[Code of Federal Regulations]
[Title 24, Volume 4]
[Revised as of April 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR883.607]

[Page 111]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
  CHAPTER VIII--OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL 
 
PART 883--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM--STATE HOUSING AGENCIES--Table of Contents
 
             Subpart F--Housing Assistance Payments Contract
 
Sec. 883.607  Default by owner and/or agency.

    (a) Rights of Owner if Agency defaults under Agreement or Contract. 
The ACC, the Agreement and the Contract will provide that, in the event 
of failure of the Agency to comply with the Agreement or Contract with 
the owner, the owner will have the right, if he/she is not in default, 
to demand that HUD investigate. HUD will first give the Agency a 
reasonable opportunity to take corrective action. If HUD determines that 
a substantial default exists, HUD will assume the Agency's rights and 
obligations under the Agreement or Contract and meet the obligations of 
the Agency under the Agreement or Contract including the obligation to 
enter into the Contract.
    (b) Rights of HUD if Agency defaults under ACC. The ACC will provide 
that, if the Agency fails to comply with any of its obligations, HUD may 
determine that there is a substantial default and require the Agency to 
assign to HUD all of its rights and interests under the Contract; 
however, HUD will continue to pay annual contributions in accordance 
with the terms of the ACC and the Contract. Before determining that an 
Agency is in substantial default, HUD will give the Agency a reasonable 
opportunity to take corrective action.
    (c) Rights of Agency and HUD if Owner defaults under Contract. (1) 
The Contract will provide that if the Agency determines that the owner 
is in default under the Contract, the Agency will notify the owner, and 
lender, if applicable, with a copy to HUD,
    (i) Of the actions required to be taken to cure the default,
    (ii) Of the remedies to be applied by the Agency including specific 
performance under the Contract, abatement of housing assistance payments 
and recovery of overpayments, where appropriate; and
    (iii) That, if he/she fails to cure the default, the Agency has the 
right to terminate the Contract or to take other corrective action, in 
its discretion.
    (2) If the Agency provided the permanent financing, the Contract 
will also provide that HUD has an independent right to determine whether 
the owner is in default and to take corrective action and apply 
appropriate remedies, except that HUD will not have the right to 
terminate the Contract without proceeding in accordance with paragraph 
(c) of this section.