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Definition of Section 8 Housing from Mortgage Glossary

Section 8 Housing The Section 8 program began during the Great Depression to increase the housing choices available to very low-income households by making privately-owned rental housing affordable to them. It provides rent subsidies, either rental certificates or vouchers, on behalf of eligible tenants. Who Qualify? In the Section 8 Program, qualifued low-income tenants pay about 30 percent of their income for rent, while the rest of the rent is paid with federal money. The housing authorities pay the difference between Fair Market Rent (FMR) and what the tennants pay. The FMR, in turn, is determined by the United States Department of Housing and Urban Development (HUD). 2005 Section 8 income limits for NY Household Size Income Limits 1 Person $35,150 2 People $40,200 3 People $45,200 4 People $50,250 5 People $54,250 6 People $58,300 7 People $62,300 8 People $66,300 See your local Housing Authority web site for limits in you area - for instance - limits for Santa Clara, CA Section 8 Landlord What are the Owner's Responsibilities under Section 8? • Tenant selection and leasing based on a family's tenancy history • Normal landlord functions during the lease term, e.g., maintenance, rent collection • Collecting amounts due from family under the lease (tenant rent, security deposit, other tenant charges for damage to the unit) • Compliance with equal opportunity requirements • Paying for owner-supplied utilities and services • Providing reasonable accommodation for persons with disabilities • Notifying HPD of rent increases and when a tenant vacates an apartment What if an Owner has a Problem with an HPD Section 8 Subsidized Tenant? Owners have the same responsibilities for managing their leases and property with tenants subsidized under Section 8 as they do for non-subsidized tenants. Tenants may not damage the unit or otherwise violate their leases. Tenants must pay their portion of the rent in a timely fashion. Just as owners are responsible for enforcing the terms of their leases with non-subsidized tenants, owners must enforce the terms of their leases with Section 8 tenants. If an owner has difficulty enforcing the terms of the lease with a subsidized tenant, for example, tenant-caused damage, housekeeping problems or non-payment, owner should contact the tenant's case manager at HPD and document the problem. HPD will review the matter and, if necessary, warn tenants to uphold their responsibilities under the lease. Serious and repeated violations of an Owner's lease are grounds for termination of a tenant's Section 8 benefits. Section 8 Homeownership Program - American Dream Commitment Fannie-Mae and Freddie-Mac expand their underwriting requirements necessary for Freddie Mac to purchase mortgages originated under the Section 8 Homeownership Program, and pledge funds in form of Section 8 vouchers, also known as the Housing Assistance Payment (HAP). HAP vouchers allow otherwise non-qualifing hoseholds to qualify for conforming mortgage loans. Households already qualifying for Section 8 Housing (rent) can use for Section 8 homewnership program benefits: With special approval by Freddie Mac of the Section 8 voucher program, 1% or $1000 minimum out-of-pocket contribution from the borrower, depending on the price of the home. Flexible total debt payment-to-income ratio of 38-42% and no housing expense-toincome ratio. Flexibility in use of automated or manual underwriting, depending upon the mortgage product used. Direct deduction of the Housing Assistance Payments (HAPs) from the principal, interest, taxes and insurance (PITI) increases purchasing power. HAP can be made directly from the Section 8 administrator to the mortgage servicer or to the borrower, depending on local needs.				You'll be re-directed to Loan Savings Solution Web Site
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