This final rule implements a program to allow public housing agencies (PHAs) to use proceeds of their Capital Fund program for financing activities, including payment of debt service and housing development and modernization activities. A PHA may grant a security interest in future Capital Fund grants, subject to the appropriation of those funds by Congress. This final rule follows a July 18, 2007, proposed rule that addressed the use of public housing Capital Funds and Operating Funds for financing activities, and takes into consideration the public comments received on that rule. This final rule addresses only the use of public housing Capital Funds for financing activities. Given the public comment received on the proposed rule, HUD determined that further consideration must be given to HUD's proposal for use of operating funds for financing activities. The final rule makes changes to the proposed rule in response to public comments, including a streamlined approval process for standard and high-performing PHAs that have borrowings against their Capital Funds within certain limits, or that propose to use their Capital Fund financing proceeds in a mixed-finance development. The final rule, also in response to comment, provides greater specificity than the proposed rule with respect to submission requirements for requests for Capital Fund financing transactions.