HUD EXTENDS LENGTH OF SECTION 8 CONTRACTS ON PROPERTIES UNDERGOING MARK-TO-MARKET DEBT RESTRUCTURING

WASHINGTON - The U.S. Department of Housing and Urban Development announced today that it has extended from 5 to 20 years the renewal period on Section 8 properties whose mortgages are being restructured under the Mark-to-Market program.

The Mark-to-Market program was created in 1997 to reduce Section 8 rental payments on thousands of privately owned, federally subsidized units to levels more in line with prevailing market rent levels, thus preserving a critical part of the nation's affordable housing stock. The program is administered by HUD's Office of Multifamily Housing Assistance Restructuring.

Owners whose properties undergo debt restructuring are required to keep rents affordable for 30 years. The longer contracts will help better balance the owner's commitment and the federal obligation.

"This change ensures a fairer deal to property owners and gives tenants more stability in their homes," said Secretary Martinez.

"The 30-year use agreement, when compared with the five-year renewal period that had been in place, was a major hindrance for owners and potential non-profit purchasers," said OMHAR Director Ira G. Peppercorn. "Section 8 contracts with longer terms will help preserve more affordable housing."

Mark-to-Market transactions that do not require debt restructuring, or OMHAR Lites (properties that take rent reduction without restructuring the mortgage), will continue to have one- to five-year contract renewal terms. Similarly, Potentially Troubled OMHAR projects will continue to be offered one-year renewal contracts.

The new Section 8 contract, contingent upon Congressional appropriations, goes into effect immediately. Details can be found can be found on HUD's Web site at: http://www.hud.gov/offices/hsg/omhar/. For more information call OMHAR at (202) 708-0001 Ext. 3779.