Who is coordinating COVID-19 efforts for Multifamily Housing (MFH)? Who will be the point of contact for housing providers?
Owners and agents should contact their field MFH Account Executive or Resolution Specialist for property specific inquiries. Jeff Little, the Associate Deputy Assistant Secretary for MFH Programs, is the main point of contact for Multifamily stakeholders.
How can owners complete a Utility Analysis (UA) baseline when utility companies are not responding?
For the lack of Utility Analysis (UA) data, owners may obtain the utility data from the tenants, which is currently permitted in HUD Notice H-2015-04. Tenants may submit this data via mail or email. Currently, owners use an adjustment factor for two years and a do a full baseline analysis on the third year. As an alternative, in the event tenant data is unable to obtain during the COVID-19 National Emergency, HUD will allow properties to use an adjustment factor for three years rather than two. For example, if a property did a full baseline analysis in 2017, and is due for a baseline analysis in 2020, the property can adjust using the adjustment factor for a third year in 2020 and perform a new full baseline analysis in 2021.
Are property owners and lenders able to access additional sources of government assistance for covering losses during the COVID-19 crisis, for example, Community Development Block Grant funds available from local and state governments?
HUD encourages borrowers and lenders to access any available Federal assistance or other resources, as may be necessary, to assist in meeting project operations and debt service. It is important to note that some forms of Federal assistance may come with requirements for recipients to ensure that they do not receive multiple forms of Federal assistance that serve duplicative purposes, as required under the Stafford Act.
Did the Coronavirus Aid, Relief and Economic Security (CARES) Act provide additional funding to HUD Multifamily Housing program?
Yes. Congress appropriated additional funding for several Multifamily Housing programs through the CARES Act, most of which is designated for increased rental subsidy in HUD-assisted housing to cover tenants’ loss of income during the COVID-19 National Emergency. Through the CARES Act, HUD is also authorized to use designated funding to take necessary actions to respond to situations resulting from the COVID-19 National Emergency, including addressing unusual operating costs such as increased cleaning costs.
Under the CARES Act, Congress provided the following additional funding:
$1 billion to support Project-based Rental Assistance properties (Section 8 project-based properties),
$50 million to support Section 202 Supportive Housing for the Elderly properties (with $10 million of that amount for additional service coordinator support), and
$15 million for Section 811 Supportive Housing for Persons with Disabilities properties.
Is there new guidance for forbearance of FHA-insured, Risk Share, and HUD-held multifamily loans?
HUD published guidance on a standard forbearance protocol, Mortgagee Letter 2020-09, dated April 10, 2020, to implement the provisions of the CARES Act and reduce paperwork and streamline processing for multifamily borrowers, servicers, and lenders. These guidelines can be found at: https://www.hud.gov/sites/dfiles/OCHCO/documents/2020-09hsngml.pdf
These guidelines are in effect during the covered period of the CARES Act, which begins March 27, 2020, and continues until the earlier of the termination date of the national emergency declared by the President on March 13, 2020 or December 31, 2020. This guidance outlines the protocol for all Multifamily HUD loans, followed by separate guidance for FHA-insured, risk share, and HUD-held loans, including continuing program obligations.
Ginnie Mae has also published a blog post on forbearance as it relates to its issuers, which can be found here: https://ginniemae.gov/newsroom/GinnieInBrief/Pages/Post.aspx?PostID=40
What is HUD’s role in the forbearance process for HUD Multifamily assisted housing properties or properties with an FHA-insured mortgage?
Mortgage forbearance repayment is a negotiation between borrowers and lenders. HUD will not participate in those negotiations except where the loan in question is a HUD-held loan. While the forbearance agreement is entered into between the borrower and lender, a copy of the forbearance agreement must be provided in connection with actions requiring HUD approval, if any are included in the agreement. HUD provided guidelines in Mortgagee Letter (ML) 2020-09, dated April 10, 2020, to assist in borrower/lender negotiations; however, these guidelines are not required to be followed. This ML also provides information on the process for HUD-held loans.
