FHA: “CARES Act Forbearance: During the CARES Act forbearance period, HUD does not consider the eligible FHA-insured multifamily borrower to be delinquent or in default. While HUD views loans subject to the CARES Act forbearance to be current during the forbearance period, for MDDR reporting purposes, lenders have the option to request an extension of the election to assign. Multifamily Housing may also grant extensions on filing the notices of default in MDDR until the CARES Act forbearance period expires. Consistent with the guidance provided in ML 2020-09, HUD asks that lenders submit executed and implemented forbearance agreements to the HUD Multifamily field office with property oversight. For extended forbearance, prior HUD approval is required as referenced in Notice H 20-07.
Extended Forbearance or Repayment Post-CARES Act: Pursuant to ML 2020-09, lenders should report the loan as delinquent or in default in MDDR after the CARES Act forbearance period ends if the multifamily borrower does not immediately make the loan current, including when the loan is subject to a forbearance and/or repayment agreement extending beyond the expiration of the CARES Act forbearance period. Lenders are advised to follow MDDR reporting guidelines at the time of such default. Lenders must inform HUD if the loan is subject to an extended forbearance and/or repayment agreement and should request an extension to assign the loan to HUD in order to permit the borrower to perform under extended forbearance and/or repayment agreements.
Notwithstanding the above, lenders should use MDDR to record delinquencies and defaults if there is a default under the Loan Documents not related to nonpayment.”
HUD: “No, the funds can cover normal operating and capital funds expenses in addition to the extraordinary uses that arise as PHAs prevent, prepare, and respond to the pandemic. The relevant language is on page 1 of PIH Notice 2020-07 (emphasis added):
“The funds may be used for eligible activities under the Operating Fund and the Capital Fund (Subsections (d)(1) and I(1) of Section 9 of the United States Housing Act of 1937 (1937 Act)) during the period the program is impacted by coronavirus, and other expenses related to preventing, preparing for, and responding to coronavirus….”
PIH Notice 2020-07 provides examples of various activities that a PHA may undertake in order to prepare for, prevent or respond to COVID-19, however the notice is not a comprehensive list, and PHAs may use the funding to pay for other reasonable expenses that fall under the umbrella of “preventing, preparing for, and responding to coronavirus.” PHAs should maintain documentation to support uses. If the PHA is still unsure of what expenses are ineligible, PHAs may contact HUD via email to PIH-COVID@hud.gov for public housing.”
HUD: “Prior to the passage of the CARES Act on March 27, 2020, Operating and Capital Funds could be used to support the costs of certain planning and prevention activities, supplies, software, and modification of PHA workspaces. See FAQs published March 13, 2020 under “Eligible Uses.”
The CARES Act provides supplemental public housing Operating Funds and permits PHAs to use previously appropriated Capital Funds and Operating Funds flexibly until December 31, 2021, per PIH Notice 2020-24. PHAs can use CARES Act supplemental public housing Operating Funds for all standard eligible uses for these funds during the limited period of availability of these funds. PHAs can also use these supplemental funds for “expenses related to preventing, preparing for, and responding to coronavirus, including activities to support or maintain the health and safety of assisted individuals and families, and activities to support education and childcare for impacted families.” HUD issued detailed guidance on eligible uses of the funds on April 28, 2020. PIH Notice 2020-07 provides examples of eligible expenses. PHAs should refer first to that notice for guidance.”
HUD: “Public hearings/meetings required as part of the Capital Fund 5 Year Action Plan process must still occur. PHAs are permitted to hold such meetings remotely or online provided they can accept and post answers to questions submitted during the meeting. In selecting a streaming service, PHAs must ensure they can comply with Section 504 of the Americans with Disability Act. PHAs that continue with public meetings should follow the latest CDC, state, or local health department guidance.”
HUD: “Public hearings/meetings required as part of the annual planning process must still occur. The statement, “HUD is waiving these requirements,” on page 7 of PIH Notice 2020-13, REV-1 in reference to waiver PH and HCV-1 refers to waiver of the provisions affecting the timing of the PHA’s Plan submission. As an alternative requirement, HUD established new submission dates to accommodate potential postponement of public hearings due to limitations on large gatherings but is not waiving the public comment requirements in 24 CFR 903.17. PHAs are permitted to hold such meetings remotely or online provided they can accept and post answers to questions submitted during the meeting. In selecting a streaming service, PHAs must ensure they can comply with Section 504 of the Americans with Disability Act. PHAs that continue with public meetings should follow the latest CDC, state, or local health department guidance.”
National Association of Home Builders: “Yes. The legislation funded several programs in these amounts:
- Community Development Fund (CDBG) — $5 billion. CDBG is a flexible block grant program, commonly used by communities for a wide range of needs. CDBG is primarily used for activities that benefit low- and moderate-income individuals.
