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03.27.20

Have your tenants lost income? HUD has a code for that. Sort of.

BY Kathie Soroka

Editor's note: An updated version of this blog post was published on April 3, 2020, after additional HUD guidance clarified many of the questions posed below.

HUD-assisted multifamily property owners may submit interim tenant income recertifications if tenant incomes change because of COVID-19. These interim recertifications can reduce the tenant’s portion of rent and increase the HUD subsidy to maintain the total contract rent level. The standard certification process requires in-person tenant interviews and obtaining original signatures to forms. If COVID-19 makes those requirements infeasible, HUD has issued guidance on flexibilities property owners may have. Property owners may skip tenant interviews and obtain tenant signatures at a later date.

HUD guidance can be found in their Questions and Answers for Office of Multifamily Stakeholders (FAQs). FAQs #6 and #7 address annual tenant income certifications and interim tenant income certifications. NP has also issued Alerts summarizing much of the guidance set forth in the FAQS, including information on tenant recertification (see the 3/16 Alert, the 3/19 Alert and the 3/26 Alert). 

To address logistics, HUD has issued a technical notification on COVID-19 (coronavirus) Impact on Tenant Annual and Interim Recertifications (TRACS Notification). When entering annual recertifications (ARs) in HUD’s Tenant Rental Assistance Certification System (TRACS), if tenants are unable or unwilling to come into the office to sign the AR, HUD will allow property owners to submit the AR without tenant signature. In this case, the property owner (or contract administrator, as applicable) should use one of three codes to indicate that extenuating circumstances prevented the signature:

  • Code 1 — Medical (if the tenant has been quarantined)
  • Code 2 — Late certification due to accommodation or extenuating circumstances
  • Code 10 — Other

However, the TRACS Notification differentiates ARs from interim certifications. The notification states that for interim certifications, property owners must follow HUD Occupancy Handbook 4350.3, Chapter 7 and TRACS guidance. It is unclear whether HUD will allow property owners to use the same codes provided for ARs for interim certifications.

The FAQs are also a bit ambiguous. The originally published FAQs stated that property owners may omit signatures and forego in-person interviews for recertifications. However, the March 24 additions to the FAQs muddied the waters. The 3/24 FAQs state that “HUD will allow electronic signatures” if property owners obtain original signatures at a later date. Does this mean that property owners cannot simply forego obtaining tenant signatures but must obtain “electronic signatures?” If so, what counts as an “electronic signature?” Digital signatures? PDFs? An email from the tenant?

In addition, the FAQs go on to state that form “HUD-9887/9887A, which is usually signed at the beginning of the recertification process and allows the owner/agent to begin verifying documentation, requires an original, ‘wet’ signature.” Does this mean that property owners must continue to receive original signatures on form HUD-9887/9887A?

Other documentation necessary for recertification, such as paystubs, bank statements, and public assistance documents, can be sent via email. In every case, HUD expects the owner/agent to obtain the original signature at a later date.

We expect HUD to continue to update its guidance on these questions. We will continue to provide updates through blogs and alerts as additional information or clarification is provided.

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Author

Kathie Soroka

Counsel

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