Subchapter A. GENERAL PROVISIONS

§ 31.1. Definitions.

 (a)  The definitions set forth in section 103 of the act (35 P. S. §  1680.103) shall apply to this subpart unless a term is specifically defined in subsection (b) or unless the context clearly indicates otherwise.

 (b)  The following words and terms, when used in this subpart, have the following meanings, unless the context clearly indicates otherwise:

   Act—The Housing Finance Agency Law (35 P. S. § §  1680.101—1680.603a).

   Affirmative action program—A program whereby the Agency imposes a duty upon applicants, developers, mortgagors, contractors, subcontractors, marketing agents and managing agents to employ minorities, minority business enterprises, females and female business enterprises from submission of the preliminary application to the satisfaction of the mortgage; such employment shall include, but not be limited to, development team members.

   Agency—The Housing Finance Agency.

   Annual family income—The total annual income for a low and moderate income family from whatever source derived and before taxes or withholdings, after deducting therefrom:

     (i)   An amount equal to $750 for each dependent, as defined in the Internal Revenue Code as family members.

     (ii)   Income of minors, as defined by the Internal Revenue Code, other than the chief wage earner.

     (iii)   An amount equal to $1,000 income of secondary wage earner not the principal wage earner, who is the individual making the most money.

     (iv)   The total family medical expenses minus 3.0% of annual gross family income. Medical expenses are those expenses which are anticipated during the 12-month period for which the annual income is computed and which are not covered by insurance; however, premiums for such insurance may be deducted as medical expenses.

   Applicant—A corporation, partnership, joint venture, trust, individual, public body or agency, or other entity making application to receive Agency monies, assistance, or services under the act.

   Application—A request for Agency assistance under the act made on forms furnished by the Agency and containing such information as the Agency requires.

   Development team member—Those individuals, corporations, partnerships, joint ventures, or other entities engaged by the applicant to perform professional or technical services which are essential to the finance, design, construction, marketing, operation and management of housing financed by the Agency.

   Dwelling unit—Living accommodations within a housing project intended for residential occupancy by a single family.

   Family—Includes any of the following:

   (1)  Elderly persons as defined by the act.

   (2)  Two or more persons living together not contrary to law.

   (3)  A single person.

   Female applicant—A female individual or a female business enterprise making application to receive Agency monies, assistance, or services under the act.

   Female business enterprise—Any business enterprise that is owned—at least 51%—or controlled by one or more females; where the female business enterprise is a general partnership or a limited partnership, the female general partner or partners must be entitled to receive at least 50% of the syndication proceeds. Control means exercising actual day-to-day management and policy decisions.

   Majority—A nonminority and nonfemale.

   Minority—A United States citizen who is one of the following:

     (i)   Black, not of Hispanic descent.

     (ii)   Hispanic.

     (iii)   American Indian.

     (iv)   Eskimo.

     (v)   Aleut.

     (vi)   Oriental.

   Minority applicant—A minority individual or a minority business enterprise making application to receive Agency monies, assistance, or services under the act.

   Minority business enterprise—Any business enterprise that is owned—at least 51%—or controlled by one or more minorities; where the minority business enterprise is a general partnership or a limited partnership, the minority general partner or partners must be entitled to receive at least 50% of the syndication proceeds. Control means exercising actual day-to-day management and policy decisions.

   Mortgage loan—A loan authorized by resolution of the Agency or by a mortgage loan commitment issued on behalf of the Agency and made or to be made to an applicant for a housing project from the proceeds of sale of the Agency’s bonds or notes and any other available funds for the purpose of providing construction financing or long-term financing, or both, the repayment of which is secured or to be secured as provided in the act.

   Syndication proceeds—The sum of any compensation, fee, profits, money, and income which the general partners of a partnership or a limited partnership are entitled to receive or the sum of any profits, money, and income which any other business enterprise is entitled to receive.

   The provisions of this §  31.1 amended February 1, 1980, effective February 2, 1980, 10 Pa.B. 461. Immediately preceding text appears at serial pages (38290) and (38291).

 (a)  Selection criteria for mortgage loans. Selection criteria for mortgage loans shall conform with the following:

   (1)  The selection criteria for making mortgage loans to applicants shall include, but not be limited to:

     (i)   Projects that have the promise of supplying well-planned, well-designed apartment units.

