236(E)(2) Use Agreement

Section 236 was created in 1968 to invent the private market for the development of affordable rental housing. Private lenders have provided interest-rate loans at 40-year rates, insured by HUD or financed by a state-run housing finance agency. HUD granted the owner an interest reduction (IRP) which subsidized the owner`s mortgage at an interest rate of 1%. The PIT was fully funded to be paid monthly to the mortgage lender for a total of 40 years. By a regulatory agreement or a user agreement, the landlord has only agreed to rent to households with incomes below or below 80% of the average income and to limit rents to rents based on costs approved by HUD. Finally, many properties have received additional assistance in the form of rent supplement (Rent Supp), rental assistance (RAP) and/or a contract under Section 8 Project-Based Rental Assistance (PBRA). The same applies to the calculation of basic and market rents in Section 236 during the duration of the decoupling contract and for refundable distributions during the term of the IRP contract. Owners of section 236 buildings originally developed by non-profit organizations, as well as certain real estate with leases and section 221 (d) (3) mortgages, cannot pay in advance without HUD`s permission. These advances are generally referred to as Section 250 advances (a). Owners must notify residents 150 days in advance.

Low-income residents will continue to pay Section 236 rents, as a new use agreement, as defined in Section 250 (a), will replace the original Section 236 regulatory agreement and remain in effect until the end of the initial mortgage period. For more information on Section 236, Rent Supp, RAP and Project-Based Section 8, see page 4-19 of NLIHC 2016 at: bit.ly/1WhSAWx HUD`s Office of Recapitalization Preserve Options for Section 236 Properties, a guide that describes the options available to homeowners to obtain Section 236 of Real Estate as Affordable Housing. HUD encourages homeowners to take action this year, as all Section 236 loans will mature over the next three years. After the deadline, homeowners can convert units into market prices or take other measures that result in the loss of affordable housing for low-income households. The guide describes existing incentives for the recapitalization of real estate in accordance with Section 236 in order to preserve their affordability. All Section 236 projects insured, uninsured or managed by HUD are eligible under the decoupling program. Conservation projects (which are processed under the Low-Income Housing Preservation and Resident Homeownership Act (LIHPRHA) and low-income hospitality programs (ELIHPA) can only participate in the absence of rent increases or decoupling operations. The requirements for rent setting and procedures for these properties are listed as part of an action plan. Conservation options in Section 236 of real estate are bit.ly/1qAdYdP The guide describes an owner`s financing options, including refinancing to raise capital, advance of the initial loan under Section 236, decoupling the balance of a PRI from the original mortgage and applying the IRP subsidy flow to a new loan as part of an early loan and refinancing transaction, as well as determining relief from balloon payments due for certain flexible grant payments. The guide also outlines options for rental assistance, including the renewal of expiring contracts in accordance with Section 8, with a possible increase in contract rents, the provision of tenant protection vouchers for residents, and the conversion of real estate into PBRA or project-based vouchers under Part 2 of the rent support event. . The guide also explains the possibility of down payment in Section 236 of the loan, which not only allows the owner to use new debts to improve capital,



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