HUD’s Office of Multifamily Housing issued its most recent FAQs for housing providers dealing with COVID-19. The new information covers a variety of questions related to mortgage relief requirements, allowable use of project funds, and resources for food-insecure older adults in affordable housing communities. The FAQs also offer limited insight into SBA loans for housing providers.

Despite urgent requests from LeadingAge and our members, the new FAQs do not allow additional flexibility or subsidy for extended vacancies. The May 1^st FAQs also note that the document is intended to provide guidance and clarification of HUD’s policies, but does not have the force and effect of law.

LeadingAge continues to urge HUD to issue formal rulemaking on key issues, to expand vacancy assistance payments, and to extend subsidy past 14 days when a sole tenant passes away but family is not able to vacate the unit.

Resources for Food-Insecure Residents

As financial burdens increase, community managers have noted upticks in food insecurity among residents. HUD’s May 1^st COVID-19 FAQs include key resources for assisting residents with food access, including a resource list that can be distributed to apartments. The FAQs also provide a directory of local food pantries based on zip code, and recommend connecting with local Eldercare administrations for community-based care. Lastly, HUD recommends sharing information with residents about potential eligibility for USDA food assistance (SNAP) if they have lost their incomes.

Subsidy Considerations for Move-Ins and Move-Outs

Many providers have struggled with the issue of extended vacancies during COVID-19, whether resulting from delayed move-ins, or from situations where family MEMBERS cannot vacate a unit due to travel restrictions. LeadingAge has urged HUD to expand its vacancy claims process to help owners stay solvent even as they pause move-ins to accommodate the concerns of new and existing residents. In addition, LeadingAge has requested that the agency extend subsidy payments beyond 14 days after the sole resident of a unit passes away.

In the new FAQs, HUD has said that they are not expanding their 14 day subsidy cut-off, leaving families and providers in a difficult financial situation: “At this time, HUD is not extending subsidy payments past the earlier of 14 days after the date of the tenant’s death or the date the unit was vacated. Owners and family of the deceased should follow Center for Disease Control (CDC) guidelines and the direction of local health officials when determining whether the possessions are safe to remove from the unit.”

Related to move-ins, HUD has continued their stance of reviewing vacancy claims on a case-by-case basis, while taking into consideration restrictions from local or state jurisdictions. LeadingAge will continue its advocacy on behalf of members for these issues.

Violence Against Women Act (VAWA) Protections

The 120 day evictions moratorium only applies to non-payment of rent or other fees. The moratorium does not impact lease violations related to domestic violence, stalking, and other harassment covered by VAWA. HUD’s new FAQs make clear that protections under the Violence Against Women Reauthorization Act are still in full effect.

Use of Project Funds for PPE and Meals

For housing providers dealing with COVID-19 containment and prevention, unexpected costs continue to climb. In response to questions about eligible uses of project funds, HUD has said that providers can access operating accounts to pay for supplies, including masks and protective gloves, as decided by the owner: “Due to the extreme public health risk presented by COVID- 19 during this national emergency, providing staff and residents access to protective gloves and masks, at the owners’ discretion, is an allowable use of project funds.”

However, payment for direct services to residents, such as meals for those who are home-bound, is not an eligible use of project funds. LeadingAge is asking Congress to approve more money for service for residents whose community- or home-based supports have fallen short during the crisis.

Mortgage Relief, Escrow Accounts, Construction Loans, and APPS Flags

In response to declining rent receipts and increased property expenses related to the crisis, HUD issued a standard forbearance agreement in April, 2020. The mortgagee letter implements assistance for multifamily housing providers, as enacted by the CARES Act. A summary of mortgage relief options is available from LeadingAge.

HUD’s new FAQs clarify that this mortgagee letter remains in effect until HUD issues a formal rescission; in addition, the FAQs state that the CARES Act does not require borrowers to have utilized other resources, such as Working Capital Escrow or Operating Deficit Escrow accounts, before accessing mortgage forbearance. In fact, the CARES Act requires lenders to grant forbearance to eligible multifamily borrowers upon request.

However, HUD has said that a construction or rehabilitation loans under Section 221(d)(4) will be considered “temporary financing,” making them ineligible for forbearance in the context of the CARES Act. Another importance consideration for providers in need of forbearance is the role of the Active Partners Participation System (APPS) flags. According to the new FAQs and a previously-recorded HUD update, the agency will not consider loans that are in forbearance to be delinquent or in default, as long as the forbearance agreement occurs before a payment is missed; however, HUD retains the discretion to place a flag if the borrower defaults under the forbearance agreement.

Small Business Administration Loans for Payroll Protection

Because of the financial downturn, housing providers have had many questions about their eligibility for the SBA’s Payroll Protection Program (PPP) loans. HUD has said it is working to clear obstacles for HUD properties that are seeking to participate in the program, leaving the SBA to determine further eligibility for housing providers.

Specifically, HUD’s FAQs state: “HUD is reviewing its subordinate financing requirements for compatibility with the SBA PPP program and has given Multifamily field staff guidance to approve SBA PPP loans without limiting repayment to surplus cash for borrowers with market rate properties. However, repayments must come first from available surplus cash, if any, before drawing on other funds to repay the loan.”

LeadingAge members still have many question related to eligibility for SBA loans, how they impact payroll allocations, and how they affect secondary financing requirements. LeadingAge has sent a letter to HUD Secretary Carson and other key leaders asking for clarity.