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COVID-19 | Federal Housing Guidance – HUD, Rural Development & LIHTC Updates

There have been an array of updates from HUD and USDA Rural Development, and some discussion about adjustments for LIHTC. Below is a summary of Federal Housing Guidance for HUD, Rural Development, and LIHTC in response to the COVID-19 outbreak.

Eviction MoratoriumHousing Eviction Notice

On March 27, 2020, the current administration signed the CARE Act to address to provide relief to those affected by  COVID-19.

Applicability of Eviction Rules

Section  4024 of the act establishes a 120-day moratorium for covered properties on:

  • Eviction filings
  • Charging of late fees

Covered Properties – The term “covered property” means:

Any property that participates in a covered housing program as defined in section 41411(a) of the Violence Against Women Act of 1994, including the following programs:

  • Low-Income Housing Tax Credit (LIHTC) properties
  • HOMEInvestment Partnerships program
  • USDA Rural Housing (RD) properties
    • Public Housing properties
    • Section 8 properties
  • HUD’s McKinney-Vento homeless programs
  • Section 221(d)(3) Below Market Interest Rate (BMIR) Program
  • Section 236 Rental Program
  • HOPWA housing program
  • Section 202 supportive housing for the elderly
  • Section 811 supportive housing for people with disabilities
  • Housing Trust Funds**
  • Properties with a federally backed mortgage loan or a federally backed multi-family mortgage loan.

Multifamily Housing

HUD Guidance on Annual and Interim Recertification Protocol during COVID-19


HUD has issued guidance regarding the completion of recertifications during the COVID crisis through the publication of a Q&A and through a Memorandum dated April 09, 2020, Titled  Annual and Interim Recertification Protocol during COVID-19.

The memo provides the following guidance:

Extenuating Circumstances

HUD reminds owners/agents that when COVID-19 prevents a re-certification from being completed by the effective date, the delay is a result of an extenuating circumstance.

“HUD considers the CDC’s recommendations for controlling the spread of the virus as well as shelter-in-place and similar orders as qualifying as an extenuating circumstance.” 

Extenuating circumstances are circumstances that are beyond the control of the tenant. (You can find HUD’s requirements regarding extenuating circumstances in the HUD Handbook 4350.3, Paragraph 7-8 D.4  on page 7-20.)

If it is determined that extenuating circumstances were present, the effective date of the recertification does not change. The tenant rent and the assistance pay will be retroactive to the effective date of the recertification.

In the memo, HUD It is recommended the owner begin, and if possible, complete the recertification actions within 90 days of being advised of the extenuating circumstance.

This guidance in HUD’s memo does not mean that owners/agents can just cease to conduct all recertifications. Owners/agents should utilize all technology available to complete tenant certifications.  It is important to remember that properties that fall below a 90% active status in TRACS may see an interruption in subsidy.

Tenant Self-Certifications for Interim and Annual Recertifications

HUD will allow assisted tenants that have lost income due to COVID-19 to self-certify for annual or interim recertifications. The self-certification of income can be provided to the owner/agent via mail or email. The owner/agent may collect the original documents from the household at a later date.  For households who have not lost income or who are reporting an increase in income, HUD’s income verification requirements must still be followed. HUD verification requirements only permit the self-certification of income if third-party verification could not be obtained.

Verification of Income

As a result of the extenuating circumstances due to the COVID-19 virus, HUD states that the owner/agent may accept certification documentation by email or other electronic delivery at the owner’s discretion; however, if the owner receives electronic documentation, and HUD requires original documents, the owner/agent must collect the original documents from the tenant at a later date.

Collecting Tenant Signatures

For owners or tenants impacted by the COVID-19 virus, HUD is allowing the use of “alternate signatures.”An “alternative signature” is a copy or an image of a signature that is sent via email, fax, or other electronic means (i.e., Onedrive, Dropbox). “Alternative signatures” may only be used IF the original, “wet” signature is obtained within 90 days of the latest date that federal, state, or local orders restricting movement to essential activities are terminated.

Forms that require “Wet Signatures”

Any “wet” signatures to be obtained in the time period noted above include any Interim or annual recertification forms or certification that requires a tenant signature. (HUD-9887/9887-A, HUD-50059, Model Lease/addendums,  (unemployment certifications, zero income certifications, child support certifications,  etc.)

Form HUD-9887/9887-A and Form HUD-50059

When a tenant’s “wet” signature cannot be obtained on form HUD-9887/9887-A or form HUD- 50059, due to extenuating circumstances owner/agent needs to document the tenant file with the reason for the delay and the specific plans to obtain the signature(s).

Tenant Rental Assistance Certification System (TRACS)

Use one of the following three (3) extenuating circumstances codes when submitting AR and IR, where an extenuating circumstance is present due to the COVID-19 virus:

1 = Medical (medical staff have quarantined the tenant)
2 = Late annual certification due to accommodation or extenuating circumstances.
10 = Other

A correction certification to remove the extenuating circumstance code must be submitted to TRACS once the appropriate signature(s) is obtained on form HUD-50059.


Rural Development Multi-Family Housing COVID-19 GuidanceUSDA-RD Housing

Rural Development (RD) has created a web-based resource page regarding COVID-19. This resource page provides links to recent notices and a Q&A.

