In late January 2023, the Biden administration released a Blueprint for a Renters Bill of Rights. This blueprint describes federal actions around five guiding renter protections: Safe, Quality, Accessible, and Affordable Housing; Clear and Fair Leases; Education; Enforcement and Enhancement of Renters Rights; the Right to Organize; and Eviction Prevention, Diversion, and Relief.
The Federal Housing Finance Agency (FHFA) announced it will identify the opportunities and challenges of adopting and enforcing tenant protections, including policies that limit egregious rent increases at properties with Government Sponsored Enterprise (GSE) backed mortgages going forward.
FHFA is also going to publish a GSE Look-Up Tool to determine if a property is backed by Fannie Mae or Freddie Mac financing and requires a 30-day notice to vacate for non-payment of rent. HUD will also issue a notice of proposed rulemaking requiring that PHAs and owners of project-based rental assistance properties provide no less than a 30-day notice of lease termination due to nonpayment of rent.
The blueprint also recommends that local governments take the following actions: (1) immediately seal eviction filings and only unseal them in the case of a decision against the tenant; (2) provide the right to counsel in eviction proceedings; and (3) prohibit source of income discrimination.
Following is a description of the "five principles" outlined in the Blueprint.
First Principle: Access to Safe, Quality, Accessible, and Affordable Housing
Renters should have access to housing that is safe, decent, and affordable and should pay no more than 30 percent of household income on housing costs. Owners of rental housing and state and local governments should ensure that homes for rent meet habitability standards and are free of health and safety hazards, such as lead or mold. In addition, owners should provide services and amenities as advertised or included in the lease (such as utility costs and functional appliances) and ensure that the residential housing unit is well maintained (including common areas). Renters should face minimal barriers when applying for housing and receiving housing assistance, which includes minimally burdensome application and documentation requirements and fair and equal tenant screening. Increases in rents should be reasonable, with the acknowledgment that rents may need to increase to cover operating costs. These increases should be transparent and fair to protect against gouging.
In 2019, almost 25% of renters spent half their income on rent. Nationally, rents rose 26% during the pandemic. Limited housing supply has created more competition for fewer available units, which gives owners even more leverage in deciding to whom to rent to, what lease terms to offer, and whether and how much to raise rents. At the same time, the housing stock in America is aging, and more rental housing is facing obsolescence or poor housing conditions.
Perhaps in recognition of the fact that private owners who do not operate under any programmatic regulations (i.e., conventional housing) are not responsible for making housing affordable. These owners operate rental housing for the profits that can be made from such housing. Offering incentives for affordability is the responsibility of the government, at the federal, state, and local levels. To accomplish this, the Biden Administration has proposed the largest expansion of the Housing Choice Voucher program in decades. In addition to this step, the Administration has proposed the following:
Second Principle: Clear & Fair Leases
Renters should have a clear and fair lease that has defined rental terms, rights, and responsibilities. Leases should not include mandatory arbitration clauses, unauthorized terms, hidden or illegal fees, false representations, or other unfair or deceptive practices. A lease should provide a transparent policy regarding security deposits, with those deposits being appropriately sized and placed in an interest-bearing account for the duration of the lease. The lease should also provide reasonable advance notice of actions related to the unit, including notice of entry for inspection by the housing provider and significant changes to the unit. Finally, the lease terms should be written in simple and clear language accessible to the renter, and the leasing process should ensure tenants understand the terms of the lease through a plain-language briefing.
A lease establishes the foundation for the housing provider and tenant relationship, highlighting the rights, responsibilities, and recourse that exists for both parties. A lease covers the terms for what is likely the largest single expense a household makes each month and over the course of a year. The trend of more leases with problematic provisions can be partially attributed to the increased use of shared forms, which are easily accessible through the internet and may include terms that are not legally enforceable in the state or locality in which the property is located.
To ensure fair leases to the greatest extent possible, the Administration is announcing the following new actions:
Owners and managers in the RD Section 515 Program should be prepared for this upcoming change. A good starting point is a review of the current HUD Model Lease for Multifamily Housing and the HUD Rights & Responsibilities Brochure. This will give operators of Section 515 housing an idea of what may be coming down the road.
