24 C.F.R. § 882.409
§ 882.409 Contract rents at end of rehabilitation loan term. (24 CFR Part 882)
Operative Text
For a Contract where the initial Contract Rent was based upon a loan term shorter than 15 years, the Contract must provide for reduction of the Contract Rent effective with the rent for the month following the end of the term of the rehabilitation loan. The amount of the reduction will be the monthly cost of amortization of the rehabilitation loan. This reduction should result in a new Contract Rent equal to the base rent established pursuant to § 882.408(c) plus all subsequent adjustments.
Under 24 CFR Part 882 § 882.409, when a Section 8 Moderate Rehabilitation contract was set up using a rehabilitation loan with a term of less than 15 years, the contract rent must automatically decrease once that loan is paid off. The reduction equals the monthly amortization cost of the rehabilitation loan, effectively stripping out the debt-service component from the rent. The resulting lower rent is intended to equal the original base rent established under § 882.408(c), adjusted for any increases that have been applied over the life of the contract.
Plain English — not legal advice.
Owners and managers administering contracts governed by 24 CFR Part 882 § 882.409 generally ensure that the Housing Assistance Payments contract itself contains explicit language specifying the rent reduction that takes effect the month after the rehabilitation loan term ends. Compliant operators typically track the loan's amortization schedule so the precise reduction amount—equal to the monthly amortization cost—is documented and ready to apply at the correct time. Keeping clear records of the base rent established under § 882.408(c) and all subsequent adjustments helps demonstrate that the post-loan contract rent was calculated correctly.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Tenants living in units covered by a Moderate Rehabilitation contract subject to 24 CFR Part 882 § 882.409 have an interest in knowing that the contract rent is supposed to decrease after the underlying rehabilitation loan term expires, which can affect how housing assistance payments are calculated. If a tenant believes the rent reduction required by § 882.409 was not applied, they may raise this as a concern with the local Public Housing Authority (PHA) administering the contract or with HUD's regional office. Tenant-rights organizations and legal aid offices familiar with Section 8 Moderate Rehabilitation programs can help explain what records to request and what options may be available.
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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