HUD issued Notice H 2014-15 on October 31, 2014 changing the imputed rate for assets from 2% to .06%.
Beginning on February 1, 2015, HUD will annually publish the passbook savings rate (i.e., imputed rate) to be used for all certifications for affected programs. This replaces the 2% rate with a rate that is more reflective of the national average.
Background
24 CFR §5.609(b)(3) requires that the income of families who receive assistance in a multifamily housing subsidized unit include income from assets. The income from assets will be the actual income earned on the asset, or, if the net value of the assets exceed $5,000, the greater or actual or imputed income. For many years, the imputed rate has been 2%. Since the actual passbook rate has been significantly less than 2% for some time, HUD has decided to lower the rate to .06%.
Applicability
The Notice applies to the following programs:
- Project-based Section 8;
- Section 101 Rent Supplement;
- Section 202/162 Project Assistance Contract (PAC);
- Section 202 Project Rental Assistance Contract (PRAC);
- Section 202 Senior Preservation Rental Assistance Contracts (SPRAC);
- Section 811 PRAC;
- Section 811 Project Rental Assistance Demonstration units under a Rental Assistance Contract (PRA);
- Section 236;
- Section 236 Rental Assistance Payments (RAP); and
- Section 221 (d) (3) Below Market Interest Rate (BMIR).
Since the Low-Income Housing Tax Credit Program (LIHTC) is required to follow Section 8 rules relative to the determination of household income, the revised imputed rate applies to LIHTC properties. It also applies to the Rural Housing Service Section 515 Program.
This Notice supersedes the information in HUD Handbook 4350.3, Section 5-7.F.
The Passbook Savings Rate will be set based on the national average provided by the Federal Deposit Insurance Corporation (FDIC).
Publication of the Rate
HUD will publish a passbook savings rate annually through a Housing Program Notice. Owners must use the rate for all move-ins, initial, annual and interim recertifications concurrent with the effective date. HUD may update the rate at any time during the calendar year if, during the year, the national average differs by at least 2% from the published rate. (Unless we run into a highly volatile economic situation at some point, this is a very unlikely scenario).
Interim Recertifications
For properties that process interim recertifications due to changes in income, residents with assets in excess of $5,000 may request an interim certification. There is no requirement to notify residents of this change, so it is unlikely that many residents will be aware of the potential impact on their income. For this reason, I recommend that owners and managers review tenant files and notify affected residents. If the reduced rate will impact the rent due from the resident, I recommend an interim be performed, but not before February 1, 2015.