For owners of multifamily properties, the COVID-19 outbreak poses serious challenges to both safety and finances. Various federal agencies are taking steps to help owners and tenants, and we have highlighted some of the key information below.
Federal Stimulus Package – Phase 3
On March 26, the Senate reached a deal on the third phase of the stimulus package related to the spread of the coronavirus – The CARES Act. That package includes several provisions relevant to owners of multi-family properties:
- A 120-day moratorium on new evictions for nonpayment of rent and other charges in any HUD, USDA Rural Housing, and Low Income Tax Housing Credit programs and FHA-insured multi-family properties. The bill also prohibits landlords from charging late fees or other penalties for nonpayment of rent or other charges during this time.
- A 90-day forbearance on federally backed mortgages for borrowers experiencing financial hardship related to COVID-19.
USDA Rural Development – Rural Housing Service
For Section 515 properties:
- Tenant certifications due March 31, April 30, and May 31 for multi-family properties have had deadlines extended to June 30 with no late fees or overage charges. This extension will allow for more time to complete needed certifications while avoiding face-to-face meetings.
- Late fees on Section 515 mortgages will be waived, subject to waiver authority.
- The deadline for Section 515 Annual Financial Statements due March 31 will be extended 30 days. USDA is exploring whether a longer extension is appropriate and will provide further guidance.
- Owners are encouraged to work with tenants whose income has been impacted by the outbreak of COVID-19. Current policy states that owners must process an interim recertification at the tenant’s request if there is a change in income of $50 or more per month.
- Visit rd.usda.gov/coronavirus for information on Rural Development loan payment assistance, application deadline extensions, and related topics.
HUD – Office of Multifamily Housing Stakeholders
- All audited financial statements due to HUD in March or April 2020 now have a 30-day extension. The Office of Multifamily Housing Programs will continue to monitor the situation and may provide additional extensions.
- The Office of Multifamily Housing Programs is postponing REAC property inspections for all multi-family properties until further notice. Where there is an urgent need or a reason to believe that there is a threat to life or property, HUD quality assurance inspectors will conduct inspections in compliance with CDC guidelines.
- If tenants are ill or have concerns about meeting face-to-face for their recertification interview, signing consent forms, or signing form HUD-50059, the owner may consider extenuating circumstances. It is recommended the owner begin or accomplish the above actions within 90 days of being advised of the extenuating circumstance.
- If subsidized residents experience a loss or reduction of income as a result of the COVID-19 outbreak, owners should apply their existing policy related to processing an interim recertification in the event of a decrease in income lasting longer than one month.
- Multi-family property owners and agents can access property operating accounts for all reasonable and necessary preparedness and response actions related to COVID-19, including supplies, staff hours, and overtime. No advance HUD approval is required to access operating account funds. To the extent that owner advances are required, owners should receive HUD approval in advance, especially if the owner expects repayment before the distribution of annual (or semiannual) surplus cash.
- For more detailed updates on HUD policies in place to help multi-family property owners deal with the COVID-19 outbreak, click here. For more general housing-related updates, visit hud.gov/coronavirus.
Single Audit submission
- On March 9, 2020, OMB issued a memorandum to provide agencies with flexibility in reporting related to grants. Federal agencies awarding grants should permit grant recipients and subrecipients that have not yet filed their single audits with the Federal Audit Clearinghouse as of March 9, 2020 and that have fiscal year-ends through June 30, 2020, to delay the completion and submission of the Single Audit reporting package for six months beyond the normal due date.
SBF is keeping up with all the latest developments, and we are committed to keeping our clients up to date as well. If you have questions about how the new rules apply to your multifamily property, we can help. Call 727-888-9200 or email info@sbfcpa.com.