Third Principle: Education, Enforcement, and Enhancement of Rights
The Administration position is that Federal, state, and local governments should do all they can to ensure renters know their existing legal rights and to protect renters from unlawful discrimination and exclusion that can take many different forms.
The Fair Housing Act (FHA) bans discrimination based on race, color, religion, sex (including sexual orientation and gender identity), disability, familial status, and national origin, including practices that have an unjustified disparate impact on a protected class. The Administration proposes to expand the FHA to prohibit discrimination based on source of income.
In order to implement this third principle, HUD is finalizing a rule to clarify that the Fair Housing Act continues to bar practices with unjustified discriminatory effects notwithstanding efforts to weaken its reach. In addition, HUD has published a proposed Affirmatively Furthering Fair Housing rule to strengthen and better align grantee planning efforts to advance fair housing goals.
The federal government has advanced other rights beyond those protected by the Fair Housing Act. For example, discrimination against a holder of a Housing Choice Voucher is banned in the federal Low-Income Housing Tax Credit (LIHTC) program, which is the largest affordable housing production program in the country. The Administration has announced the following new actions:
Tenant Background Checks:
Source of Income Discrimination:
Fourth Principle: The Right to Organize
The Administration believes that renters should have the right to organize without obstruction or harassment from their housing provider or property manager and should not risk losing housing over organizing.
Tenants in different types of HUD and RD programs have recognized rights to organize. The Administration is not proposing that the government impose this requirement on non-assisted properties. They are taking the following steps:
It should be noted that these actions will not apply to LIHTC properties.
Fifth Principle: Eviction Prevention, Diversion, and Relief
Before the pandemic, roughly 900,000 evictions were completed against tenants every single year. In order to reduce the number of evictions, the Administration is taking the following actions:
Bottom Line - This "Renters Bill of Rights" will have a direct impact on federally assisted housing, with some minor effects across the non-federal universe of rental housing. The most immediate impact will be felt in the rural housing community due to the Rural Development Service development of a Model Lease and "Rights & Responsibilities" brochure. At the same time, the push to create "best practices" relative to applicant background screening should lead landlords to examine current practices - before they are forced to do so by state or local agencies.
With regard to the LIHTC program, The Treasury Department will meet with tenants, advocates, housing providers, and researchers to discuss ways to further the goals of tenant protections, including those around source of income, as well as broader issues of affordability and eviction prevention with respect to the LIHTC incentive.
A. J. Johnson to Provide Live Webinar on Assistance Animals in Multifamily Housing
A. J. Johnson will be conducting a one-hour webinar on January 24, 2024, on Assistance Animals in Multifamily Housing - Avoiding Fair Housing Violations. The Webinar will begin at 1:00 PM Eastern Time. Understanding Fair Housing Law concerning assistance animals is crucial for several reasons: Fair housing law ensures that individuals with disabilities have equal access to housing, preventing discrimination. Assistance animals are not pets but are necessary for the well-being of their owners. Landlords and housing providers must comply with these laws to avoid legal repercussions. Ignorance of the law is not a defense. The law clarifies the obligations of housing providers to make reasonable accommodations for assistance animals, even in pet-free housing. It promotes awareness and sensitivity towards the needs of individuals with disabilities, fostering a more inclusive and supportive community. Understanding these laws helps prevent misuse of the system by those who do not genuinely require assistance animals, ensuring resources and accommodations are available for those who truly need them. This one-hour live webinar will provide the information necessary for owners to comply with this complex area of fair housing law. It will cover the difference between service and support animals, how to verify the need for an assistance animal (including a detailed discussion of the "online verification services), and what types of animals are acceptable as assistance animals. There will be plenty of time for Q&A and at the end of the session, attendees will be more confident when dealing with requests for assistance animals. Those interested in participating in the Webinar may register on the A. J. Johnson Consulting Services website (www.ajjcs.net) under "Training.
