On October 3, 2016, HUD published Notice H-2016-09, relating to the streamlining of Administrative Regulations for Multifamily Housing (and some medically related) Programs. This memo relates only to the portions of the Notice relating to multifamily housing. The full streamlining rule was published in the Federal Register on March 8, 2016.
The Notice only applies to programs administered by the HUD Office of Multifamily Housing, as follows:
- Project-based Section 8, including new construction, HFA-financed projects, Substantial Rehab, Section 202/8, Rural Housing Section 515/8, Loan Management Set-Aside, and Property Disposition Set-Aside;
- Section 101 Rent Supplement;
- Section 202 PAC;
- Section 202 and 811 PRAC;
- Section 202 Senior Preservation Rental Assistance Contract (SPRAC);
- Section 811 Project Rental Assistance Demonstration Units under a Rental Assistance Contract (PRA);
- Section 236;
- Section 236 RAP; and
- Section 221(d)(3) BMIR.
- Verification of Social Security Numbers (SSN)
This change applies to Rent Supplement, Section 8, Section 221(d)(3), Section 236, Section 202, and Section 811. It modifies the regulation as it applies to program applicants (as differentiated from program participants).
The regulation now permits owners/agents (OAs) to accept applicant households that include an applicant family member under the age of six, who does not yet have a SSN and was added to the household six months or less from the move-in date. In other words, if the child was added to the household more than six months prior to move-in, the child must have a SSN in order to move into the unit. With this change, the O/A may not deny occupancy to such applicant households.
The O/A must give the applicant 90-days from the effective date of the move-in certification to provide SSN documentation for the child. An additional 90-days must be granted if the failure to provide SSN documentation is due to circumstances that are outside the control of the household. Examples of such circumstances are delayed processing by the SSA, natural disaster, fire, death in the family, etc.
During this time, the child will be counted as part of the household and will receive all program benefits, including the dependent deduction. Once the SSN is provided, an interim recertification is required.
TRACS Input
Purchased software used by O/As to transmit data to TRACS may not yet have the ability to properly transmit the SSN data. O/As will input using one of two methods:
- Pre-Software Change: when completing the SSN field in TRACS for a child who has been added to the applicant household six months or less from move-in and has no SSN, the owner must input an SSN of “999990000.” This may only be used for move-in and initial certifications.
- Post–Software Change: Once software is updated, all SSNs of “999990000” must be edited with an interim certification. For a child without an SSN, the owner will input “999999999,” with an “M” exception code. When the child is issued an SSN, an interim will be conducted and the correct SSN will be entered. All software is expected to be updated by February 17, 2017.
Penalty for Nondisclosure of SSN
The penalty for nondisclosure of a SSN for someone who is supposed to have or be issued a SSN is termination of tenancy for the entire household. Proration of assistance is not permitted.
Housing Assistance Payments During Eviction
HAP payments will continue during eviction and continue until the household is actually evicted. If a court refuses to evict a household, the household will be permitted to remain. O/As should continue to use “999999999” until an SSN is obtained, at which point an interim will be done.
- Change in the definition of Extremely Low-Income (ELI)
This change applies only to the Section 8 Program.
The definition of “Extremely Low-Income” is now the highest of 30% of the Area Median Income or the Federal Poverty Level. The poverty level definition does not apply for public housing or projects in U.S. possessions, territories, or Puerto Rico.
HUD will publish the ELI annually – no research by the O/A is required.
Section 8 owners must use the ELI limits to meet the income targeting requirements (i.e., at least 40% of units rented at the ELI income level).
- Change in the definition of Tuition
This change applies only to the Section 8 Program (other than Section 8 Mod Rehab). It amends the definition of “income” for purposes of tuition. Tuition now includes mandatory fees and charges and is excluded from income for Section 8 only. Formal guidance on this change was published in Notice H-2015-12. I sent a memo to clients on this on December 2, 2015.
- Reexamination of Income
This is a major change in procedures, and applies to Project-based Section 8 properties, including 202 and 811 projects.
O/As may now use streamlined income determinations for fixed sources of income. For each fixed source, O/As must apply either a verified cost of living adjustment (COLA) or current rate of interest to previously verified or adjusted income. All non-fixed income must still be third party verified.
O/As have discretion regarding whether or not to adopt this rule. If chosen, the method may be used on the two annual recertifications following the annual recertification or move-in certification for which the income was third party verified. Every third year, all income must be third party verified.
If a household has both fixed and non-fixed income, the streamlined method may be used for the fixed income sources only.
Tenants may instruct owners not to use the streamlined method, in which case third party verification will be required.
Note: Low-Income Housing Tax Credit project owners should check with their HFA prior to using this streamlined method. While state agencies will be able to permit this method for LIHTC projects, they are not required to do so.
Definition of “Fixed-Income”
Examples of fixed income include
- Social Security, SSI, SSDI;
- It is interesting that HUD considers SSI as a fixed-income since it is subject to change at any time.
- Federal/State/Local/Private Pensions; and
- Periodic payments from annuities, insurance policies, retirement funds, disability or death benefits, etc.
The Adjustment Factor
O/As must verify all adjustment factors (e.g., COLA or current rate of interest) from public sources or tenant-provided, third party generated documentation. If such documentation is not available, third party verification is required. Once an adjustment factor is verified, it is applied to the previously verified or adjusted income amount.
EIV verification of income is not required in the streamlining years.
All the changes outlined here apply to the HUD Project-based Section 8 program, and one (streamlining) may also apply to the LIHTC program. These changes are now in effect.