3-1. OVERVIEW

• A. The Mark-Up-To-Market (MUTM) Option was introduced as an emergency initiative in June 1999 to provide owners of certain properties with rents below market and located in strong markets to mark rents up to market as an incentive to renew the Section 8 contract and continue providing affordable housing. Because the cost of marking all below-market Section 8 properties up to market would likely have exceeded available resources, MUTM was made available to only a limited universe of properties. Section 524(a)(4)(A) of MAHRA made MUTM a permanent program and required HUD to mark rents up to market on properties meeting specific eligibility criteria as described in Section 3-3. Contract renewals under this authority are referred to as Option One-A, Entitlement MUTM.

• B. To protect those most vulnerable and to further preserve affordable housing, Section 524(a)(4)(C) of MAHRA gives HUD authority to extend the option of marking rents up to market for properties not meeting the eligibility criteria under Option One-A but are still considered an important affordable housing resource. The eligibility criteria for marking rents up to market under Section 524(a)(4)(C) of MAHRA are described in Section 3-6. Contract renewals under this authority are referred to as Option One-B, Discretionary Mark-Up-To-Market.

3-2. GENERAL ELIGIBILITY CRITERIA FOR OPTIONS ONE A AND B

• A. Rents. Aggregate current rent levels under the expiring or terminating contract must be less than comparable market rents.

• B. Project Condition. The project must have:

  1. Management’s most recent Management and Occupancy Review (MOR) rating is “Satisfactory” or above; and

  2. A physical inspection score, from the Real Estate Assessment Center (REAC), of 60 or above with no uncorrected Exigent Health and Safety (EH&S) violations.

• C. FASS Findings. If applicable, all Financial Assistance Subsystem (FASS) findings need to be closed or under a HUD-approved corrective action plan.

Chapter Three – Published March 2023

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