HUD Updates the COVID-19 Multifamily Q&A
Here’s how to comply with the latest guidance on CARES Act provisions, building operations, and certifications.
On April 14, HUD published another update to the HUD COVID-19 Q&A document. HUD’s Office of Multifamily Housing Programs, which oversees contracts with private owners of HUD-assisted sites, has been using this document to address the concerns of owners, staff, and residents during this pandemic.
With the latest update, important additions to the document explain the forbearance and eviction moratorium provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. HUD also added information related to staffing and building operations.
CARES Act Guidance
The biggest addition to the FAQs is guidance concerning the implementation of provisions of the CARES Act. The legislation is meant to address the economic fallout of the pandemic and is unprecedented in size and scope. As part of the economic stimulus package, direct payments of up to $1,200 are made to taxpayers, and the legislation increases unemployment assistance benefits by adding $600 per week from the federal government on top of whatever base amount a worker receives from the state.
The FAQ makes clear that the direct stimulus payment is an advance tax credit, and that it and the temporary federal enhancement to unemployment insurance are not to be included in household calculations of income. But HUD notes that the regular state-issued payments of unemployment insurance are treated as income as stated in the HUD Handbook. (See Income Calculations for State-Issued Unemployment Compensation, below).
Beyond income calculation considerations, the CARES Act includes mortgage forbearance and eviction moratorium provisions of interest to owners.
Eviction moratoriums. The CARES Act contains two eviction moratoriums. Section 4024 imposes a broad 120-day moratorium on evictions for nonpayment of rent at many federally assisted or supported multifamily housing. In addition, Section 4023 contains a separate moratorium for sites that utilize the CARES Act’s mortgage forbearance relief. Here are some key points for eviction moratoriums under the CARES Act:
- The eviction moratorium applies to all HUD-assisted multifamily housing, as well as all multifamily housing with Federal Housing Administration (FHA)-insured mortgages.
- Sites that receive mortgage forbearance pursuant to Section 4023 of the CARES Act may not, for the duration of the forbearance period, evict or commence eviction proceedings against a tenant solely for nonpayment of rent or charge late fees or penalties for late payment of rent. Depending on when the borrower invokes the mortgage forbearance provisions, this may have the effect of extending the 120-day eviction moratorium found in Section 4024 past its July 24, 2020, expiration date.
- An owner who takes advantage of mortgage forbearance can’t require a tenant to vacate a unit for 30 days after the date on which the owner provides the tenant with a notice to vacate and issue a notice to vacate for nonpayment of rent or other fees or charges until after the end of the forbearance period.
- The eviction moratorium applies to any eviction based on nonpayment of rent, regardless of whether the nonpayment resulted from unemployment related to coronavirus or other causes.
- Owners aren’t prohibited from issuing a notice of late payment. But the notice may not include a notice to vacate or include fees or charges for late payment. HUD officials have advised that the eviction moratorium doesn’t constitute rent forgiveness and that renters remain responsible for any unpaid rent accruing during the moratorium period.
- Evictions for reasons other than nonpayment of rent or other charges such as criminal activity, domestic violence, or other lease violations, however, are permitted to the extent allowed by HUD Handbook 4350.3, Chapter 8.
- The eviction moratorium may not apply to tenants who “abandon” their unit. Abandonment may occur if a tenant leaves the unit, stops paying rent, and fails to respond to notices from the owner. However, “abandonment” is a “fact-specific determination,” and under the COVID-19 emergency, tenants might vacate a unit without intending to abandon it. Before taking action, owners or agents should ensure that the unit is, in fact, “abandoned” by the family.
Mortgage forbearance. The Q&A document refers to HUD’s recently published Mortgagee Letter 2020-09, which was published on April 10. It outlines protocols for the mortgage forbearance program for FHA-insured, Risk Share, and HUD-held mortgages. However, following these guidelines isn’t mandatory. This mortgagee letter also provides information on the process for HUD-held loans. The letter can be found at www.hud.gov/sites/dfiles/OCHCO/documents/2020-09hsngml.pdf.
HUD notes that mortgage forbearance involves a negotiation between borrower and lender, and that HUD won’t participate in forbearance negotiations unless the loan involved is a HUD-held loan. While the forbearance agreement is between the borrower and lender, a copy of the forbearance agreement must be provided in connection with actions requiring HUD approval, if any are included in the agreement.
Additional flexibility. The CARES Act gives HUD the authority to waive certain requirements for its Section 8 Project Based Rental Assistance, Section 202, and Section 811 programs when HUD deems this authority is needed to expedite or facilitate the use of the funds to prepare for, and respond to situations resulting from, the COVID-19 National Emergency. HUD notes that its waiver authority excludes any requirements related to fair housing, nondiscrimination, labor standards, and the environment. At this time, HUD hasn’t identified any specific waivers for these programs.
Property Management Guidance
When HUD initially issued its FAQ it covered important steps owners should take to prepare for the COVID-19 pandemic. It generally referred owners to guidance issued by the Centers for Disease Control and Prevention (CDC). The updates include guidance confirming that owners and managers can notify residents when another resident has a confirmed case of positive coronavirus cases as long as identifiable information isn’t disclosed and HIPAA and other privacy laws are followed.
The most recent update adds to the property management guidance and includes the following:
Visitor restrictions or bans. Owners and managers have asked if they’re allowed to ban or restrict visitors to their site as a way to prevent the introduction of COVID-19. In a prior Q&A edition, HUD took the position that owners and managers shouldn’t do anything that would violate tenants’ rights and should avoid restrictions on visitors except pursuant to guidance from the CDC and local public health and law enforcement officials.
