[Code of Federal Regulations]
[Title 24, Volume 3]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR572.100]

[Page 174-175]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
  CHAPTER V--OFFICE OF ASSISTANT SECRETARY FOR COMMUNITY PLANNING AND 
        DEVELOPMENT, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 572_HOPE FOR HOMEOWNERSHIP OF SINGLE FAMILY HOMES PROGRAM (HOPE 3)--Table of Contents
 
   Subpart B_Homeownership Program Requirements_Implementation Grants
 
Sec. 572.100  Acquisition and rehabilitation of eligible properties; 
rehabilitation standards.


    (a) Minimum number of properties. (1) Each homeownership program 
must involve acquisition of at least ten units in eligible properties by 
eligible families.
    (2) A homeownership program may not result in appreciably reducing 
in the locality the number of affordable rental housing units of the 
type to be assisted that would be available to residents currently 
residing in the types of properties proposed for use under the program 
or to families who would be eligible to reside in the properties.
    (b) Maximum acquisition costs. The cost of acquiring an eligible 
property (by a recipient or other entity for transfer to eligible 
families or by an eligible family from a recipient or directly from an 
eligible source) may not exceed the as-is fair market value of the 
property, plus reasonable and customary closing costs charged for 
comparable transactions in the market area. The as-is fair market value 
of a property must be determined in accordance with a recent appraisal 
conducted under procedures consistent with appraisal standards published 
by The Appraisal Foundation in the current edition of ``Uniform 
Standards of Professional Appraisal Practice.''
    (c) Maximum cost of acquisition and rehabilitation. The cost of 
acquisition and rehabilitation paid for from grant funds or credited as 
match may not exceed 80 percent of the maximum amount that may be 
insured in the area under section 203(b) of the National Housing Act, 
plus reasonable and customary closing costs charged for comparable 
transactions in the market area.
    (d) Rehabilitation standards. (1) The recipient is responsible to 
assure that rehabilitation of eligible property meets local codes 
applicable to rehabilitation of work in the jurisdiction (but not less 
than the housing quality standards established under the Section 8 
rental voucher program, described in Sec. 982.401 of this title). 
Rehabilitation must also include work necessary to meet applicable 
federal requirements, including lead-based paint requirements set forth 
at part 35, subparts A, B, J, K, and R of this title.
    (2) The property must be rehabilitated to a level that makes it 
marketable for homeownership in the market area to families with incomes 
at or below 80 percent of the median for the area. Luxury items 
(fixtures, equipment, and landscaping of a type or quality that 
substantially exceeds that customarily used in the locality for 
properties of the same general type as that being rehabilitated) are not 
eligible expenses. HUD reserves the right to disapprove improvements or 
amenities to be paid for from nonprogram funds that it determines are 
unsuitable for the HOPE 3 program.
    (3) Rehabilitation costs must comply with the cost standards 
established by HUD (see paragraph (c) of this section for applicable 
cost limitations covering both acquisition and rehabilitation). If 
improvements are made to an eligible property beyond those that qualify 
as

[[Page 175]]

eligible costs, the applicant must assure that the entire cost of the 
excess improvements will be covered by funds other than the HOPE 3 grant 
and any amounts contributed toward the match, and that the affordability 
of the property will not be impaired.
    (4) Higher standards may be proposed by the applicant or required by 
lenders.
    (5) The applicant must adopt written rehabilitation standards.
    (e) Rehabilitation and transfer of units. (1) The unit must be free 
from any defects that pose a danger to life, health, or safety before 
transfer of an ownership interest in the unit to the family or occupancy 
of a unit by an eligible family under a lease-purchase agreement. The 
recipient must inspect, or ensure inspection of, each unit to determine 
that it does not pose an imminent threat to the life, health, or safety 
of residents and that the property has passed recent fire and other 
applicable safety inspections conducted by appropriate local officials.
    (2) The unit must, not later than 2 years after transfer of an 
ownership interest in the unit to an eligible family, or execution of a 
lease-purchase agreement for the unit, meet minimum rehabilitation 
standards under paragraph (d)(1) of this section. The recipient must 
inspect, or ensure inspection of, each unit to determine that it meets 
the rehabilitation standards required under paragraph (d)(1) of this 
section.

[58 FR 36526, July 7, 1993, as amended at 62 FR 34145, June 24, 1997; 64 
FR 50226, Sept. 15, 1999]