Under HUD regulations "Substantial Default" means a public housing agency (PHA) has violated a federal statute, federal regulation, or terms of its Annual Contributions Contract (ACC) or other covenants — or, for PHAs designated as troubled performers under PHAS, has failed to execute or comply with a required Memorandum of Agreement (MOA) or to show substantial improvement. HUD must identify the specific statutes/regulations/contract terms violated and the events or conditions constituting the violation; except in emergencies or fraud/criminal cases HUD normally gives the PHA notice and an opportunity to respond and (if appropriate) cure the default within a specified time frame (generally 10–30 days for a response).
HUD’s authority comes from the U.S. Housing Act and implementing regulations. When HUD finds substantial default it may use remedies in 42 U.S.C. 1437d(j)(3) and 24 CFR Part 907, including imposing federal Monitorship, appointing receivers or administrative receivers, and (for smaller troubled PHAs) taking possession of all or part of a PHA ("full HUD possession"). Those steps can transfer operational control and financial management from the local PHA to HUD-appointed officials or a court-appointed receiver; HUD may also limit remedies to specific programs, projects, or operational areas.
"Cure Monitors" are HUD-appointed monitors placed to supervise and verify that a PHA implements required remedial actions under a recovery plan; HUD may select monitors on a competitive or non‑competitive basis. Their responsibilities typically include overseeing procurement, financial controls, program administration, tracking recovery milestones, reporting to HUD, and coordinating technical assistance; they operate under HUD’s statutory/regulatory authority and have the power to supervise or directly manage designated functions but do not replace HUD’s statutory authority to appoint receivers or take possession if problems persist. (Specific appointment procedures and the monitors’ exact authorities are set by HUD case‑by‑case and in HUD’s Monitorship/Risk‑assistance communications.)
A federally‑mandated Recovery Agreement (often an MOA or similar written plan) is a binding arrangement between HUD and a troubled PHA that sets required corrective actions, timelines, milestones, and reporting to fix identified deficiencies. The Manhattan Housing Authority was declared in Substantial Default for failing to comply with the terms of its Recovery Agreement — i.e., it repeatedly failed to correct identified deficiencies in areas such as procurement, financial controls, and program administration as required by the agreement. The HUD notice says the PHA was given notice and technical assistance before Monitorship. (HUD’s public statement lists the general areas but does not publish the full Recovery Agreement in the notice.)
HUD says services should continue uninterrupted ‘‘to the extent feasible’’ while a PHA operates under monitorship or other remedies. Monitorship typically focuses on governance, procurement, financial controls and program administration; routine tenant responsibilities — paying rent, housing rules, and maintenance requests — usually remain in place and tenants’ rights (including protections against wrongful eviction) generally continue under existing law and lease terms. However, in practice tenants may see changes in responsiveness to maintenance or administrative procedures while monitors work to fix systemic problems; HUD may also provide technical assistance or place interim managers if needed. For immediate tenant concerns, tenants should contact the Manhattan Housing Authority, HUD’s local field office, or HUD’s tenant resources.
Duration varies by case; there is no fixed statutory term. Monitorship continues until HUD determines the PHA has met the agreed recovery milestones and cured the substantial default, or until HUD takes stronger action (receiver appointment or possession). HUD will specify cure periods and recovery milestones in its notices or the Recovery Agreement; if the PHA is a troubled performer and fails to improve, statutory remedies (receivership or possession) may be pursued. Historic practice shows durations can span months to years depending on the depth of problems and the PHA’s progress.
The full HUD notice is published on HUD’s website (HUD press release HUD No. 26-010) and supporting regulatory text is in 24 CFR Part 907; statutory authority is in 42 U.S.C. §1437d. HUD’s press release page and the Code of Federal Regulations are the public sources for the notice and legal documents.