In the most recent FAQ, HUD appears to be taking a more nuanced approach. It says owners and agents may have the authority to restrict visitors from HUD-assisted multifamily housing sites and should review state and local laws to determine the permissibility of banning visitors. HUD says that if an owner or agent plans to implement a visitor restriction or ban through amended policies or house rules, it recommends it be done as part of a broader, publicly announced plan to respond to the COVID-19 emergency. And owners should consider that residents will still need to receive essential services, such as food deliveries, medications, and personal care assistants. HUD reminds owners are that they must continue to adhere to Fair Housing Act requirements in implementing such restrictions.
Hospitalized resident’s return to site. If a resident hospitalized with COVID-19 returns to his or her unit, HUD says he or she is allowed to do so before receiving a negative test confirmation. The hospital may want to discharge the patient to quarantine and recuperate at home in order to free up much-needed hospital space and resources. HUD encourages owners and agents to coordinate and cooperate with local healthcare professionals and officials to ensure a safe transition for the discharged patient from one location to another.
Major rehab work. HUD says there’s no blanket prohibition on continuing major rehabilitation work, but the decision to continue or suspend such work should be made taking into account the safety of workers, staff, and residents, and should conform to guidance from state and local officials. The federal government hasn’t issued any specific mandates toward the construction industry, so states and cities are enacting their own policies.
Vacancy claims. Some sites have halted move-ins and have been unable to fill vacancies as a result of the COVID-19 emergency. HUD is encouraging owners to continue turning over units when safely possible. HUD has allowed streamlining and electronic options for site staff to continue screening and processing move-ins with limited face-to-face contact.
If there’s a clear reason—such as restrictions based on guidance from their local or state jurisdictions or the unit can’t be made fit for occupancy because utilities can’t be turned on—the owner should delay the move-in and document everything. In addition, HUD’s current guidance states that if a unit can’t be filled because of state or local restrictions or guidance, then the owner should submit the documentation to the local HUD office, and these will be reviewed on a case-by-case basis by the agency.
Annual and Interim Certifications for Lost Income
As the COVID-19 emergency continues, annual income recertification completion rates have dipped as site staff are occupied with other urgent matters. Many sites have purposefully delayed recertifications to limit in-person interactions at the site. The current FAQ addresses the processing of annual and interim recertifications and the protocol to use during the pandemic. The latest update supersedes earlier guidance on this topic.
HUD statute and regulations require family income to be reviewed at least annually to determine the amount paid by the family for the assisted unit. Owners must continue to perform annual and interim recertifications, as requested by tenants, within the required time frames and using current/anticipated data. Annual recertifications must not use the previous year’s income to determine rent and assistance, except in instances when using streamlined income determinations.
According to the FAQ, you can delay the annual recertification completion. While annual recertifications can be temporarily postponed, HUD is asking providers to expedite interim income recertifications as much as possible to trigger the lower tenant rent contributions and higher property subsidy flow.
When the use of traditional procedures for recertifications isn’t possible, the extenuating circumstance instructions provided in HUD’s FAQ, HUD Handbook 4350.3, and the TRACS MAT Guide should be used. HUD considers the CDC’s recommendations for controlling the spread of the virus as well as shelter-in-place and similar orders as qualifying as an extenuating circumstance.
In early April, HUD’s Office of Multifamily Housing issued a clarification on delaying annual recertifications for 90 days. HUD also issued codes for TRACS to document reasons for delays, including a medical code for a resident who’s in a quarantine, and an extenuating circumstance code for residents who are practicing social distancing. The annual recertification adjustments are effective retroactively to the anniversary date.
It’s important to note that a 90-day delay may not be long enough to keep subsidy flowing. HUD reminds owners that accounts overall need to keep at least 90 percent of their certifications in active status in TRACS to maintain subsidy payments. In addition, HUD has said specifically that providers can’t use previous information to complete a “provisional” AR and amend it later, meaning that providers should continue to complete them when safely possible. In particular, staff can make use of the streamlining and electronic options HUD issued in mid-April, such as temporary electronic signatures and documents acceptance and tenant “self-certification” of income changes.
Income Calculations for State-Issued Unemployment Compensation
In compliance with HUD Handbook 4350.3, par. 5-5(A)(1), when a resident receives regular unemployment, the income is calculated assuming the current circumstance will last for a full 12 months. Residents should be advised that the Pandemic Unemployment Compensation of $600 per week (for 17 weeks) is not included when determining the housing assistance payment.
If changes occur later in the year when the benefit stops, the resident should notify the site within a reasonable amount of time, so that an interim recertification can be conducted to change the family’s rent. The resident should provide documentation supporting the date of termination of the benefits, and the site staff will then prepare a recertification removing the unemployment income.
According to HUD Model Lease 90105-A, paragraph 16, residents are required to report when an adult member of the household, who was reported as unemployed on the most recent certification, obtains employment.
- The CARES eviction moratorium bars eviction only for nonpayment of rent.
- Eviction for criminal activity, domestic violence, or other lease violations is still permitted.
- HUD won’t participate in mortgage forbearance negotiations for assisted sites unless the loan involved is a HUD-held loan.
- Assisted sites may have the authority to restrict visitors; review your state and local laws to determine the permissibility of banning visitors.
- You may not bar a tenant who’s COVID-19 positive from returning to his unit until he tests negative.
- You must maintain at least 90 percent of your certifications in an active status in TRACS to maintain subsidy payments.