     (ii)   Location and suitability of the site relative to the proposed housing project.

     (iii)   Need for the proposed housing project.

     (iv)   Qualifications of the development team.

     (v)   Participation of minorities, minority business enterprises, females, and female business enterprises as development team members or as applicants.

   (2)  Where some applicants for mortgage loans satisfy the selection criteria set forth in paragraph (1)(i)—(iv) but not the criteria set forth in paragraph (1)(v), the Agency may make mortgage loans to other applicants who satisfy the selection criteria set forth in paragraph (1)(i)—(v).

 (b)  Rental housing program. The basic steps in the processing of an Agency rental housing program mortgage loan application under Article IV-A of the act (35 P. S. § §  1680.401a—1680.404a) are as follows:

   (1)  Preliminary application submission. Preliminary application submission shall conform with the following:

     (i)   The applicant shall submit a completed application with the required exhibits including evidence of land control, sketch plot plan, and location map. The Agency staff may inspect the proposed site and will analyze and evaluate the rental market the applicant proposes to attract to the proposed project development. The Agency will then advise the applicant of its findings.

     (ii)   The applicant and development team members must comply with the provisions of this part and the procedures and policies of the Agency regarding the finance, design, construction, marketing, operation, and management of housing financed by the Agency. The applicant and development team members must also comply with the Agency’s affirmative action program and policies and procedures regarding the finance, design, construction, marketing, operation, and management of housing. In order to insure that an applicant or a development team member claiming to be a minority business enterprise or a female business enterprise is such an enterprise within the meaning of §  31.1 (relating to definitions), the Agency shall after notice have the right to audit and inspect the books, agreements, contracts, and other relevant documents of any applicant or development team member making such claim.

   (2)  Feasibility submission. Feasibility submission shall conform with the following:

     (i)   If the Agency staff finds the site and market suitable for the proposed project, the applicant shall submit a feasibility submission which includes:

       (A)   Schematic—architectural—drawings.

       (B)   Preliminary cost estimate.

       (C)   Evidence of proper zoning.

       (D)   Proposed operating budget.

       (E)   Any other documentations deemed necessary by the Agency.

     (ii)   If the feasibility submission is determined to be ‘‘feasible’’ by the Agency staff, a feasibility analysis will be prepared and forwarded by the Agency staff to the Agency Board for its consideration. If the Board approves the feasibility requirements by the applicant, the Agency will then proceed to the commitment submission.

   (3)  Commitment submission. Commitment submission shall conform with the following:

     (i)   At this point, the applicant is required to submit a commitment submission which includes:

       (A)   Preliminary working drawings and outline specifications in sufficient detail for cost analysis by the Agency.

       (B)   Tenant selection plan, concerning which reference should be made to §  31.19 (relating to Tenant Selection Plan).

       (C)   Affirmative Action Program for Minority Employment to ensure equal opportunity.

       (D)   Affirmative Action Program for marketing rental to ensure equal opportunity.

       (E)   Management plan.

       (F)   All other items or documentation the Agency deems necessary.

     (ii)   When the applicant has submitted and completed the commitment requirements in acceptable form, the Agency staff will prepare and forward a commitment analysis to the Board of the Agency for its consideration. If the Board approves the commitment analysis, the Agency will issue a commitment letter to the applicant.

   (4)  Initial closing. Upon receipt of the commitment letterAgency, the applicant shall advise his attorney to provide the counsel of the Agency with the required legal closing documents. An initial closing date shall be mutually agreed upon, and the closing shall be held.

   (5)  Construction. The Agency will conduct regular on-site inspection of construction progress. Construction loan disbursements will be made monthly on the basis of work-in-place as approved by the Agency.

 (c)  Federally related mortgage loan program. The processing of an application for a Federally related or assisted mortgage loan from the Agency shall follow the procedures described in subsection (b) unless the characteristics of the Federal program make one or more of the steps unnecessary and shall be subject to such additional procedures as are necessary to ensure compliance with provisions of the Federal program and the act.

 The Agency may waive or vary particular provisions of this subpart:

   (1)  To conform to the requirements of the United States Department of Housing and Urban Development or the United States Department of Agriculture in connection with any housing development with respect to which Federal assistance is sought; or

   (2)  In exceptional circumstances, under an emergency situation, or if, in the determination of the Agency, the application of a provision to a specific case may result in the undue hardship.

