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Impact of sequestion on project based Section 8 and FHA programs

NAHMA has just received information from HUD’s Office of Housing on how sequestration will affect its affordable housing programs. Two separate letters from Deputy Assistant Secretary Marie Head and Assistant Secretary Carol Galante described how sequestration will affect HUD’s multifamily programs administered by the Office of Housing. To read these letters in their entirety, please see NAHMA’s Sequestration Grassroots Action webpage.

For project-based Section 8, HUD has developed the following plan of action:

All Section 8 contracts expiring in FY 2013 will be renewed if eligible under current program rules and will receive full twelve month funding.

All existing multi-year contracts that expire after FY 2013 and have anniversary dates in the first quarter of FY 2013 (October-December) will receive full twelve month funding, assuring sufficient funding to carry them into the first quarter of FY 2014.

All other multi-year Section 8 contracts will receive less than 12-month funding, but will be provided sufficient funding to carry them into the first quarter of FY 2014.

o There are about 11,000 Section 8 contracts that fall in this last category, and on average, they will receive roughly 8.5 months of funding.

For FHA in general:

HUD staff will be furloughed.

Funding for system maintenance will be reduced.

Delays in processing mortgage insurance applications are possible as are delays in loan closing, construction inspections and other essential program activity.

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