Processing Requests for Minimum Rent Exemption

Sequestration is resulting in considerable financial difficulty for thousands of people. In California, federal unemployment benefits have been cut for more than 400,000 people. 70,000 children in the head start program will have meals reduced, as will seniors and low-income women.

Due to these cuts, some residents in assisted housing may not be able to pay the $25 minimum rent required by HUD.

• The minimum rent does not apply to 202, 811, RAP, Rent Supplement, 221(d)(3) BMIR, or Section 236.

Households that cannot pay the minimum rent may request an exception.

Who Qualifies for the Exemption?

• Households with a “financial hardship” may qualify.
• Per HUD Handbook 4350.3, 5026(D)(3), any household that “would be evicted if the minimum rent requirement was imposed” qualifies for the exemption. The specific circumstances that may lead to this conclusion include
  • The household lost eligibility for – or is awaiting an eligibility determination for – a federal, state or local assistance program;
  • The household would be evicted if the minimum rent requirement was imposed;
  • The household’s income has decreased because of changed circumstances, including the loss of employment; or
  • A death of an income earner has occurred in the household.
• A household may qualify for either a short-term or long-term exemption.
  • Households that can verify that circumstances will last more than 90 days qualify for a long-term exemption;
  • Households whose circumstances are expected to last 90-days  or less qualify for short-term exemptions.
    • At the end of the 90-days, the household must pay the minimum rent, retroactive to the date of suspension. At the end of the 90-day period, the household must repay the full amount of suspended rent, subject to a reasonable repayment schedule.

Steps to Take for Exemption Request

1. Household must request exemption in writing          –           ask whether hardship is short-term or long-term, and get household to agree to repay suspended rent;
2. Suspend minimum rent          –           as soon as a household requests an exemption, the rent must be suspended beginning with the month following the date of the request;
3. Investigate & verify whether household qualifies for exemption      –           verify the circumstances that qualify the household for the exemption.
   1. If the household claims more than one reason for the exemption, choose the easiest one to verify.
   2. Decide whether the household qualifies for the exemption   –           -there are three possible decisions:
      1. Household is ineligible – must resume the minimum rent requirement. The household must pay back any minimum rent due from the date the obligation was suspended until the date a determination of ineligibility was made;
      2. Household qualifies for short-term exemption – give household 90-day grace period during which it does not have to pay minimum rent. At end of grace period, the household must pay minimum rent and pay back rent that accrued during the grace period; or
      3. Household qualifies for long-term exemption – the household is exempt from paying minimum rent for as long as the qualifying circumstances continue.

i.     The owner must recertify the household every 90-days while the suspension lasts.

1. Give written notice to household of determination;
2. Have the household head sign a repayment agreement (reasonable timeframe); and
3. Keep records of exemption paperwork.