RENTAL HOUSING PROGRAM

§ 31.11. Amortization period.

§ 31.14. Ancillary facilities.

   Only rents established or approved by the Agency may be charged for dwelling units in housing projects receiving a permanent mortgage loan from the Agency. In establishing or approving rents, the Agency will provide for rents which, together with other money legally available to the Agency or the mortgagor, will be sufficient to meet the debt service and the maintenance and operational requirements of the housing project unless such rents would cause rental vacancies in excess of 50% of the total apartment units in the property. The rental charges established by this section shall conform with the definition ‘‘moderate rentals’’ and ‘‘low rentals’’ as set forth in section 103 of the act (35 P. S. §  1680.103).

 Each mortgagor shall prepare and submit to the Agency, as a part of its application for financing, a Tenant Selection Plan. The Tenant Selection Plan shall include, but not be limited to the following:

   (1)  The proposed rent structure of the housing project, which is determined by §  31.18 (relating to rental charges), including any rent levels made possible by Federal or other subsidies.

   (2)  The mortgagor’s allocation of at least 51% of its dwelling units to low and moderate income families. However, this 51% may be temporarily waived by the Agency if the Agency determines that the mortgagor has made a good faith effort to accomplish this 51% but has been unsuccessful and, as a result, the development or project has suffered an undue economical hardship. The 51% waiver will be granted only after the Agency determines, through a thorough analysis of the marketing efforts of the mortgagor, that a limited number of low and moderate income families reside in the market area and an insufficient number applied for tenancy. This analysis would include, but would not be limited to, an examination of advertising schedules, letters and telephone inquiries, and project files.

   (3)  That the following schedule of occupancy priorities be maintained to the fullest extent possible:

     (i)   Persons and families displaced by natural disasters.

     (ii)   Persons and families displaced by urban renewal or other governmental action.

     (iii)   Elderly persons and families.

 (a)  To assure that the maximum annual income limits for low and moderate income families are being complied with, the mortgagor must verify the income eligibility of tenants.

 (b)  Verification shall be accomplished by the applicant for a rental unit signing a release which authorizes the mortgagor to request a written verification of the most recent yearly income from the applicant’s employer. Copies of correspondence for income verification must be maintained on file by the mortgagor.

 The maximum annual family income limit for a moderate family occupying a rental unit permanently financed by the Agency is $18,000. This figure shall increase on each annual anniversary date of the effective date of this chapter in the same proportion as the increase in the Cost of Living Index, for Philadelphia, for the same time period, as published by the Department of Labor. Notwithstanding any provision of this subpart to the contrary, with respect to housing financed in whole or in part by a Federally-aided mortgage loan which is to provide housing for moderate and low income persons, the Agency’s actions in authorizing such mortgage loan will have the effect of adopting, as the Agency’s income limitations for initial occupancy of the housing project or part thereof, the income limitations for initial occupancy then provided in the Federal program pursuant to which the mortgage loan or part thereof qualifies as a Federally-aided mortgage.

 (a)  In the event the maximum family income of a moderate family occupying a rental housing unit permanently financed by the Agency increases after initial occupancy so that it exceeds 125% of the allowable income limit established in §  31.22 (relating to income limits), a rental surcharge shall be charged the family in accordance with the following schedule:

SURCHARGE SCHEDULE

Adjusted Family Income As A Percentage of Maximum Adjusted Income for Initial Occupancy of Premises	Rent Surcharge As A Percentage of Rent
0.0% to 125%	None
125% to 130%	4.0%
130% to 135%	6.0%
135% to 140%	8.0%
140% or greater	10%

 (b)  A rental charge shall be charged prospectively only and shall not be imposed until the family completes its first lease year. The family shall pay 1/12 of the rent surcharge along with the monthly rent payment on the first calendar month after receipt of notice from mortgagor requiring this in accordance with the surcharge schedule set forth in subsection (a).

 All books and records of mortgagors, agents of the mortgagors and general contractors shall be open to inspection and audit by representatives of the Agency or certified public accountants retained by the Agency at all reasonable hours.

