The affordability restriction runs for the original term of the guaranteed loan and is recorded as a deed restriction

rd538.affordability_period.use_restriction_runs_for_the_original_loan_term · v1.0.0

For the ORIGINAL TERM of the guaranteed loan, a Section 538 property must remain available for occupancy by low and moderate income households in accordance with 7 CFR part 3565 subpart E, and that requirement must be recorded in a deed restriction or other instrument acceptable to the Agency. During the period of the guarantee the owner is prohibited from using the housing or related facilities for any purpose other than an approved programme purpose. The restriction lifts only where the housing is acquired by foreclosure or an instrument in lieu of foreclosure, or where the Agency waives it after determining ALL THREE of: there is no longer a need for low- and moderate-income housing in the market area; housing opportunities for low-income households and minorities will not be reduced as a result; and additional federal assistance will not be necessary as a result.

Confidence

high

Effective from

1998-07-22

Last reviewed

2026-08-30