3-003.01G2 Nonallowable Shelter Costs

3-003.01G2

The following are not allowable as shelter costs:

1. Mortgage payments on unsecured or personal loans. A loan is considered secured only when a lien is placed on the property by the lender. Continuing charges leading to ownership of a property are not considered an unsecured loan and are allowable shelter costs;

Exception when there is no loan:
Examples:
Father and son are not living together. Son lives in a trailer that he is purchasing from his father. The father and son have a signed statement that the son will pay his father $625 per month to purchase the trailer. There is no loan against the property and the father will retain the title to the property until the son has paid in full.
  1. Given the fact that a loan is not involved, the distinction of whether or not the loan is secured by a lien placed on the property does not apply. Continuing charges leading to the ownership of the shelter would be defined as shelter costs. The signed statement provides appropriate documentation and the shelter cost is allowable.
  2. In the exception above, would it make a difference if the trailer were in both the son and father's names and the son was making payment to the father?
The determining factor in this situation is who is incurring the costs. If the trailer were in both names, the son would be allowed the shelter costs as he is incurring the cost and is responsible for payment.
  3. In the exception above, the father is paying the taxes and insurance on the trailer and then billing the son for these expenses in addition to the regular monthly payment.
Note: When there is an actual loan against the property and an individual is paying on the loan, the loan must be secured by a lien on the property.

2. Costs of insuring the contents of the shelter, such as furniture and personal belongings, liability, etc.

3. One time deposits required by landlords;

4. Charges for repair of a home which has been substantially damaged or destroyed due to a natural disaster when these charges have been or will be reimbursed from any source;

5. Down payments;

6. Closing costs as a whole are not allowable. However, if the closing costs can be itemized to identify allowable costs such as taxes and insurance, these costs can be allowed;

7. Repairs and/or improvements in exchange for rent (no income is counted and no deduction for rent is allowed);

8. The costs of repairs as the result of wear and tear, incidental repairs, and improvements;

9. Late fees or charges for being late in making shelter payments. Amounts carried forward from past billing periods are not allowable;

10. Shelter expenses being paid by an insurance company; and

11. Any amount of housing costs (including utilities) covered by HUD or other vendor payments to the landlord.

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