In the Multifamily Q&A, RD provides guidance related to challenges presented by this public health crisis. For Multi-Family housing, RD answered several questions, including a question that I have been receiving quite a bit regarding the treatment of zero income tenants.

Q: How can owners and management agents assist tenants who experience a reduction in income due to COVID-19?

A:  For tenants receiving Rental Assistance, an interim re-certification should be completed as quickly as possible. We encourage agents to be accurate but flexible, including receiving information by phone or email, and making accommodations when income changes can’t be verified due to business closures.Given the high number of potential zero-income certifications, we are suspending Handbook 2-3560 Attachment 6-B used to verify living expenses for zero income interim recertifications. Tenants who have been laid off due to COVID-19 do not qualify for income annualization as mentioned in Handbook 2-3560 Chapter 6 Section 6.9 (4), as this emergency is not a seasonal or predictable layoff. Rent should be calculated based on current income.

In addition to the above question above zero income households, the Q&A also clarified that:

  • Recovery payments under the CARES Act are not to be treated as income
  • The 2020 CARES Act emergency forbearance provision applies to Multi-family borrowers experiencing financial hardship due, directly or indirectly, to the COVID–19 emergency forbearance for up to 90 days.
  • Section 514 and Section 515 property owners and agents can utilize property operating accounts or authorized reserve withdrawal to alleviate financial hardship caused by non-payment of rent by residents having trouble because of COVID-19
  • Management may take reasonable precautions, including closing playgrounds, having site staff work remotely, or delaying non-essential maintenance. However, management must not remove tenant access to essential shared amenities like laundry rooms. Access can be changed; for example – management may institute a sign-up for laundry time to ensure social distance is maintained and providing disinfecting wipes to clean the laundry machines.
  • If staff is no longer maintaining office hours, management must ensure tenants have a way to maintain contact, report emergency maintenance issues, and ask questions or request an interim certification. It is strongly recommended that both a phone number and email address are provided to tenants as contact options. Electronic rent payment may be offered as an option, but must not be mandatory, and no additional fees may be charged.
  • Digital signatures may be utilized during the recertification process as needed.

LIHTC COVID-19 GuidanceLIHTC Housing

At the time of this writing, the IRS has not issued any guidance regarding relief related to challenges presented by COVID-19.

The National Council of State Housing Agencies (NCSHA) sent a letter to the IRS on March 23, 2020, asking for the IRS to issue guidance and/or grant relief related to the following ten issues:

  1. Provide a 12-month extension of the 10% Test deadline for carryover allocations as required by IRC Section 42(h)(1)(E)(ii) and IRS regulation 1.42-6.
  2. Provide a 12-month extension of the 24-month minimum rehabilitation expenditure deadline as required by IRC Section 42(e)(3) and IRC Section 42(e)(4).
  3. Provide a 12-month extension of the placed in service deadline as required in IRC Section 42(h)(1)(E)(i).
  4. Provide at minimum a 12-month extension of the 25-month rehabilitation period currently allowed under IRS Revenue Procedures 2014-49 and 2014-50 to properties that suffered a casualty loss due to a Presidentially declared a major disaster in the 25-month period prior to the onset of COVID-19. State Housing Credit agencies should be allowed to set restrictions within this period.
  5. Provide a 12-month extension of the year-end deadline for property restoration for any property that suffers a casualty loss not associated with a major disaster during 2020 (until December 31, 2021). State Housing Credit agencies should be allowed to set restrictions within this period.
  6. Provide a 12-month moratorium on both physical inspections and tenant file reviews as required by IRS regulation 1.42-5. State Housing Credit agencies should continue to monitor emergency work orders during this time and should be allowed to continue or resume inspections depending on their assessment of the situation in their state and their ability to do so, but there should be no penalty for states or owners if inspections are not completed during this time.
  7. Provide a 12-month moratorium on tenant income recertification requirements. State Housing Credit agencies should be allowed to continue or resume requiring property managers to conduct recertifications depending on their assessment of the situation in their state and their ability to do so.
  8. Provide a 12-month extension for all open noncompliance corrective action periods. State Housing Credit agencies should be allowed to reinstate deadlines depending on their assessment of the situation in their state and their ability to do so.
  9. Suspend the yet-to-be implemented IRS regulation 1.42-5 which will increase the number of required compliances monitoring physical inspections even further than required under current regulations and exacerbate the inspection backlog.
  10. Provide guidance clarifying that the temporary closure of property amenities and common space facilities during the duration of the crisis (with the exception of laundry facilities) will not negatively impact a property’s eligible basis and result in loss of Credits.

Every Household May Have Their Own Set of Unique Circumstances…

Every household may have their own set of unique circumstances. Some residents may have had to cancel their internet and/or cell phone plans, which means that they cannot access email or the “cloud.”  Further, some residents may have internet service, but may have never signed a document electronically or even emailed a picture. These residents may need instructions, help, and most importantly – our patience.  Of course, snail mail is also an option, but then again, some residents may not have stamps in their homes and may not be able to leave their homes to purchase stamps.  My point is, everyone, has different challenges during this crisis. So it is important to communicate openly and listen to your residents to best assist them in getting their certification completed.

Contact us if you have any questions.

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