OWNER-OCCUPIED RESIDENTIAL HOUSING PROGRAM

 These § §  31.101—31.105 are established and will be applied to effectuate the general purposes of the act and the specific objective of providing funds for the financing of certain owner-occupied residential housing for occupancy by qualified persons in this Commonwealth and thereby encouraging the purchase, construction, rehabilitation, and home improvement of residential housing by such persons. Through its purchase program, the Agency increases the availability of funds for such residential housing by making commitments to local lending institutions to purchase and by purchasing loans approved by the Agency as meeting the standards set forth in these § §  31.101—31.105.

 (a)  All words and terms which are defined in the act are used in these § §  31.101—31.105 as defined in the act.

 (b)  The following words and terms, when used in these § §  31.101—31.105 have, unless the context clearly indicates otherwise, the following meanings:

   Approved lending institution—Any lending institution as defined by the act and approved by the Agency.

   Bonds—Bonds issued to obtain funds to purchase program loans as provided in Article V-A of the act (35 P. S. § §  1680.501a—1680.508a).

   Eligible borrower—Any mortgagor or borrower meeting the criteria set forth by the Agency.

   Home improvement loan—A loan made for the improvement of a single-family dwelling.

   Income—The total annual income of a family or person as defined by the Agency.

   Loan—A mortgage loan, a substantial rehabilitation loan, or a home improvement loan made by an approved lending institution to an eligible borrower and meeting the conditions set forth in these § §  31.101—31.105.

   Loan commitment—The aggregate unpaid principal amount of loans which an approved lending institution agrees to deliver and sell to the Agency and the Agency agrees to purchase.

   Loan purchase agreement—An agreement entered into between an approved lending institution and the Agency under which the lending institution agrees to deliver and sell to the Agency and the Agency agrees to purchase loans.

   Loan servicing agreement—An agreement entered into between an approved lending institution and the Agency under which the lending institution agrees to service the loans purchased by the Agency.

   Mortgage loan—A loan made for the purchase or construction of a single-family dwelling.

   Program—A program of the Agency involving mortgage loans, substantial rehabilitation loans, or home improvement loans administered under these § §  31.101—31.105.

   Program guidelines—A guide for a program promulgated by the Agency, summarizing specific contractual requirements of the program, as revised and supplemented from time to time.

   Qualified insurer—The Federal Housing Administration, the Veterans Administration, and any other person legally authorized to insure or guarantee, in whole or part, the payment of loans for single-family dwellings in this Commonwealth and otherwise meeting the qualifications set forth in these sections.

   Single family dwelling—A structure designed for occupancy by no more than four persons or families in separate dwelling units, provided that at least one such dwelling unit shall be occupied by the owner thereof as a primary residence; the term includes condominium units and planned unit development.

   Substantial rehabilitation loan—A loan made for the purchase and substantial rehabilitation or for the substantial rehabilitation of a single-family dwelling.

 Fees may be established by the Agency in connection with loans to be purchased by the Agency in connection with a program. The Agency may establish such other premiums and penalties as it shall determine to be necessary in connection with a program.

 The Agency will establish specific procedures and minimum standards to ensure that community conservation goals and local land-use planning objectives are encouraged.

 When approving a lending institution, the Agency will consider, among other things, the financial strength and stability of the lending institution and its qualifications to originate loans under National Secondary Mortgage Market Standards.

   This section cited in 12 Pa. Code §  31.101 (relating to purpose and objectives); and 12 Pa. Code §  31.102 (relating to definitions).

PROGRAMS GENERALLY

 The Agency will make available to lending institutions who so request a form of loan commitment application at least 14 days in advance of the date such applications must be submitted to the Agency. The application shall be in the form prescribed by the Agency and shall contain, among other things, the following:

   (1)  Provision for the lending institution to state the maximum principal amount of loans which the lending institution offers to sell to the Agency.

   (2)  The date by which the application must be received by the Agency in order to be considered for an allocation of funds.

   (3)  Draft forms of the proposed loan purchase agreement and servicing agreement.

   (4)  Provision for the lending institution to furnish information regarding its loan origination and servicing activities during a time period prescribed by the Agency.

 The Agency may regulate, limit, restrict, or prohibit by contract the charge or collection of any commitment fee, premium, bonus, points or other fees in connection with the origination and servicing of loans by approved lending institutions to be purchased by the Agency.