Replacement housing applies only to existing, individual owner occupied housing. Replacement housing does not apply to rental properties (single-unit or multiple-unit) or to cooperative housing projects. The grantee is responsible for determining the extent of the repairs and rehabilitation prior to any assistance given to an individual homeowner. If the cost of such repairs and rehabilitation is not economically feasible, then the grantee may consider replacing the existing housing with replacement housing, subject to the following:

The HPG grantee:

Shall document the total costs for all repairs and rehabilitation of the existing housing; and

Shall document the basis for the determination that the costs for all repairs and rehabilitation for the existing housing are not economically feasible.

The individual homeowner:

Must meet all requirements of § 1944.661;

Must lack the income and repayment ability to replace their existing home without the assistance of the HPG grantee;

Must have been determined by the HPG grantee and RHS to be unable to afford a loan under section 502 for replacement housing; and

Must be able to afford the replacement housing on terms set forth by the HPG grantee.

The existing home:

Must be demolished as part of the process of providing replacement housing. It will be determined by the grantee and individual homeowner when is the best time for demolition; and

May not be sold to make way for the replacement housing.

The replacement housing:

May be either new housing or a dwelling brought onto the site of the existing housing;

May use no more than $15,000 in HPG funds;

Must meet all applicable requirements of 7 CFR 3550.57; and

May not be sold within 5 years of completion of the project.

Any moneys received by the homeowner from selling salvaged material after demolishing the existing home must be used towards the replacement housing.