HUD Multifamily Issues Updated FAQs

Regulation | October 14, 2020 | by Linda Couch, Juliana Bilowich

On October 14, HUD issued updated COVID-19 FAQs for Multifamily Housing providers, including HUD Section 202 and Section 8 providers. The agency had last issued updated FAQs on July 31.

On October 14, HUD issued updated COVID-19 FAQs for Multifamily Housing providers, including HUD Section 202 and Section 8 providers. The agency had last issued updated FAQs on July 31.

HUD’s newest FAQs for Multifamily Housing providers include updated guidance on:

  • CDC’s order to halt evictions
  • Offering COVID-19 tests and flu shots on premises
  • REAC inspections and MORs

Below are several highlights from the new FAQs. LeadingAge will continue to work with HUD to support housing providers navigating the pandemic.

CDC eviction moratorium – The new HUD FAQs include a segment on the CDC’s eviction moratorium in place from September 4th through December 31. The CDC, HUD and other federal agencies recently jointly released similar eviction moratorium FAQs, including a discussion of timing and eligibility for the eviction protections.

  • Applicability: The CDC’s eviction order applies to all HUD Multifamily Housing programs, including Project Based Section 8, Section 202, and Section 811. The moratorium applies only to non-payment of rent; evictions for other lease violations can still continue.
  • Resident Protections: Under the Order, HUD-assisted residents must sign and submit a declaration to receive the eviction protections. The signed declaration must be submitted to the owner or management agent; until the declaration is signed and submitted to the owner or agent, the CDC eviction protection is not in place. Owners and agents are not required to verify the certifications in the declaration.
  • Declaration Submission: HUD recommends residents send the signed declaration using a method that provides them a time-stamped receipt, such as via email, and that residents keep a copy of the signed declaration for their records. HUD has made translated versions of the declaration available on its website.
  • Resident Notification: While the CDC order does not mandate resident notification, HUD strongly encourages owners and agents to notify their residents that the CDC eviction moratorium is in place and that the declaration needs to be submitted.
  • Late Fees: Unlike during the previous CARES Act eviction moratorium, late fees can still be charged during the CDC ban.
  • Repayment Agreements: HUD encourages owners and agents to consider entering into repayment agreements for all outstanding payments with residents facing financial difficulties during the COVID-19 National Emergency.

On-site flu shots and COVD-19 testing – LeadingAge has been working with housing provider members to assist residents with increased access to flu shots and COVID-19 testing during the pandemic. In HUD’s new FAQs, the agency says that temporary use of property common areas, parking lots, and vacant offices by providers of healthcare services to provide flu shots and/or COVID-19 testing to residents is allowable.

However, the services must not affect property operating costs beyond budgeted and approved supportive services funds. In addition, owners and agents should ensure that their testing site has a Clinical Laboratory Improvement Amendments (CLIA) certificate of waiver or is covered by another facility’s CLIA certificate. HUD encourages housing providers to consult with their legal counsel before hosting healthcare services on site.

Emergency planning and confirmed COVID-19 cases – Regarding emergency preparedness steps that housing providers should take, HUD has updated its guidance to include recent recommendations by the CDC for Multifamily Housing providers. The CDC recommendations also address confirmed cases on site.

LeadingAge assisted the CDC in developing COVID-19 recommendations for communities serving residents who are at higher risk for the virus; more information about the CDC recommendations is available here. HUD also continues to recommend the use of Chapter 38 of the HUD handbook and other resources.

Mortgage forbearance – The CARES Act provided mortgage forbearance options for Multifamily Housing providers financially impacted by the pandemic. In the new FAQs, HUD clarifies that during the CARES Act forbearance period, HUD does not consider the eligible FHA-insured multifamily borrower to be delinquent or in default.

Lenders should report the loan as delinquent or in default only after the CARES Act forbearance period ends (if the multifamily borrower does not immediately make the loan current) – that includes forbearance agreements extending beyond the expiration of the CARES Act forbearance period. Lenders should record defaults or delinquencies not related to nonpayment.

Physical inspections -  The October 14 update brings the FAQs in line with the resumption of physical inspections as announced in August  by HUD’s Real Estate Assessment Center. REAC resumed physical inspections on October 5. As detailed in the new FAQs, and has HUD has previously stated, HUD is prioritizing states and localities for inspections where public health data and health risk scoring show it is safest to do so. HUD has said that senior affordable communities would be de-prioritized because of the risk of older adults from COVID. The resumption of physical inspections follows a guide that categorizes states and localities into four risk categories from low risk to high risk; the guide is updated weekly.

Regarding instances where a Notice of Default for an inspection prior to the earlier suspension of physical inspections, the October 14 FAQ says that HUD will continue to review and approve or deny owner repair plans when all deficiencies cannot be corrected in 60 days. However, with the resumption of physical inspections on or about October 5, 2020, HUD will not approve any extensions where an owner/agent is having difficulty entering units. In these cases, owners receiving a Notice of Violation (NOV) and/or Notice of Default (NOD) based on a project’s physical conditions must follow the corrective actions enumerated in the NOV/NOD within the time specified. At a minimum, the owner must conduct a 100% survey of the property and submit their survey report to HUD. The NOV/NOD may require the correction of all physical deficiencies by a specified date or that the owner submit a repair plan for HUD’s review and approval.

Management and Occupancy Reviews - LeadingAge has reported on the resumption of “light touch” Management and Occupancy reviews effective May 22. In the October 14 FAQ, HUD says that light touch MORs will continue until December 30, 2020. LeadingAge has advocated for the continuation of light touch MORs, which include alternative methods for completing the MORs in light of COVID. The October 14 FAQ reiterates those alternative methods from HUD’s May 22 memo to owners and agents of properties administered by Performance-Based Contract Administrators and HUD Multifamily Regional Center and Satellite Office Directors.

The alternative manner MOR includes the following:

  • HUD will, until September 30, 2020 (or such later date as HUD may determine), allow PBCAs to conduct on-site MORs without entering resident units.
  • For REAC follow-up, in determining whether EH&S and other deficiencies have been corrected, the PBCA must attempt follow-up on those affected units via contact directly with the resident by way of phone or email and document the results or attempt(s) made on the MOR report. HUD understands that this method will require cooperation from both the Owner/Agent in obtaining a contact number or email for the resident(s) and from the resident(s) when contact is made.
  • A physical on-site visit to the property must still occur to document the physical conditions, general appearance, security of the property and should include a visual assessment of each building and grounds of the property but does not require an assessment of resident units.
  • An on-site entrance/exit interview 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.
  • Tenant file review must be completed on-site, as HUD is not authorizing the transfer, either electronically or physically, of tenant files off-site. This portion of the review can be completed without contact with management staff. The PBCA will identify the files for review in advance and those files can be selected and left in a secured location for the PBCA staff’s access on-site.
  • All other portions of the MOR, Desk Review, and On-site review must be completed in their entirety. This includes an on-site review of tenant files.

Hazard Pay and Calculation of Income - On whether hazard pay should be included in the calculation of a resident’s income, HUD’s October 14 FAQ says that it should. HUD also says that owners and agents should consider whether the pay increase is temporary or recurring in determining whether it will trigger an income reexamination in accordance with HUD Handbook 4350.3, REV-1 and their written recertification policies.

Financial Reporting Deadline Extensions - For audited financial reporting deadlines had previously been provided through September 30. In the October 14 FAQ, HUD states that it is only allowing further extensions on a case-by-case basis through the REAC-FASS system for circumstances beyond the owner’s control.

Find HUD's October 14 Multifamily FAQ here.