The Department of Housing & Urban Development (HUD) recently updated its “Frequently Asked Questions (FAQs) for subsidized multifamily housing programs to encourage owners to take certain longer-term actions and to address specific issues such as mask-wearing and accounting for enhanced unemployment benefits provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This new guidance encourages owners but does not give a great deal of permission relating to what can be done. For this reason, owners should tread lightly and consult counsel when implementing any of the HUD suggestions.
Enforcement of COVID-19 Restrictions
- HUD provides some suggestions on how to respond if a resident contracts COVID-19. There is more emphasis on recommending that landlords contact local authorities in the event a resident is known or suspected to have COVID-19. HUD is neither sanctioning nor prohibiting testing or face coverings, mandatory or otherwise, but notes that landlords should be guided by state or local law.
- HUD advises that if owners want to take mandatory measures that could be enforced as lease violations, they should do show through changes to house rules (which do not require HUD approval).
- Notice 20-12 reminds owners that house rules should be “within the bounds of common sense” and that owners must provide a 30-day notice (60-days for tenants during the initial term of their lease) when revising house rules.
Impact of COVID-19 Relief Payments on Tenant Income
- The FAQ has been updated to provide detail on how unemployment assistance affects tenant income. There are several types of unemployment benefits provided by the CARES Act, and different rules apply to different benefits.
- Federal Pandemic Unemployment Compensation (FUPC) is regarded as temporary income and not included in annual income calculations for purposes of determining rent subsidies. The FUPC has been the program that allowed recipients collecting state unemployment insurance to receive an additional $600 per week through July 31, 2020.
- However, owners must include in income the Pandemic Unemployment Assistance (PUA), the unemployment benefit for self-employed or part-time workers, as well as the Pandemic Emergency Unemployment Compensation (PEUC), providing a 13-week extension of regular unemployment benefits.
Mortgage Forbearance & Eviction Moratorium
- In addition to the well-known 120-day eviction moratorium that expired on July 25, 2020, the CARES Act also included an eviction moratorium on properties that took advantage of its mortgage forbearance provisions.
- If an owner is receiving mortgage forbearance under the CARES Act – including extensions – an eviction moratorium must be given to the tenants.
- The forbearance protection for tenants also applies if an owner is able to obtain mortgage forbearance outside of the CARES Act.
Oversight
- Management Occupancy Reviews (MORs) are resuming, but they do not require entering units. The requirement to enter units is suspended until September 30.
- While HUD has generally extended the deadline for filing audits until September 30, audits that were delinquent as of March 20, 2020, are still considered delinquent.
- Entities with June 30 year-ends must file audits within 90 days (September 30).
- Concerning loan production and related inspections, HUD will permit lenders to submit a sampling of units that is less than that prescribed by the MAP Guide until September 30 or sooner if the COVID-19 National Emergency is lifted.
- The guidance from Notice 20-4 regarding electronic signatures continues, allowing certain electronic signatures, consistent with local laws. Documents converting personal information must be encrypted. Multifamily loan closings must have original signatures, but copies can be scanned and sent electronically.
HUD continues to regularly update the COVID-19 guidance and multifamily owners should be alert for additional changes.