Highlights from HUD's July 31 Multifamily Q&A

Regulation | July 31, 2020 | by Linda Couch

On July 31, HUD issued its first update since May 21 of its Q&A for Multifamily Housing programs. HUD’s Q&A document relays HUD’s guidance on operational and procedural questions related to the safe administration of HUD-assisted programs during COVID-19.

On July 31, HUD issued its first update since May 21 of its Q&A for Multifamily Housing programs. HUD’s Q&A document relays HUD’s guidance on operational and procedural questions related to the safe administration of HUD-assisted programs during COVID-19.

Updates in the July 31 Q&A:

Cannot Require Tests or Results. The Q&A clearly states there is no regulatory or statutory basis under the Section 8, 202, or 811 programs for an owner or agent to require tenants to take a health or medical test and disclose results as a condition of tenancy. The Q&A states that, if an owner or agent believes there is a basis in state or local law to require testing and disclosure, their counsel should provide the local HUD Multifamily Office with the legal authority. Owners and agents can encourage, but not require, tenants to get testing and disclose the results. However, tenant testing cannot be classified as a project expense.

Face Masks. As to whether owners and agents can require residents to wear face masks, HUD says that lease terms and/or house rules can be amended in accordance with state and local law and HUD requirements, and that they should be “within the bounds of common sense, […and] not excessive or extreme.” HUD reminds owners and agents that Notice H 2012-22 states that owners and agents must notify existing tenants, who have completed their initial lease terms, of modifications to the House Rules 30 days prior to implementation. Tenants who have not yet completed their initial lease terms must be notified 60 days prior to the end of their lease terms. House rules pertaining to face coverings must be reasonable and consistent with state and local law and directives from public health officials. Changes to house rules may be sent to the local Multifamily Office or Performance-Based Contract Administrator (PBCA) for review. While neither HUD nor the PBCA approves house rules, the Q&A states, they can advise if any rules violate HUD statutory, regulatory, or programmatic requirements. This latest Q&A states that failure to comply with face covering requirements may be treated as a lease violation only if house rules are reasonable and consistent with state and local law and directives, and if the house rules are identified in the lease as an attachment to the lease agreement.

Management and Occupancy Reviews.

  • As LeadingAge has reported, in May, HUD lifted the suspension of Management and Occupancy Reviews by PBCAs in locations where there are no restrictions by state or local law or ordinance to prevent them from performing these reviews. In the Q&A, HUD includes the particulars of its May 22 Memo, including that a physical on-site visit to the property must still occur to document the physical conditions, general appearance, and security of the property, and the visit should include a visual assessment of each building, including the common areas, and the grounds of the property; an on-site, entrance/exit interview with the owner/agent should occur, except in instances where state or local law or ordinances prevent such meetings. In instances where these interviews are prohibited from occurring on-site, they should be conducted by telephone or email and documented as such in the MOR Report.
  • Regarding MORs, the Q&A also states that PBCAs must continue to conduct MORs in accordance with their approved workplans regardless of owners’ willingness to provide electronic tenant files. Tenant file reviews may be conducted remotely when owners/agents voluntarily create and transmit electronic tenant files to the PBCA in accordance with all requirements of Notice H 2020-4 (use of this new Notice on electronic signatures and files is throughout the latest Q&A). Personally identifiable information (PII) must be encrypted or transmitted and stored in a secure manner to prevent its release. Violations of the Privacy Act may be subject to fines up to $5,000. Owners/agents and reviewers must comply with EIV Data Sharing Agreements to prevent any prohibited use of or access to EIV records. And, all other portions of the MOR, including the Desk Review and On-site Review, including the review of tenant files, must be completed in their entirety.

Guidance for Positive Residents. In the event of a confirmed COVD-19 case at a HUD-assisted property, HUD is now encouraging owners and management agents to provide residents with information on how to care for themselves and when to seek medical attention. HUD’s latest Q&A links to these two CDC sources that owners are encouraged to share with positive-testing. Owners should encourage such residents to self-isolate and limit their use of shared spaces on the property.

How to Treat Unemployment Insurance Benefits. The Q&A breaks down the CARES Act’s three changes to unemployment insurance benefits for purposes of how these benefits should for owner and agents. The CARES Act’s Pandemic Unemployment Assistance, an unemployment benefit for individuals who are self-employed, seeking part-time employment, or whom otherwise would not qualify for regular unemployment insurance (UI), must be included as annual income. The CARES Act’s Federal Pandemic Unemployment Compensation (FPUC) program, providing the additional $600 in federal benefits per week for weeks of unemployment ending on or before July 31, 2020, must NOT be included in annual income. Finally, the CARES Act’s Pandemic Emergency Unemployment Compensation, which  provides an extension to regular unemployment insurance benefits for eligible individuals, allowing them to receive up to 13 weeks of additional benefits (this extends UI from 26 weeks to 39 weeks in total), must be included in annual income. HUD also notes that regular payments of unemployment insurance (issued by the state) are treated as annual income according to existing HUD policy.

Income Recertifications. Following an income recertification, owners/agents must then retroactively apply any reduction in rent starting with the first day of the month after the date of the action that caused the decrease in income.

Link to HUD’s July 31 FAQ.