---
kind: "section"
citation: "12 U.S.C. § 4109"
title: "12"
title_heading: "Banks and Banking"
number: "4109"
heading: "Incentives to extend low-income use"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/12/4109"
units:
  - "Chapter 42 — Low-Income Housing Preservation and Resident Homeownership"
  - "Subchapter I — Prepayment of Mortgages Insured under National Housing Act"
---

# §4109. Incentives to extend low-income use

- (a) **Agreements by Secretary—** After approving a plan of action from an [owner](/usc/12/4119.md?p=7) of [eligible low-income housing](/usc/12/4119.md?p=1) that includes the [owner](/usc/12/4119.md?p=7)’s plan to extend the [low-income affordability restrictions](/usc/12/4119.md?p=3) of the housing, the [Secretary](/usc/12/4119.md?p=10) shall, subject to the availability of appropriations for such purpose, enter into such agreements as are necessary to enable the [owner](/usc/12/4119.md?p=7) to receive (for each year after the approval of the plan of action) the annual authorized return for the housing determined under [section 4104(a) of this title](/usc/12/4104.md?p=a), pay debt service on the federally-assisted [mortgage](/usc/12/1707.md?p=a) covering the housing, pay debt service on any loan for rehabilitation of the housing, and meet project operating expenses and establish adequate reserves. The [Secretary](/usc/12/4119.md?p=10) shall take into account the [Federal cost limits](/usc/12/4119.md?p=2) under [section 4105(a) of this title](/usc/12/4105.md?p=a) for the housing when providing incentives under subsections[^1] (b)(2) and (3) of this section. The [Secretary](/usc/12/4119.md?p=10) shall take such actions as are necessary to ensure that [owners](/usc/12/4119.md?p=7) receive the annual authorized return for the housing determined under [section 4104(a) of this title](/usc/12/4104.md?p=a) during the period in which rent increases are phased in as provided in [section 4112(a)(2)(E) of this title](/usc/12/4112.md?p=a-2-E), including (in order of preference) (1) allowing the [owner](/usc/12/4119.md?p=7) access to residual receipt accounts (pursuant to [subsection (b)(1)](#b-1) of this section), (2) deferring remittance of excess rent payments, and (3) providing an increase in rents permitted under an existing contract under [section 1437f of title 42](/usc/42/1437f.md) (pursuant to [subsection (b)(2)](#b-2) of this section).
- (b) **Permissible incentives—** Such agreements may include one or more of the following incentives:
  - (1) Increased access to residual receipts accounts.
  - (2) Subject to the availability of amounts provided in appropriations Acts—
    - (A) an increase in the rents permitted under an existing contract under [section 1437f of title 42](/usc/42/1437f.md), or
    - (B) additional assistance under [section 1437f of title 42](/usc/42/1437f.md) or an extension of any project-based assistance attached to the housing; and
  - (3) An increase in the rents on units occupied by current tenants as permitted under [section 4112 of this title](/usc/12/4112.md).
  - (4) Financing of capital improvements under [section 201](/usc/12/201.md) of the Housing and Community Development Amendments of 1978.
  - (5) Financing of capital improvements through provision of insurance for a second [mortgage](/usc/12/1707.md?p=a) under [section 1715z–6 of this title](/usc/12/1715z–6.md).
  - (6) In the case of housing defined in [section 4119(1)(A)(iii) of this title](/usc/12/4119.md?p=1-A-iii), redirection of the Interest Reduction Payment subsidies to a second [mortgage](/usc/12/1707.md?p=a).
  - (7) Access by the [owner](/usc/12/4119.md?p=7) to a portion of the [preservation equity](/usc/12/4119.md?p=8) in the housing through provision of insurance for a second [mortgage](/usc/12/1707.md?p=a) loan insured under [section 1715z–6(f)](/usc/12/1715z–6.md?p=f)[^2] of this title or a non-insured [mortgage](/usc/12/1707.md?p=a) loan approved by the [Secretary](/usc/12/4119.md?p=10) and the [mortgagee](/usc/12/1707.md?p=b).
  - (8) Other incentives authorized in law.

  With respect to any housing with a [mortgage](/usc/12/1707.md?p=a) insured or otherwise assisted pursuant to [section 1715z–1 of this title](/usc/12/1715z–1.md), the provisions of subsections (f) and (g) of [section 1715z–1 of this title](/usc/12/1715z–1.md) notwithstanding, the fair market rental charge for each unit in such housing may be increased in accordance with this subsection, but the [owner](/usc/12/4119.md?p=7) shall pay to the [Secretary](/usc/12/4119.md?p=10) all rental charges collected in excess of the basic rental charges, in an amount not greater than the fair market rental charges as such charges would have been established under [section 1715z–1(f) of this title](/usc/12/1715z–1.md?p=f) absent the requirements of this paragraph.


## Footnotes

[^1]: So in original. Probably should be “subsection”.
[^2]: See References in Text note below.

## Source credit

(Pub. L. 100–242, title II, § 219, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4256; amended Pub. L. 102–550, title III, § 306, Oct. 28, 1992, 106 Stat. 3764.)

## Notes

### Editorial Notes

### References in Text

Section 201 of the Housing and Community Development Amendments of 1978, referred to in subsec. (b)(4), is section 201 of Pub. L. 95–557, title II, Oct. 31, 1978, 92 Stat. 2084, which enacted section 1715z–1a of this title and amended section 1715z–1 of this title.

Section 1715z–6(f) of this title, referred to in subsec. (b)(7), was repealed by Pub. L. 104–204, title II, Sept. 26, 1996, 110 Stat. 2885.

### Amendments

1992—Subsec. (a). Pub. L. 102–550 inserted “(for each year after the approval of the plan of action)” after “receive” and inserted at end “The Secretary shall take such actions as are necessary to ensure that owners receive the annual authorized return for the housing determined under section 4104(a) of this title during the period in which rent increases are phased in as provided in section 4112(a)(2)(E) of this title, including (in order of preference) (1) allowing the owner access to residual receipt accounts (pursuant to subsection (b)(1) of this section), (2) deferring remittance of excess rent payments, and (3) providing an increase in rents permitted under an existing contract under section 1437f of title 42 (pursuant to subsection (b)(2) of this section).”

### Statutory Notes and Related Subsidiaries

### Study of Projects Assisted Under Flexible Subsidy Program

Pub. L. 102–550, title III, § 318, Oct. 28, 1992, 106 Stat. 3772, directed the Secretary to conduct a study of certain housing projects assisted under 12 U.S.C. 1715z–1 or the proviso of 12 U.S.C. 1715l(d)(5) and submit a report to the Congress regarding any findings and conclusions of the study not later than the expiration of the 1-year period beginning on Oct. 28, 1992.