42 U.S.C. § 12874 — Homeownership program requirements

(a) In general: The program must let eligible families get ownership interest or shares in the units — through whatever setup the Secretary finds fitting, such as cooperative ownership (including limited-equity co-ops) or fee-simple ownership (including condos) — so the families can live there. (b) Affordability: The program must set sale prices (covering principal, insurance, taxes, interest, and closing costs) low enough that no eligible family has to spend more than 30% of its adjusted monthly income to complete the purchase. (c) Plan: The program must include a plan for: picking which eligible families get to join; giving relocation help to families who choose to move instead; keeping the property affordable on an ongoing basis for tenants, buyers, and owners; and giving buyers and owners continued training and counseling. (d) Acquisition and rehabilitation limitation: The program generally can't buy or fix up only part of a property's units — it has to be all or none. The Secretary can waive this if selling less than all the buildings in a project is workable and won't hurt any tenants left out of the homeownership plan. (e) Financing: The application must describe how any repairs and any property purchase will be financed — both the purchase by the entity handling the transfer and the purchase of ownership shares by the families. Financing can include the grant money itself, cash sales, conventional mortgages, or FHA-insured mortgages under the National Housing Act. The property generally can't be pledged as collateral for debt or otherwise encumbered, unless the Secretary finds that: the debt won't threaten long-term availability of the property for low-income families; neither the government nor the public housing agency faces undue risk from the "opportunity to cure" step below; the debt can be paid from the project's own income, including operating assistance; and the borrowed money will only go toward meeting the housing standards in (f) or approved capital improvements. Any lender financing the program must give the public housing agency, resident corporation, individual owner, or other responsible party a fair chance to fix a default before foreclosing or taking other action. (f) Housing quality standards: The application must include a plan showing the unit will be free of any health or safety hazards before an ownership interest transfers to a family, and will meet the Secretary's minimum housing standards within 2 years after that transfer. (g) Protection of nonpurchasing families: No tenant living in a unit on the date the Secretary approves the grant can be evicted because of the homeownership program. If a tenant decides not to buy, or doesn't qualify, the Secretary must (subject to available funding) make sure rental assistance under section 1437f is available to that tenant, in that property or another one. The recipient must also tell each such tenant that if they choose to move, the recipient will pay relocation assistance as set out in the approved plan.