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HUD Publishes Final Rule Persons with Criminal Convictions to Engage in Testing for Fair Housing Violations

On April 1, 2024, the Department of Housing and Urban Development (HUD) published a final rule on Expanding the Fair Housing Testing Pool for FHIP and FHAP Funded Entities. This document is a final rule issued by the Department of Housing and Urban Development (HUD) regarding using fair housing testers with criminal convictions. The rule eliminates certain restrictions and responds to the need for a diverse group of testers with actual criminal convictions to fully investigate potentially discriminatory criminal background screening policies under federal civil rights laws. The document provides background information on the Fair Housing Act, which prohibits discrimination in housing based on various protected characteristics. It explains that FHIP and FHAP were established to fund fair housing enforcement activities by government agencies and private non-profits. Testing is a key tool these entities use to investigate potential violations of the Fair Housing Act. The document also discusses the current regulatory landscape, which includes restrictions on using testers with criminal convictions. The proposed rule was issued in response to a directive from HUD Secretary Marcia Fudge to review HUD programs and remove barriers that prevent individuals with criminal histories from participating. The proposed rule received public comments, both in support and opposition. Supporters of the rule argued that it would expand opportunities for individuals with criminal convictions, promote equity and civil rights, and improve fair housing testing. Opponents expressed concerns about the credibility and safety of testers with criminal convictions. After carefully considering public comments, HUD has finalized the rule to remove the restrictions on testers with criminal convictions. This rule is expected not only to strengthen fair housing enforcement efforts but also provide employment opportunities and promote equity and inclusion for individuals with criminal conviction The document also addresses other issues, such as the impact on small entities, federalism considerations, environmental impact, and compliance with the Unfunded Mandates Reform Act. It concludes with the amendments to the relevant parts of the Code of Federal Regulations. In summary, this document announces a final rule issued by HUD to remove restrictions on using fair housing testers with criminal convictions. The rule promotes equity, inclusion, and effective fair housing enforcement. It is based on public comments and considerations of various factors and amends the relevant regulations to reflect the changes. The final rule takes effect in May 2024.

The Rural Development Service Announces HOTMA Implementation

A memorandum from Joaquin Altoro, the Administrator of the Rural Housing Service (RHS), addressed to Multifamily Housing Owners and Management Agents Multifamily Housing Partners, has explained how HOTMA will be implemented by the Rural Housing Service (RHS). All housing programs administered by RHS are affected, but the primary impact will be felt in the Section 515 Program.  The memorandum concerns an Administrator Exception related to implementing the Housing Opportunity Through Modernization Act (HOTMA).   The memorandum explains that the Housing Act of 1949, which governs the RHS, requires the calculation of a tenant's annual and adjusted household income to be based on the definition provided by the Housing Act of 1937. As a result, RHS must determine income for housing purposes per 24 CFR 5.609, the section of the Code of Federal Regulations governing HUD housing programs.  However, HOTMA directed the U.S. Department of Housing and Urban Development (HUD) to issue a rule changing the income calculation requirements.  HUD published a Final Rule updating 24 CFR 5.609 on February 14, 2023, effective January 1, 2024.  The memorandum states that the Housing Act of 1949 does not incorporate the updates found in 24 CFR 5.609(c), and therefore, the RHS and Multifamily Housing (MFH) will not implement 24 CFR 5.609(c).   The memorandum further explains that under the authority granted in 7 CFR 3560.8, a regulatory waiver has been approved to exclude 24 CFR 5.609(c) from Rural Development's annual income calculation requirements.  The waiver is effective retroactive to January 1, 2024.  The memorandum lists the specific requirements that RD will not implement, including interim tenant income reexaminations where adjusted income is estimated to increase or decrease by 10% or more, using other programs' income determinations, and allowing de minimis errors resulting in $30 or less per month to remain in compliance. Concerning recertifications, tenants at RD properties must be income recertified at least annually and whenever household income changes by $100 or more per month or $50 or more per month if the tenant requests such a change be made. This requirement remains in place.  The Administrator's Exception will be in effect until 7 CFR 3560.153(a) is updated to refer only to 24 CFR 5.609(a) and (b). RD will apply all HOTMA changes regarding the definition of annual income, including all revised inclusions and exclusions from income.    The memorandum also mentions that full compliance with HOTMA is mandatory, effective January 1, 2025, and RD is establishing further guidance and updating handbooks and forms to incorporate the changes.   RD encourages owners and management agents to discuss the implementation with software providers to ensure seamless data transmission.   The memorandum concludes by stating that RD will not penalize owners for HOTMA-related tenant file issues during RD Supervisory reviews conducted before January 1, 2025. 

