Meghan Rileyⁱ

The Oakland Housing Authority's (OHA) Section 8 Housing Choice Voucher Program (commonly referred to as Section 8), funded by the U.S. Department of Housing and Urban Development (HUD), offers two self-sufficiency and asset-building programs to Section 8 participants: the Family Self-Sufficiency Program and the Section 8 Homeownership Program. Unfortunately, disabled Section 8 participants are often unable to fully utilize these programs because of restrictions on their income, lack of available resources and barriers due to particular disabilities.

The Section 8 Program helps low-income persons rent housing from property owners in the private market. Section 8 participants pay a portion of the rent based upon their income (usually 30%-40% of their income) and OHA pays the difference. OHA's Section 8 program serves nearly 11,000 low-income households in Oakland. Of this number, 35% (approximately 3,850) have at least one family member who is disabled.

The Family Self-Sufficiency (FSS) Program is a voluntary work-incentive program available to all Section 8 participants. The goal of the FSS program is to assist clients to become independent from welfare assistance programs by increasing their earned income. FSS clients establish a 5-year plan with the help of an FSS Coordinator. The plan specifies the client's work goals and also outlines the steps needed to help achieve those goals, including education, job training and child care. The FSS Coordinator provides ongoing career planning assistance and referrals. However, the most valuable aspect of the FSS program is the escrow account. On the Section 8 program, when a participant earns more money, their share of the rent also increases. On the FSS program, when a client's income increases, their portion of the rental payment likewise increases. If an FSS client's rent increases due to increased earned income, OHA places the money from HUD that would have been lost to the client in an escrow savings account. When the client successfully graduates from the FSS program, they receive the entire escrow account, including any earned interest, tax-free. There are no restrictions on use of the savings account, most clients pay down debt, make a down payment on a home or buy a car.

Because the FSS program requires clients to achieve suitable employment in order to graduate, few disabled clients join the FSS program. Each individual PHA is allowed to determine what is considered suitable. So, for a person with a disability, if they are unable to work a typical full-time job, the PHA could determine that a part-time position is considered suitable (§984.303 (4) Employment Obligations). OHA FSS Coordinators have found via interviews with disabled clients interested in participating in the FSS program that many of these clients were fearful of losing their social security income (SSI). Once a client receiving SSI starts earning income from employment their SSI check is gradually phased out until the countable earned income exceeds the benefit. Of the disabled clients who have joined the FSS program, those that have been successful usually already had supportive services in place (i.e. working with an independent living center or vocational rehabilitation program), were already actively pursuing employment or career training, and did not have severe deterioration in their physical conditions.

Another asset development program that OHA offers to its Section 8 participants is the Section 8 Homeownership Program. This program allows first-time homeowners participating in the Section 8 Program to use their subsidy to pay a mortgage and associated homeownership expenses (i.e. utilities, maintenance and upkeep of the property) as opposed to paying rent. Lenders that partner with OHA consider the Section 8 subsidy to be a part of the client's income and therefore structure the loan to include the monthly assistance from OHA. In general, clients are able to qualify for a loan at least twice the amount than if they applied for a mortgage loan based solely on their income.

Although the program is available to clients with disabilities, there are still a number of hurdles faced for those who wish to purchase a home through the program. One of the difficulties is the down-payment requirement. HUD requires that participants have at least one percent of the purchase price of the home as a down payment. In Oakland, CA where the median priced home is nearly half a million dollars, one percent is often more than the $2,000 ($3,000 for a couple) a client receiving SSI is allowed to hold in assets based on Social Security Administration guidelines.

Another barrier has been the complexity of loan programs for people with disabilities. In order to receive a loan pre-approval with a purchase price that is consistent with competitive housing markets, all of the Section 8 homeowners use a combination of down payment assistance programs to leverage the first loan amount. Typically, clients receive on average $70,000 to $100,000, using a combination of local, state and federal down-payment assistance programs. OHA has been unsuccessful in finding a lender approved for these disabled loan programs as well as the myriad down payment assistance programs. Additionally if the lender offers a disabled loan program they may not be able to offer loans based on the Section 8 Homeownership subsidy.

OHA had some success with a below-market interest rate loan created by the California Housing Finance Agency (CalHFA). The loan program has a mortgage reserve requirement, meaning that clients would need to have two-months of mortgage payments in their savings account in addition to their down payment. Due to the SSI asset restriction this would make it difficult for disabled clients to utilize their loan program, CalHFA's credit underwriting department (Mortgage Insurance Services) made an exception to waive the reserve requirement if the client is a disabled, Section 8 client. Unfortunately due to underwriting changes, this loan program has become increasingly more difficult to use in conjunction with the Section 8 subsidy. Advocates and housing authorities need to work together on the federal level to continue to develop waivers and regulations that enable disabled individuals to utilize asset-development programs. In the meantime, OHA continues to search for creative ways to broaden access to these programs for its disabled clients.

i Meghan Riley received a B.A. in Economics from the University of California at Berkeley. Since then she has worked at various non-profit affordable housing agencies as a resource counselor, program coordinator, and doing research in the area of the Section 8 Housing Choice Voucher Program.

Currently she is the Section 8 Homeownership Coordinator at Oakland Housing Authority.