HUD HOTMA Rules Update Verification Requirements
Introduction The U.S. Department of Housing and Urban Development (HUD) has released Notice H 2013-10, which expands upon the Final Rule for implementing the Housing Opportunity Through Modernization Act (HOTMA). This final rule makes some changes to the way managers of HUD-assisted housing will verify eligibility-related information for HUD-assisted properties. Consent to Release Forms The final HOTMA rule changes the requirements relating to the signing of Authorization for Release of Information (Forms HUD-9886/9887). Under the final rule, all applicants age 18 and over must sign the consent form at admission and participants must sign the consent form no later than their next interim or regularly scheduled income reexamination. After an applicant or participant has signed and submitted a consent form on or after January 1, 2024, they do not need to sign and submit subsequent consent forms at the next interim or regularly scheduled income reexamination except under the following circumstances: When any person 18 years or older becomes a member of the family; When a member of the family turns 18 years of age; and As required by HUD or the PHA in administrative instructions. Executed consent forms will remain effective until the family is denied assistance, the assistance is terminated, or if the family provides written notification to the owner revoking consent. If a family leaves a HUD program, the assistance is terminated, and the signed consent forms will no longer be in effect. HUD is updating the form HUD-9886-A and 9887 to conform to the final rule. EIV Use The regulation reminds owners the EIV must be used to verify tenant employment and income at annual and streamlined reexaminations of family composition and income. However, Owners are no longer required to use EIV to verify tenant employment and income information during an interim reexamination. Owners have the discretion to use EIV reports at interim reexaminations, but such a policy must be stated in written EIV Policies & Procedures. Determination of Income Using Other Means-Tested Public Assistance (i.e., "Safe Harbor ) Owners may determine a family s annual income, including income from assets, before the application of any deductions based on income determinations made within the previous 12-month period, using income determinations from the following types of means-tested federal public assistance programs: Temporary Assistance for Needy Families ("TANF ); Medicaid; Supplemental Nutrition Assistance Program ("SNAP ); The Earned Income Tax Credit; The Low Income Housing Tax Credit; Special Supplemental Nutrition Program for Women, Infants, and Children; Supplemental Security Income (SSI); Other HUD-administered programs; Other means-tested forms of federal public assistance for which HUD has established a memorandum of understanding; and Other federal benefit determinations made by other means-tested federal programs that HUD determines to have comparable reliability and announces through a Federal Register notice. All means-tested verifications must utilize third-party verification. HUD clarifies in this notice that the verification will be considered acceptable if the documentation meets the criteria that the income determination was made within the 12 months before the receipt of the verification by the Owner. The safe harbor documentation will be considered acceptable if any of the following dates fall into the 12 months prior to the receipt of the documentation by the Owner: Income determination effective date; Program administrator s signature date; Family s signature date; Report effective date; or Other report-specific dates that verify the income determination date. Safe harbor verifications may only be used to determine gross annual income - not adjusted income. Verification Hierarchy HUD has developed a hierarchy that describes verification documentation from most acceptable to least acceptable, as follows: Upfront Income Verification (UIV), using HUD s EIV system; Upfront Income Verification using a non-EIV system (e.g., The Work Number, web-based state benefits, etc.); Written, third-party verification from the source, also known as "tenant-provided verification or EIV plus Self-Certification. Owners must use written, third-party verification when the income type is not available in EIV (e.g., self-employment, GoFundMe accounts, general public assistance, VA benefits, etc.); Examples are pay stubs, payroll summary reports, employer hire letters, SSA benefit letters, bank statements, child support payment stubs, welfare benefit letters, and unemployment monetary benefit notices. When pay stubs are used, a minimum of two consecutive pay stubs are required. However, for new income sources or when two pay stubs are not available, traditional, third-party verification or the best available information should be used. When verification of assets is required, owners are required to obtain a minimum of one statement that reflects the current balance of banking/financial accounts. Note that a six-month average balance for checking accounts is no longer required Written, third-party verification form directly from the income source; Oral Third-Party Verification; and Self-certification (not third-party verification). Owners and property managers should note that these requirements apply only to HUD projects. The Rural Development Service (RD) and Housing Finance Agencies (HFAs) have complete discretion concerning verification requirements and the procedures outlined here may not be acceptable to those agencies.
