Follow Three Dos & Don'ts When Rejecting Applicants
HUD regulations have three key requirements when rejecting applicants. Owners must not discriminate against an applicant based on race, color, religion, sex, national origin, familial status, or disability. Also, for Section 8 program owners, HUD requires owners to comply with the Violence Against Women Act (VAWA). The VAWA protects victims of domestic violence, dating violence, or stalking, as well as their immediate family members, from being denied housing assistance if an incident of violence is reported and confirmed. An applicant’s status as a victim of domestic violence, dating violence, or stalking isn’t a basis for denial of rental assistance or for denial of admission, if the applicant otherwise qualifies for assistance or admission. And, lastly, owners must notify the applicant promptly in writing of the denial of admission [HUD Handbook 4350.3, par. 4-9(A)].
Consequently, owners may reject an applicant if the applicant:
- Doesn’t meet eligibility requirements for a particular unit or site;
- Is unable to disclose and provide verification of Social Security numbers (SSNs) for all household members, except for those household members who don’t contend eligible immigration status or tenants who were 62 or older on Jan. 31, 2010, whose initial determination of eligibility was begun before Jan. 31, 2010;
- Doesn’t sign and submit verification consent forms or the Authorization for Release of Information (forms HUD-9887 and HUD-9887-A);
- Has household characteristics that aren’t appropriate for the specific type of unit available at the time, or has a family of a size not appropriate for the unit sizes that are available. Here, the owner may deny the applicant admission to a specific unit, but the applicant may continue to wait for another unit; for example, if there’s an accessible unit available and the applicant’s household doesn’t need the accessible features of the unit and there are other applicants or tenants on the site waiting list who need such a unit;
- Includes family members who didn’t declare citizenship or noncitizenship status, or sign a statement electing not to contend noncitizen status. However, an owner should permit families to revise their application to exclude proposed family members who don’t declare citizenship or eligible noncitizen status; or
- Doesn’t meet the owner’s tenant screening criteria [HUD Handbook 4350.4, par. 4-9(B)].
Whatever reason you have when rejecting an applicant, you can’t immediately give an available unit or waiting list spot to the next eligible applicant after you send off the rejection letter. HUD rules give rights to assisted site applicants that most would-be renters don’t have, including the right to appeal your rejection.
Here are three Dos & Don’ts to keep in mind when rejecting applicants. Following them will help you comply with HUD rules, while not losing out on income for vacant units.
DO Give Applicant Opportunity to Appeal Rejection
HUD rules require you to give every applicant you reject an opportunity to appeal the rejection. Rejection notices must be in writing and include specifically stated reasons for the rejection and notify the applicant of his or her right to respond to the owner in writing or request a meeting within 14 days to dispute the rejection. Also, the notice must state that persons with disabilities have the right to request reasonable accommodations to participate in the informal hearing process [HUD Handbook 4350.3, par. 4-9(C)].
If an applicant requests a meeting, a staff member other than the one who initially rejected the applicant must conduct the meeting [HUD Handbook 4350.3, par. 4-9(D)(1)]. And you must send the applicant a written final decision on his appeal within five business days after getting the applicant’s written response or holding an appeal meeting [HUD Handbook 4350.3, par. 4-9(D)(2)].
DON'T Rush to Give Away Available Unit or Spot on Waiting List
You may think that once you reject an applicant, you can rent an available unit to another applicant or place the next applicant in the rejected applicant’s waiting list spot during the appeal period. But doing so could place you in a difficult position.
HUD rules don’t expressly say that you must hold a unit vacant or keep a waiting list spot open during the up-to-19-day appeal period. But if you give away the unit or the applicant’s waiting list spot while an appeal is pending, the right to appeal is meaningless.
Rejected applicants could complain to HUD that you treated them unfairly, or even claim that you discriminated against them based on, say, race or religion, if you give away “their” unit or spot to other applicants before considering their appeal. So it may be in your best interest to hold a rejected applicant’s spot until after the appeal process is complete or until after the 14-day period ends with no appeal.
It’s important to note that HUD imposes record-keeping requirements when dealing with waiting lists. Once an applicant is taken off the waiting list, the owner must retain the application, form HUD-92006 completed by the applicant, initial rejection notice, applicant reply, copy of the owner’s final response, and all documentation supporting the reason for removal from the list for three years [HUD Handbook 4350.3, par. 4-22(B)].
DO Bill HUD for Vacancy Payments
You don’t have to lose money keeping a unit vacant while you wait for a rejected applicant to exercise his right to appeal. HUD recognizes the financial risks owners have in their efforts to provide affordable housing. HUD’s intent is to ensure that owners involved in this effort remain financially viable partners. And the special claims process is a tool that owners may use for reimbursement of qualified financial loss. Information on this claims process can be found in HUD’s Special Claims Processing Guide (HSG-06-01).
One category of special claims is vacancy loss. A special claim for vacancy loss after rent-up is compensation to the owner for the loss of rental income of a unit that was previously occupied by an assisted tenant but has been vacant for circumstances beyond the owner’s control. Special claims for vacancy loss applies to Section 8, Section 202/8, Section 202 PAC, Section 202 PRAC, and Section 811 PRAC project types.
Owners can’t submit a special claim for the unit when termination of rental assistance was based on the tenant’s income increasing to where the tenant no longer qualifies for assistance or for the period of occupancy by a police officer or security personnel [HSG-06-01, p. 3-2(B)(2)]. However, an owner is eligible to submit a special claim for vacancy loss after rent-up if:
- The vacancy loss was for a unit that was previously occupied by an assisted tenant;
- The vacated household wasn’t at market rent unless termination was for failure to recertify;
- Move-out was transmitted through TRACS;
- All attempts have been made to re-rent the unit;
- Applicants were rejected only for good cause; and
- The unit was ready for occupancy [HSG-06-01, p. 3-2(B)].
To submit a claim you must have supporting documentation as well. This includes a copy of signed HUD-50059 Move-In, which shows the security deposit required from the resident who’s vacating the unit. Documentation that the appropriate security deposit was collected from the resident who’s vacating the unit also includes a copy of the original lease, tenant ledger card, a copy of the security deposit receipt; a copy of the security deposit disposition notice provided to the vacating resident indicating the Move-Out date, amount of deposit collected, amount of deposit returned, and any charges withheld from the deposit; and documentation that verifies the date the unit was ready for occupancy.
If the new resident was selected from the waiting list, you should be able to provide a copy of the waiting list from which the tenant was selected. And if the new resident wasn’t selected from the waiting list, you must be able include documentation of marketing efforts such as advertising or invoices for advertising expenses that substantiate compliance with the site’s affirmative fair housing marketing plan.
Typically, vacancy payments equal 80 percent of the vacant unit’s rent and continue for up to 60 days, starting the day after the unit is ready for occupancy and ending the day before the new move-in [HSG-06-01, par. 3-3(F)(1); par. 3-4(B and C)]. However, for Section 202 PRAC and 811 PRAC sites, the claim amount may not exceed 50 percent of operating rent [HSG-06-01, par. 3-3(F)(2)].
If submitting a claim for vacancy payments, the completed claim form and documentation must be received by HUD or the contract administrator within 180 calendar days from the date the unit is available for occupancy [HSG-06-01, par. 3-4(A)]. Because the ending date of the claims period ends on the day preceding the day on which the unit is re-rented, or 60 calendar days from the date the unit is available for occupancy (start date), whichever is earlier, you can’t submit a vacancy claim until either of these events has occurred [HSG-06-01, par. 3-4(C)].