3.11.2.2 Affordable Projects and 55+ Exemption

A. Existing projects availing themselves of the 55+ Exemption under the Fair Housing Act may be eligible for FHA mortgage insurance if all of the following are true:

1. The project is an affordable property (as defined in Section 3.1.12);

2. The project is already availing itself of the 55+ Exemption for at least the previous three years and is not using FHA mortgage insurance to facilitate transition into the use of the 55+ Exemption; and

3. There is no statutory or regulatory restriction limiting eligibility to another category of persons (for example persons or heads of household who are age 62 or older).

4. Properties with project-based Section 8 rental assistance and other federal assistance have programmatic terms that limit eligibility and thus such projects may not avail themselves of the 55+ Exemption.

B. These potentially eligible properties must operate in full compliance with the 55+ Exemption in the Fair Housing Act to impose age restrictions and exclude children. To be eligible for FHA mortgage insurance, a project operating under the 55+ Exemption must provide a Certification of Compliance with the Fair Housing Act by the Borrower. A sample template is included in Appendix 3, Section A.3.3 of this guide. In support of the certification, the Borrower must provide the governing age restriction documents and management documents indicating the property complies with the 55+ Exemption. Governing age restriction documents include use agreements, bond documents, tax credit qualified allocation plan and application documents, and zoning documents, as applicable. Management documents include leases, occupancy policies, marketing plans, and affirmative fair housing marketing plans, as applicable. Though such management documents may be sufficient to establish eligibility, processing staff should encourage applicants to provide documents such as use agreements, relevant zoning documents, or bond documents, whenever available. See 24 C.F.R. § 100.306 for examples of other relevant documents to be considered.

C. HUD processing staff should review the certification to determine whether it is consistent with the age restriction and management documents submitted by the property. Further, processing staff should review the certification, age restriction, and management documents to ensure that the project is not operating as a “dual purpose” property in contravention of the Fair Housing Act.

D. FHA MAP Lender applications and underwriting must document, and HUD processing staff must verify, the property’s compliance with the Fair Housing Act by requesting and then analyzing the governing age restriction and management documents to determine whether the documents clearly impose a 55 or older restriction that is compatible with the 55+ Exemption.

E. If an FHA-financing-eligible property certifies as a 55 or older property, it is important for processing staff to verify when the property began operating as such. The regulations at 24 C.F.R. § 100.305(e) specify that properties had the opportunity to establish eligibility for this exemption until May 3, 2000. After this date, existing projects could avail themselves of this exemption only if they met the criteria defined in the certification through neutral admission policies.

F. Multifamily HUD staff should consult with Office of General Counsel prior to accepting an application for FHA mortgage insurance for properties operating under the following programs and seeking to take advantage of the 55+ Exemption:

1. Old Section 202 Prepaid;

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Chapter 3 Programs 3.11 Age and Family Status Restrictions

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2. Refinance of Prepaid Section 202.