HUD issues frequently asked questions for owners of multifamily assisted housing on dealing with Covid-19

March 16, 2020

Affordable Housing Alert

Author(s): Deborah VanAmerongen

We discuss information pertinent to affordable properties dealing with residents who may be impacted by the virus.

HUD’s Office of Multifamily Housing has recently published FAQs for owners and managers of HUD assisted housing. Not surprisingly, many of the FAQs reference CDC guidance that is not specifically tailored to housing owners and managers, but can still provide useful information. While much of the HUD FAQs is focused on issues that all owners may encounter, a few takeaways are pertinent to affordable properties dealing with residents who may be impacted by the virus:

HUD encourages owners to adjust rent payments and enter into forbearance agreements for tenants impacted by the virus, but states that “no additional subsidy funding has been made available.” HUD also encourages owners to consider offering tenants who are quarantined extra time to complete income recertifications.

HUD also advises owners to process interim income recertifications for residents who report a decrease in income that will last more than one month. The guidance on interim recertifications appears in HUD’s Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, Section 2. For owners and agents who may not deal with interim recertifications frequently following are the basic rules:

Tenants may request an interim recertification due to any changes occurring since the last recertification that may affect the total tenant payment (TTP) or tenant rent and assistance payment for the tenant. Among the reasons for an interim recertification are decreases in income including, but not limited to, loss of employment or a reduction in the number of hours worked by an employed family member.

Upon receiving a tenant request for an interim recertification, owners must process a recertification of family income and composition within a reasonable time, which is only the amount of time needed to verify the information provided by the tenant. Generally, this should not exceed four weeks. Once the interim recertification is complete the owner/agent must electronically transmit the interim recertification to the contract administrator or HUD to update the tenant information in TRACS.

Once owners are able to verify the tenant’s new income, they must recertify the tenant, and retroactively apply any reduction in rent to the first day of the month after the date of the action that caused the decrease in income.

Owners must provide the tenant with written notice of the effective date and the amount of the change in TTP or tenant rent resulting from the interim recertification. For interim recertifications, both the change in assistance payment and change in TTP or tenant rent are effective on the same day.

In addition, HUD’s Office of Public and Indian Housing issued their own FAQ, which has implications for owners of properties where residents have Housing Choice Vouchers (HCVs) or a Project-based Voucher (PBV) contract.

Assisted families who are covered by the HCV or PBV programs currently have the ability to report decreases in income. The public housing agency PHA has authority to adjust the family share of the rent and grant hardship exemptions consistent with applicable regulations and the PHA’s policies. A decrease in family income is not the basis for a termination of tenancy action or eviction.

The Multifamily Section 8 guidance in the HUD Handbook does not apply to residents covered by the HCV or PBV programs. There is not one source of information to point to for owners or residents dealing with a loss of income. Each PHA has a Section 8 Administrative Plan and the guidance on how they will process such a request should be in their Administrative Plan.

Owners are encouraged to continue to check HUD’s website for updates. Nixon Peabody has also published general guidance on coronavirus issues for owners and managers of both market-rate and affordable multifamily housing.

The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

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