NAHMA Rural Update: USDA Rural Development Provides Additional COVID-19 Multifamily stakeholder FAQ - Part 2 April 13, 2020
An update from USDA Rural Development's Office of Multi-Family Housing. This update includes additional answers to several frequently asked questions that were not addressed in the April 5 FAQ, regarding the impact and effects of COVID-19 on various Multi-Family Housing stakeholders.
Below, please find an update from USDA Rural Development's Office of Multi-Family Housing. This update includes additional answers to several frequently asked questions that were not addressed in the April 5 FAQ, regarding the impact and effects of COVID-19 on various Multi-Family Housing stakeholders.
|Multifamily Housing Partners,
Rural Development is continuing to receive questions on COVID-19 (Coronavirus) related issues as they affect Multifamily housing properties across the country and would like to provide additional guidance. Your assigned Servicing Official should remain your primary contact for questions, but the below consolidated frequently-asked questions may assist during this challenging time.
A: Traditional unemployment payments are eligible income and should be included in income calculations.
Federal Pandemic Unemployment benefits, however, include an additional $600 per week in addition to traditional unemployment payments for individuals who have lost jobs due to COVID-19. These emergency payments will only continue for four months, and are temporary. Temporary income is excluded in 24 CFR § 5.609(c)9, so these emergency payments should be excluded in income calculations.
Tenants who are receiving hazard pay or other additional income due to COVID-19 should contact property management to review whether the income increase is temporary or expected to continue past the immediate COVID-19 pandemic. If the additional income is temporary in nature, it can be excluded from income calculations and no interim recertification is necessary. Management should document the tenant file so that any discrepancies can be reconciled at the tenant's next recertification.
Q2: If tenants are over-income upon recertification, should they be given a notice to vacate during the COVID-19 emergency?
A: Tenants whose annual recertification shows them to be over-income for the property that they currently occupy may remain in their unit under certain circumstances, shown in HB 2-3560, Section 6.30. A borrower may permit an ineligible tenant to stay if either:
Q3: If an applicant declines to move in due to social distancing or COVID-19 concerns, do they lose their spot on the waiting list?
A: If an applicant declines to move in due to social distancing and COVID-19 concerns, management may either hold the unit until the national emergency has ended, or move to the next applicant on the waiting list. The applicant declining to move should not be penalized or removed, but should be offered the next appropriate-sized unit when the emergency has ended.
We encourage management to seek out creative solutions, such as virtual or ‘no-touch' showings, digital signatures, and contactless move-in procedures to continue to provide housing while complying with social distancing recommendations.
Q4: Is there further guidance on Section 514/515 Forbearance requests?
A: The 2020 CARES Act allows Multifamily borrowers experiencing a financial hardship related to COVID–19 to request forbearance for up to 90 days. Guidance on how to request this forbearance was distributed on April 2, 2020, and we encourage you to contact your Servicing Official with questions. The following are responses to common forbearance questions:
Q5: Does RD need to be notified if an owner or management agent is applying for a Payroll Protection Program (PPP) Loan under the CARES Act? What about other SBA loan programs?
A: If an SBA loan requires a Section 514 or Section 515 property to be used as collateral, it must meet the standard in Handbook 3560-3, Chapter 8, Section 1 on Junior Liens and should follow the same approval procedure. If a PPP or other loan does not require property collateralization, RD does not need to concur on an application for a PPP loan. However, owners and agents should be aware that PPP repayment is not an eligible property expense.
For a Section 538 property, the Agency must review the terms and conditions of any secondary financing or funding of projects, including loans, capital grants or rental assistance.
Q6: Earlier guidance referred to Section 515 only, does RD's guidance apply to Section 514 as well?
A: Yes, all COVID-19 guidance issued for Section 515 also applies to Section 514. Section 538 does require separate guidance in most cases.
We would like to remind all Section 514, Section 515, and Section 538 owners and management agents that the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Pub.L. 116-136) prohibits evictions due to non-payment of rent for the next 120 days, and does not allow late fees or otherwise penalize tenants who are unable to pay rent. This eviction prohibition became effective upon enactment of the CARES Act (March 27, 2020) and is effective for 120 days. We strongly encourage owners and agents to notify tenants of this provision as well as their ability to request an interim recertification if they receive Rental Assistance and their income has decreased. Notices and postings should be translated to other languages whenever possible.
We continue to appreciate your partnership in providing quality, affordable rural housing. Please do not hesitate to reach out to your local RD staff if you have additional questions.
Manager of Government Affairs
National Affordable Housing Management Association
400 N. Columbus St., Suite 203
Alexandria, VA 22314
703-683-8630 (ext. 116)
NAHMA is the leading voice for affordable housing management, advocating on behalf of
multifamily property managers and owners whose mission is to provide quality affordable housing.