An owner’s Rent Comparability Study (RCS) has triggered the need for a HUD RCS, but concerns from owners, tenants, and HUD contract appraisers are making it difficult to execute the HUD-sponsored RCS. How will this be addressed?
HUD RCSs are suspended in areas that are under a state or nationally declared emergency or where public health officials have imposed limited travel. HUD is rescinding guidance provided on 3/13/20 on how it will respond to an owner’s previously submitted RCS and will be providing new guidance on this topic in the upcoming weeks.
An owner/agent’s property’s contract is coming up for renewal, and a Rent Comparability Study (RCS) is required. How can the property renewal be approved if an RCS can’t be obtained?
Renewal rents that are capped at market, and therefore require an RCS, include Option One, Option Two, and Option Three (at initial renewal only) renewals as detailed in HUD’s Section 8 Renewal Policy Guidebook. Renewal under Option Four also requires an RCS if the owner wishes to establish eligibility based on rents under the expiring contract being at or below market rate. As a result of the COVID-19 National Emergency and under the authority of the Section 8 Renewal Policy Guidebook, HUD will, until June 30, 2020 (or such later date as HUD may determine), approve all renewals for the above-noted Options (*see exception below) as short-term renewals with a 12-month term at current rents. This includes any Option Four renewal requests for which the owner seeks to establish eligibility based on rents being at or below market.
A multifamily owner’s financial statements are complete, but their auditor is not comfortable coming into their office to conduct the audit. Can they get an extension?
To provide relief for multifamily property owners, HUD has extended the audited financial reporting deadlines until April 30. All entities required to submit financial information on or before April 30, 2020 are now required to submit their financial information no later than 120 days after the end of the fiscal year of the reporting period, and as otherwise provided by law. This waiver does not apply to the submission requirements for financial information that was delinquent as of March 23, 2020.
The Office of Multifamily Housing Programs will continue to monitor the situation and may provide additional extensions as warranted.
Will MFH allow electronic signatures on its documents?
Production: For FHA insured transactions, please see the section on Office of General Counsel-MFH Closings below for specific information.
Asset Management: Electronic signatures are allowed for all subsidy administration, including contract renewals, rent schedules, and HAP Assignments, and all other Multifamily Housing submissions. State and local law determines the requirements for leases and 50059s.
Recapitalization: For RAD and other real estate transactions, the recorded documents typically have “wet” signatures that are notarized. The HUD closing attorney will have to advise if electronic signatures are acceptable in the recording offices in their jurisdictions. Documents that will not be recorded may be signed electronically.
For all transactions, electronic signatures must conform to applicable federal, state, and local requirements.
May FHA-insured borrowers as well as Section 202 and 811 property owners access their reserve for replacement accounts to cover items not consistent with Handbook 4350.1 Chapter 4 guidance, such as mortgage payments for delinquent mortgages?
Owners and agents may submit requests to HUD field staff for non-traditional uses of reserve for replacement accounts. Field staff will review such requests based on account balances and future needs, project needs, owner compliance and other criteria consistent with Chapter 4 of HB 4350.1. In addition, HUD field staff will need to see evidence of the loss of rental receipts.
Can property owners with FHA-insured mortgages with reserve for replacement accounts access those funds to pay debt service?
Owners should request any reserve for replacement account releases from their Account Executive and local field office using the form HUD-9250. The request should include evidence of the causes of the cash shortfall and a promise to repay the funds to the reserve for replacement account. HUD field staff will expeditiously review such requests and consider the cash flow of the property, the amount in the reserve account, and the borrower’s current compliance with HUD’s business agreements.
What is HUD’s protocol for properties that are currently undergoing major rehabilitation work? Should HUD order the owner to withhold all work until further notice?
The decision as to whether work should proceed should be made by the project owner and agent, taking into account the safety of the construction workers, residents, staff, as well as guidance from state and local officials pertaining COVID-19.