24 C.F.R. § 882.405
§ 882.405 Financing. (24 CFR Part 882)
Operative Text
(a) Types. Any type of public or private financing may be utilized with the exception of the rehabilitation loan program under Section 312 of the Housing Act of 1964. (b) Use of Contract as security for financing. An Owner may pledge, or offer as security for any loan or obligation, an Agreement or Contract entered into pursuant to this Program, Provided That (1) such security is in connection with a unit(s) rehabilitated pursuant to this Program and (2) the terms of the financing or any refinancing must be approved by the PHA in accordance with standards provided by HUD. Any pledge of the Agreement or Contract, or payments thereunder, will be limited to the amounts payable under the Contract in accordance with its terms.
Under 24 CFR Part 882 § 882.405, the Section 8 Moderate Rehabilitation Program permits owners to use virtually any form of public or private financing for rehabilitated units, with one explicit carve-out: the Section 312 rehabilitation loan program is not permitted. Additionally, an owner may use a Housing Assistance Payments Agreement or Contract as collateral for a loan, but only when that financing is tied to the rehabilitated unit covered by the contract, the loan terms are approved by the Public Housing Authority (PHA) in line with HUD standards, and any pledge of payments is capped at the amounts actually payable under the Contract.
Plain English — not legal advice.
Operators working under 24 CFR Part 882 § 882.405 generally ensure that any financing arrangement they pursue—whether conventional, government-backed, or otherwise—does not involve the Section 312 loan program. When an owner intends to pledge a HAP Agreement or Contract as loan security, compliant operators typically submit the proposed financing terms to the PHA for approval before finalizing the arrangement, and they structure any pledge so that it does not exceed the payment amounts specified in the Contract itself. Keeping documentation of PHA approval for financing and any refinancing is a standard practice for operators managing rehabilitated units under this program.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
For tenants living in units covered by 24 CFR Part 882 § 882.405, this provision governs how owners may finance or refinance the property and use HAP Contracts as collateral—matters that operate in the background of the tenancy but can affect program stability. If a tenant has concerns that financing arrangements may be affecting their housing assistance or the condition of their unit, they may raise questions with their local PHA, which holds approval authority over financing terms under this section. Tenant-rights organizations and HUD's regional offices can also be resources for understanding how this provision interacts with tenant protections under the broader Section 8 Moderate Rehabilitation Program.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated September 4, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
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