HUD’s Office of Multifamily Housing Programs (Multifamily) sent an email on March 25 to owners and operators of private multifamily properties assisted through the Project-Based Rental Assistance (PBRA) program with a reminder about the tenant income recertification process for households experiencing rent payment arrears.
Tenants may request an income recertification before their next scheduled income recertification (called an “interim recertification”) for a variety of reasons, including a change in household income that may affect the amount of rent they owe. Multifamily reminds owners that they must (emphasis in the email) conduct an interim income recertification within a reasonable period of time after a household makes a request. Multifamily indicates that a reasonable time period should not be greater than 30 days from the date the household reports the decrease in income.
NLIHC notes that the “Housing Opportunity Through Modernization Act” (HOTMA) final rule modified the existing rule [24 CFR §5.657(c)], adding the 30-day “reasonable time” guideline [§5.657(c)(1)]. It also changed the existing regulation by stating that owners must (instead of “may”) adopt policies prescribing when and under what conditions a household must report a change in family income or composition [§5.657(c)(4)].
The Multifamily email states that an owner/agent must (emphasis in the email) retroactively apply any reduction in rent owed by a household starting with the first day of the month after the date of an “action” that caused the decrease in income. An action might be a reduction in hours worked as a result of an employer’s decision, loss of a job, an injury, a household member moving out, etc. The email couches the requirement for retroactive rent adjustment based on a household complying with an owner’s interim income reporting requirements. NLIHC points out that this retroactive provision is new in the regulation [§5.657(c)(5)(i)] but has been part of Multifamily practice as outlined in Handbook 4353.3 REV-1, Chapter 7, Section 2.
Multifamily’s email adds that if a household does not comply with an owner’s interim reporting policies and the owner discovers that a household failed to report a decrease in income and later recertifies, any rent reduction must be started at the first rent period following the household’s income recertification. However, an owner has the option of applying the rent reduction retroactively if the option is provided for in the owner’s written policies. These provisions reflect HOTMA regulation changes [§5.657(c)(5)(ii)].
The Multifamily email concludes by encouraging owners to review and apply their hardship exceptions for households that fall behind on their rent [See §5.630].
NLIHC notes that the HOTMA regulation changes indicate that an owner may decline to conduct an interim income reexamination of a household’s income decreases by less than 10%. However, an owner has the discretion to set an income decrease threshold lower than 10% in order to provide households more chances to weather income declines. [§5.657(c)(2)]
The Multifamily email focuses on income decreases. Advocates should be aware that the HOTMA final rule also addresses interim income reexaminations when a household experiences an income increase of 10% or more.
Read the March 25 Multifamily email at: https://tinyurl.com/5c2675s7
Details of the final HOTMA rule are available in Notice H 2023-10/PIH 2023-27 (modified on February 2, 2024), Attachment I, Section I.7 (page 107).
More information about Project-Based Rental Assistance is on page 4-86 of NLIHC’s 2024 Advocates’ Guide.