ASSOCIATION
burden and physical problems. (S&L).
SINGLE-FAMILY. A single-family property is a VERY LOW INCOME (VLI). A household with
residential property with fewer than five units. income is at or below 50% of area median income
(AMI), as defined by HUD.
“STAFFORD DISASTER RELIEF AND EMERGENCY
ASSISTANCE ACT” (STAFFORD ACT, P.L. 100- VOUCHER. A government payment to, or on
707). Provides a systemic means of supplying behalf of, a household to be used solely to pay a
federal natural disaster assistance to state portion of the household’s housing costs in the
and local governments. The act establishes private market. Vouchers are considered tenant-
the presidential declaration process for major based assistance because they are not typically
emergencies, provides for the implementation connected to a particular property or unit
of disaster assistance, and sets forth the various (although they may be ‘project based’ in some
disaster assistance programs. cases) but are issued to a tenant.
“STEWART B. MCKINNEY HOMELESS WORST CASE HOUSING PROBLEMS.
ASSISTANCE ACT.” Enacted in July 1987, the Unsubsidized very low-income renter households
“McKinney Act,” P.L. 100-77, established distinct with severe housing problems. HUD is required
assistance programs for the growing numbers to submit a periodic report to Congress on worst
of homeless persons. Recognizing the variety of case housing problems.
causes of homelessness, the original “McKinney
Act” authorized 20 programs offering a multitude
of services, including emergency food and
shelter, transitional and permanent housing,
education, job training, mental health care,
primary health care services, substance abuse
treatment, and veterans’ assistance services.
The act was renamed the “McKinney-Vento
Homeless Assistance Act” in 2000 to reflect the
late Representative Bruce Vento’s (D-MN) work
NATIONAL LOW INCOME HOUSING COALITION AP–15You can also read
