WASHINGTON -- A key House lawmaker has introduced legislation to alter proposed Housing and Urban Development Department rules so as not to hamper the ability of private, nonprofit organizations to acquire low-income units under a new program designed to preserve affordable housing.

Once that program gets off the ground, those organizations are expected to issue billions of dollars in tax-exempt bonds to finance their purchases. But implementation has been slow because housing industry officials and lawmakers have been in a tug of war with the department over the regulations it proposed in April.

House Banking Committee Chairman Henry B. Gonzalez, D-Tex., had said repeatedly he would take action himself if he determined HUD was not going to change the rules on its own. The congressman apparently reached that point last week, introducing legislation with changes suggested by the housing industry and legislators.

The measure "simply restates the Congress's original intent so that the preservation program can proceed as we intended," Rep. Gonzalez said in a statement.

"HUD seems to want to divine new intent to further their own objectives and subvert ours," said the congressman, who is also chairman of the banking panel's housing and community development subcommittee.

That program was created by Congress last year to solve the so-called prepayment problem, involving thousands of housing units built in the 1960s and 1970s by private developers who received HUD-subsidized 40-year mortgage loans. In return for the subsidies, the developers were required to keep low-income tenants in the units for at least 20 years.

Many of the mortgages on those projects have reached their 20th year, prompting developers to repay their loans so that they can be released from low-income requirements and turn the units into more expensive rental or condominium properties.

The purchase program is designed to stave off an expected wave of prepayments by offering financial incentives to developers if they agree to sell the properties to entities -- mainly 201(c)(3) organizations -- that are interested in bolstering the stock of low-income housing. Housing industry officials have predicted that nonprofits are likely to finance their purchases with mortgages insured by the Federal Housing Administration and financed with tax-exempt bonds.

But the regulations proposed by HUD in April to implement the program set up roadblocks that could make bidding difficult for the non-profits and make the mortgages -- and in turn, the debt financing -- too costly, housing lobbyists have said.

In June, Rep Gonzalez and other lawmakers wrote to HUD Secretary Jack Kemp urging him to repair the regulations as quickly as possible. Last month, two other key housing legislators -- Sen. Barbara Mikulski, D-Md., and Sen. Alan Cranston, D-Calif. -- indicated they might act to fix the regulations in legislation making appropriations for the department for fiscal 1992. But that legislation passed last week without such a provision.

In offering his bill, Rep. Gonzalez chided HUD for failing to listen to a near-unanimous call from the housing industry to revamp the regulations.

"It seems remarkable to me that despite the fact that virtually all the comments expressed the exact same concerns, from members of Congress, tenants [and] local governments, to owners, HUD has apparently refused to budge," he said.

One of the problems in the HUD rules would drive up the cost of the mortgages, housing industry officials have said. HUD is requiring the term of the loans to be no more than 20 years or the remaining term of the original loan on the property.

Buyers will need longer-term loans so that they can stretch out their administrative costs over a greater period of time, housing officials said. Mr. Gonzalez's bill would permit 40-year terms for the mortgages.

Another problem is the way the regulations give top priority to tenants groups as purchaser of the units, which is lawmakers have warned would discourage nonprofits from coming forward. Once a property goes up for sale, the seller can accept a bid only from those groups for the first 12 months. Bids from nonprofits or other interested purchasers must be held until the end of that period.

Under Mr. Gonzalez's bill, non-profits would not have to wait a year to bid on the property. Sellers could accept their bids at any time "without HUD's interference," he said.

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