April 26, 2018: HUD is pleased to announce that with the publication of two Housing Notices published this year (described below) there are now comprehensive options for owners of properties with pre-1974 Section 202 Direct Loans to preserve the affordability of these properties by entering into long-term rental assistance contracts. HUD has also developed a 2-page flyer, “Key Concepts for Preservation of Pre-1974 Section 202 Direct Loan Properties,” to assist owners with understanding the preservation options. HUD is also developing a webinar on this topic, which will be announced at a future date.
Summary of Housing Notices
- Notice H 2018-02: “Refinancing of Pre-1974 Section 202 Direct Loans and Subsequent Issuance of Tenant Protection Vouchers (TPVs) or Senior Preservation Rental Assistance Contracts (SPRACs),” which supplements Notice H 2013-17 ("Updated Requirements for Prepayment and Refinance of Section 202 Direct Loans"), provides additional guidance to owners of pre-1974 Section 202 Direct Loan properties that have the option of refinancing the Section 202 Direct Loan for the purposes of reducing the interest rate and/or making capital improvements. Following the refinancing of a pre-1974 Section 202 Direct Loan, the Notice clarifies that the vouchers that are issued following the refinancing may be project-based (i.e., Project Based Vouchers or "PBV") without the need for a PHA to competitively select the property and without having to first offer the voucher to the affected families in the form of tenant-based assistance. The Notice also provides for the issuance of Senior Preservation Rental Assistance Contracts (SPRACs) for units that could not be covered by a PBV contract.
- PIH 2018-02 / H 2018-01: “Funding Availability for Set-Aside Tenant-Protection Vouchers – Fiscal Year 2017 Funding” explains the eligibility, application, and procedural requirements for Tenant Protection Voucher (TPV) "set-aside" funding for properties with maturing Section 202 Direct Loans and other HUD-held or insured mortgages. This TPV funding helps to ensure that certain at-risk households in low-vacancy areas can be protected with ongoing rental assistance and properties can be preserved as affordable housing. As is the case with refinancing, the vouchers that are issued as a result of a maturing loan may be project-based without the need for a PHA to competitively select the property and without having to first offer the voucher to the affected families in the form of tenant-based assistance.
Together, these Notices provide comprehensive options to preserve this important stock of affordable housing for the elderly.