A. J. Johnson Partners with Mid-Atlantic AHMA for Affordable Housing Training - May 2024

During May 2024, A. J. Johnson will partner with the Mid-Atlantic Affordable Housing Management Association for training sessions for real estate professionals, particularly those in the affordable multifamily housing field. The sessions will be presented via live webinars.  The following sessions will be presented: May 8: Intermediate LIHTC Compliance  - Designed for more experienced managers, supervisory personnel, investment asset managers, and compliance specialists, this practical program expands on the information covered in the Basics of Tax Credit Site Management. A more in-depth discussion of income verification issues is included, as well as a discussion of minimum set-aside issues (including the Average Income Minimum Set-Aside), optional fees, and use of common areas. The Available Unit Rule is covered in great detail, as are the requirements for units occupied by students. Attendees will also learn the requirements for setting rents at a tax-credit property. This course contains some practice problems but is more discussion-oriented than the Basic course. A calculator is required for this course. May 14: Basic LIHTC Compliance - This training is designed primarily for site managers and investment asset managers responsible for site-related asset management and is especially beneficial to those managers who are relatively inexperienced in the tax credit program. It covers all aspects of credit related to on-site management, including the applicant interview process, determining resident eligibility (income and student issues), handling recertification, setting rents - including a full review of utility allowance requirements - lease issues, and the importance of maintaining the property. The training includes problems and questions to ensure students fully comprehend the material. May 16: The Verification and Calculation of Income and Assets on Affordable Housing Properties - The live webinar provides concentrated instruction on the required methodology for calculating and verifying income and determining the value of assets and income generated by those assets. The first section of the course involves a comprehensive discussion of employment income, military pay, pensions/social security, self-employment income, and child support. It concludes with workshop problems designed to test what the student has learned during the discussion phase of the training and serve to reinforce HUD-required techniques for determining income. The second component of the training focuses on a detailed discussion of requirements related to determining asset value and income. It applies to all federal housing programs, including the low-income housing tax credit, tax-exempt bonds, Section 8, Section 515, and HOME. Multiple types of assets are covered, both in terms of what constitutes an asset and how they must be verified. This section also concludes with problems designed to test the student s understanding of the basic requirements relative to assets. These sessions are part of a year-long collaboration between A. J. Johnson and MidAtlantic AHMA designed to provide affordable housing professionals with the knowledge needed to effectively manage the complex requirements of the various agencies overseeing these programs, ensuring long-term success in the field. Persons interested in any (or all) training sessions may register by visiting either www.ajjcs.net or https://www.mid-atlanticahma.org.

HUD Publishes 2024 Income Limits

On April 1, 2024, HUD published the 2024 income limits for HUD programs as well as for the Low-Income Housing Tax Credit and Tax-Exempt Bond programs. The limits are effective on April 1, 2024.  The limits for the LIHTC and Bond projects are published separately from the limits for HUD programs. LIHTC and Bond properties use the Multifamily Tax Subsidy Project (MTSP) limits and are held harmless from income limit (and therefore rent) reductions. These properties may use the highest income limits used for resident qualification and rent calculation purposes since the project has been in service. HUD program income limits are not held harmless. HUD publishes the 50% and 60% MTSP limits in the same table with the Average Income (AI) limits. AI limits are set at 20%, 30%, 40%, 50%, 60%, 70%, and 80%. Projects in service prior to 2009 may use the HERA Special Income Limits in areas where HUD has published such limits. Projects placed in service after 2008 may not use the HERA Special Limits. Projects in rural areas that are not financed by tax-exempt bonds may use the higher of the MTSP limits or the National Non-Metropolitan Income Limits (NNMIL). According to HUD, the non-metropolitan median income has gone up approximately .78% from 2023 to 2024. Owners of LIHTC projects may rely on the 2023 income limits for all purposes for 45 days after the effective date of the newly issued limits. This 45-day period ends on May 16, 2024. The limits for HUD programs may be found at www.huduser.gov/portal/datasets/il.html. The limits for LIHTC and Bond programs may be found at www.huduser.gov/portal/datasets/mtsp.html.