HOTMA Makes Significant Changes to the Handling of Interim Reexaminations at HUD Properties
Introduction The U.S. Department of Housing and Urban Development (HUD) has released Notice H 2013-10, which expands upon the Final Rule for implementing the Housing Opportunity Through Modernization Act (HOTMA). This final rule makes significant changes to the way managers of HUD-assisted housing will process interim reexaminations. Basics of the Rule Change A family may request an interim determination of family income or composition because of any changes since the last determination. Project owners must conduct interims within a reasonable period of time after the family request or when the Owner becomes aware of a change in the family s adjusted income that must be processed in accordance with the final rule. While owners have some discretion in determining a "reasonable time, interim reexaminations should generally be conducted no more than 30 days after the owner becomes aware of the changes. Decreases in Adjusted Income A family may request an interim determination of income for any change in income or family composition. However, the owner may decline to conduct an interim if the owner estimates that the adjusted income will decrease by less than 10 percent of the annual adjusted income. If owners select a threshold lower than 10 percent, the lower percentage threshold must be included in the ACOP, Administrative Plan, or Tenant Selection Plan, as applicable. HUD has made some exceptions to the 10 percent threshold and applies a zero percent threshold in certain circumstances: (1) If there is a decrease in family size due to the death or permanent move-out from the assisted unit of a family member during the period since the family s last reexamination that results in a decrease in adjusted income of any amount. If there is no change in adjusted income as a result of the decrease in family size, then a non-interim transaction is processed instead of an interim reexamination. This zero percent threshold applies only to decreases in adjusted income due to a decrease in family size. If the move-out of the family member results in an increase in annual adjusted income, the owner will process the removal of the member as a non-interim transaction without making changes to the family s annual adjusted income. Owners are not permitted to establish a dollar-figure threshold amount instead of a percentage threshold. Owners may establish policies to round calculated percentage decreases up or down to the nearest unit (e.g., a calculated decrease of 9.5% may be rounded up to 10%). Increases in Adjusted Income Owners must conduct an interim reexamination of family income when the family s adjusted income increases by 10 percent or more, with the following exceptions: (1) owners may not consider any increases in earned income when determining whether to conduct an interim unless the family has previously received an interim reduction during the same reexamination cycle, and (2) owners may choose not to conduct an interim reexamination during the last three months of a certification period if a family reports an increase in income with three months of the next annual reexamination effective date. Note: Families who delay reporting income increases until the last three months of their certification period may be subject to retroactive rent increases. Owners may not establish a policy of conducting interim reexaminations for increases in annual adjusted income of less than 10 percent. When a family previously received an interim reexamination for a decrease in annual adjusted income during the same annual cycle, an owner has the discretion to consider or ignore a subsequent increase in earned income for the purpose of conducting an interim reexamination. When an increase in income of any size is reported by a family, it is a recommended best practice for the owner to note the reported increase in the tenant file. If a series of smaller reported increases in adjusted income result in a cumulative increase of 10 percent or more, an interim reexamination is required. Bottom Line Project owners must process interim reexaminations of family income or composition if there's a significant change since the last check. The interim should be done within 30 days of becoming aware of the change. Decreases in income warrant an interim if over 10%, with certain exceptions allowing a 0% threshold. For increases, an interim is required for a 10% rise in adjusted income unless a reduction has occurred in the same cycle. Owners should document all reported income changes, and cumulatively, a 10% increase triggers an interim reexamination.
A. J. Johnson to Host Live Webinar on Interviewing Skills for Affordable Housing Managers
A. J. Johnson will be conducting a webinar on December 6, 2023, on Interviewing Skills for Affordable Housing Managers. The Webinar will be held from 1:00 PM to 4:00 PM Eastern time. One of the most important skills any affordable housing manager can possess is the ability to interview applicants and residents and obtain the information required to determine eligibility - this is also one of the greatest weaknesses of most affordable housing managers. This training has been developed to address that weakness. This three-hour session focuses on the interview process and provides concepts and tools that will aid managers as they conduct their interviews. Techniques apply to all interview settings including initial eligibility interviews, interim certifications, and annual recertifications. The primary emphasis is on the initial eligibility interview since it is so critical to the housing process. The skills taught during this session will also assist managers in detecting fraud and dealing with third parties when resolving discrepancies. Those interested in participating in the Webinar may register on the A. J. Johnson Consulting Services website (www.ajjcs.net) under "Training Schedule.