U.S. Code » Title 12 » Chapter CHAPTER 42— LOW-INCOME HOUSING PRESERVATION AND RESIDENT HOMEOWNERSHIP › Subchapter SUBCHAPTER I— PREPAYMENT OF MORTGAGES INSURED UNDER NATIONAL HOUSING ACT

12 U.S.C. § 4108

Prepayment and voluntary termination

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(a) ApprovalThe Secretary may approve a plan of action that provides for termination of the low-income affordability restrictions through prepayment of the mortgage or voluntary termination of the mortgage insurance contract only upon a written finding that—(1) implementation of the plan of action will not—(A) materially increase economic hardship for current tenants, and will not in any event result in (i) a monthly rental payment by any current tenant that exceeds 30 percent of the monthly adjusted income of the tenant or an increase in the monthly rental payment in any year that exceeds 10 percent (whichever is lower), or (ii) in the case of a current tenant who already pays more than such percentage, an increase in the monthly rental payment in any year that exceeds the increase in the Consumer Price Index or 10 percent (whichever is lower); or(B) involuntarily displace current tenants (except for good cause) where comparable and affordable housing is not readily available determined without regard to the availability of Federal housing assistance that would address any such hardship or involuntary displacement; and(2) the supply of vacant, comparable housing is sufficient to ensure that such prepayment will not materially affect—(A) the availability of decent, safe, and sanitary housing affordable to low-income and very low-income families or persons in the area that the housing could reasonably be expected to serve;(B) the ability of low-income and very low-income families or persons to find affordable, decent, safe, and sanitary housing near employment opportunities; or(C) the housing opportunities of minorities in the community within which the housing is located.(b) Standards and procedure for written findings(1) Standards

A written finding under subsection (a) shall be based on an analysis of the evidence considered by the Secretary in reaching such finding and shall contain documentation of such evidence.

(2) Procedure and criteria

The Secretary shall, by regulation, develop (A) a procedure for determining whether the conditions under paragraphs (1) and (2) of subsection (a) exist, (B) requirements for evidence on which such determinations are based, and (C) criteria on which such determinations are based.

(c) Disapproval

If the Secretary determines a plan of action to prepay a mortgage or terminate an insurance contract fails to meet the requirements of subsection (a), the Secretary shall disapprove the plan, the notice of intent filed under section 4102 of this title by such owner shall not be effective for purposes of this subchapter, and the owner may, in order to receive incentives under this subchapter, file a new notice of intent under such section.

(Pub. L. 100–242, title II, § 218, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4256; amended Pub. L. 102–550, title III, § 305, Oct. 28, 1992, 106 Stat. 3763.)Editorial NotesAmendments

1992—Subsecs. (b), (c). Pub. L. 102–550 added subsec. (b) and redesignated former subsec. (b) as (c).

Notes of Decisions
Cited in 22 cases, 1994–2015 · leading case: CCA Assocs. v. United States, 75 Fed. Cl. 170 (Fed. Cl. 2007).
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CCA Assocs. v. United States, 75 Fed. Cl. 170 (Fed. Cl. 2007). · cites it 11× “12 U.S.C. § 4108 (a)(1)(A). If prepayment would result in increases beyond these thresholds, the Secretary was not permitted to approve prepayment.”
Cienega Gardens v. United States, 67 Fed. Cl. 434 (Fed. Cl. 2005). · cites it 6× “12 U.S.C. § 4108 (a). Title VI, however, did not permit prepayment under a plan approved by a state agency.”
Cienega Gardens v. United States, 265 F.3d 1237 (Fed. Cir. 2001). · cites it 6× “12 U.S.C. § 4108 . In particular, section 4108(a) precludes HUD from approving a prepayment request unless it finds that: (1) implementation of the plan of action will not— (A) materially increase economic hardship for current tenants, and will not in any event result in (i) a…”
Cienega Gardens v. United States, 503 F.3d 1266 (Fed. Cir. 2007). · cites it 2× “12 U.S.C. § 4108 (a). The Court of Federal Claims found that this was not a viable alternative for the markets involved here because "HUD could not make the factual findings that were a necessary predicate for prepayment approval.”
Cienega Gardens v. United States, 33 Fed. Cl. 196 (Fed. Cl. 1995). · cites it 3× “12 U.S.C. § 4108 ; 24 C.F.R. § 248.141 (1994).”
Woodrow Wilson of Middletown, LLC v. Connecticut Hous. Fin. Auth., 986 A.2d 271 (Conn. 2010). · cites it 4× “” The federal regulation implementing 12 U.S.C. § 4108 provides in relevant part as follows: “For purposes of approving a plan of action under [ 12 U.”
Chancellor Manor v. United States, 331 F.3d 891 (Fed. Cir. 2003). “12 U.S.C. § 4108 (a) (Supp. II 1990). In 1996, Congress enacted the Housing Opportunity Program Extension Act (“HOPE”).”
Biafora v. United States, 773 F.3d 1326 (Fed. Cir. 2014). · cites it 2× “”) (citing 12 U.S.C. § 4108 (a)). Prepaying the mortgage was one step in removing affordability restrictions on properties so that they could be rented at market prices.”
Cienega Gardens v. United States, 38 Fed. Cl. 64 (Fed. Cl. 1997). · cites it 2× “12 U.S.C. § 4108 . HUD must approve or disapprove a POA within 180 days of filing, provided the POA is not deficient.”
Anaheim Gardens v. United States, 33 Fed. Cl. 24 (Fed. Cl. 1995). · cites it 4× “12 U.S.C. § 4108 , see also §§ 4104(a) and 4110(d).”
CCA Assocs. v. United States, 91 Fed. Cl. 580 (Fed. Cl. 2010). “Both ELIHPA and LIHPRHA required HUD approval to prepay, which required an owner to obtain the Secretary's certification that prepayment would not have adverse effects on the low-income housing stock or on current tenants.”
Anaheim Gardens v. United States, 107 Fed. Cl. 404 (Fed. Cl. 2012). · cites it 2× “LIHPRHA, 12 U.S.C. § 4108 . None of the owners at issue here proposed POAs, Def.”
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