42 U.S.C. § 1437z–2
Public housing mortgages and security interests (THE PUBLIC HEALTH AND WELFARE (42 U.S.C.))
Operative Text
The Secretary may, upon such terms and conditions as the Secretary may prescribe, authorize a public housing agency to mortgage or otherwise grant a security interest in any public housing project or other property of the public housing agency. In making any authorization under subsection (a), the Secretary may consider— the ability of the public housing agency to use the proceeds of the mortgage or security interest for low-income housing uses; the ability of the public housing agency to make payments on the mortgage or security interest; and such other criteria as the Secretary may specify. No action taken under this section shall result in any liability to the Federal Government.
Under 42 U.S.C. § 1437z–2, the Secretary of Housing and Urban Development has the authority to permit a public housing agency (PHA) to place a mortgage or other security interest on public housing property, subject to conditions the Secretary sets. When evaluating such a request, the Secretary may weigh whether the PHA can direct the proceeds toward low-income housing purposes and whether the PHA can meet its repayment obligations. The provision also explicitly shields the federal government from any financial liability arising from actions taken under this section.
Plain English — not legal advice.
Public housing agencies operating under 42 U.S.C. § 1437z–2 that seek to mortgage or encumber public housing property must first obtain authorization from the Secretary of HUD, who may attach specific terms and conditions to that approval. Compliant agencies typically demonstrate a clear plan for applying loan proceeds to low-income housing uses and document their capacity to service the debt before seeking approval. Because the federal government bears no liability under this section, PHAs generally ensure their own financial and legal frameworks are in order before pursuing such financing arrangements.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
42 U.S.C. § 1437z–2 governs when and how a public housing agency may place a mortgage or security interest on public housing property, a process that requires federal approval and is subject to conditions designed to protect low-income housing uses. Residents of public housing have an interest in understanding that any such financing must be authorized by HUD and is evaluated in part on whether it serves low-income housing purposes. Tenants who have concerns about how a proposed mortgage or encumbrance might affect their housing can reach out to their local PHA, a HUD field office, or a tenant-rights organization for information about the process and any applicable resident consultation requirements.
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 3, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
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