- Section 202 housing for the elderly — $50 million
- Section 811 housing for those with disabilities — $15 million
- Homelessness Assistance Grants — $4 billion. This funding is for homeless individuals, shelter and Public Housing Authorities (PHAs). However, this funding will also assist those who find themselves on the verge of homelessness due to severe income loss from COVID-19.
- Fair Housing Act initiatives — $2.5 million. Of this total, $1 million will go for education and outreach and $1.5 million is for enforcement.”
HUD: “Production: For FHA insured transactions, please see Q&A #14 of the Office of General Counsel Question & Answers, FHA Multifamily Housing Production Closings, Coronavirus (COVID-19) (May 24, 2020).
Asset Management: Electronic signatures are allowed for all subsidy administration, including contract renewals, rent schedules, and HAP Assignments, and all other MFH submissions.
Recapitalization: For RAD and other real estate transactions, the recorded documents typically have “wet” signatures that are notarized. The HUD closing attorney will have to advise if electronic signatures are acceptable in the recording offices in their jurisdictions. Documents that will not be recorded may be signed electronically.
For all transactions, electronic signatures must conform to the requirements of Notice H 20-4, as well as applicable federal, state, and local requirements.”
HUD: “Unless advised otherwise by the providing party, FHA lenders and their counsel should assume any PII provided by a HUD closing attorney was intended for the sole purpose of facilitating the timely and efficient completion of a real estate transaction during a nationally declared pandemic. The PII should not be used for any other purpose, including redisclosure to other parties, without the express consent of the individual providing the PII. If the real estate transaction has concluded, please immediately delete the PII from all systems and records. If the real estate transaction has yet to conclude, please ensure the information is deleted upon completion or, if earlier, at the request of the HUD employee.”
National Association of REALTORS©: “Until we get more guidance from Treasury and IRS as to what constitutes “adverse financial consequences” we will not know for sure. By its literal meaning, adverse financial consequences could arguably be even $1 less in income due to tenants not paying rent due to the shutdown. However, it is possible that the regulations would not recognize the ownership of a small number of rental properties as meeting the definition of a business. We hope that the regulations will be liberal in their interpretation, but until they are released, we cannot say for sure. Retirement plan administrators may rely on an individual’s certification that the individual satisfies the conditions to be a qualified individual in determining whether a distribution is a coronavirus-related distribution. However, the individual is entitled to treat such distribution as a CRD only if they actually meet the eligibility requirements. Thus, a person who believes they do qualify may instruct their retirement plan to issue a distribution, but how it is taxed will be determined by the guidance the IRS ultimately issues.”
FDIC: “The definition of a statutory multifamily mortgage requires a DSC of at least 120 percent for a fixed-rate loan, or 115 percent for an adjustable rate loan. The DSC ratio is based on the property’s annual net operating income (NOI) for the most recent fiscal year and the loan’s annual debt service. Because there typically is a lag before a financial institution receives a property’s financial statements, the DSC ratio usually is based on the prior year’s operating results. Therefore, any accommodation provided to a statutory multifamily mortgage borrower affected by COVID-19 in 2020 will generally not affect eligibility as a statutory multifamily mortgage until 2021. For determining whether the DSC ratio meets the eligibility criteria in 2021, financial institutions can use the property’s NOI from 2020, taking into account any accommodations that modify, extend, suspend, or defer the payments to borrowers affected by COVID-19.”
FDIC: “Yes. The Loan Modification Statement states that financial institutions’ efforts to work with borrowers with prudently underwritten one-to-four family mortgages whose loans are not past due or carried in nonaccrual status will not be considered restructured or modified for the purposes of the agencies’ respective risk-based capital rules. This approach applies to multifamily loans of $1 million or less that qualify as residential mortgage exposures.
For other multifamily loans, the criteria to “not be restructured or modified” is not included within the requirements for a statutory multifamily mortgage to receive a 50 percent risk weight under the risk-based capital rules. However, a statutory multifamily loan will receive a 150 percent risk weight if it is 90 days past due or on nonaccrual status. Institutions should refer to the Interagency Statement for additional information on when a loan is considered past due or on nonaccrual status.”
USDA: “The CARES Act allows Multi-family borrowers to request forbearance if they are experiencing financial hardship due to COVID-19. Multi-family Housing has existing authority in 7 CFR §3560.453to take special servicing actions as part of a workout plan on Section 514 and 515 loans to prevent a default, and under that authority will approve a deferral of up to 3 monthly loan payments. For your convenience, attached is a sample streamlined workout agreement proposal that MFH considers to be in compliance with the requirements of 7 CFR §3560.453(c). Borrowers are welcome to use that sample or submit your requests orally or in another written format to your assigned Multi-family Servicing Official.”
HUD: “Stakeholders are reminded to ensure that their responses remain faithful to obligations under the Constitution, Fair Housing Act and related regulations. Exigencies associated with important and timely response to issues surrounding COVID-19 are not the basis for unlawful discrimination based on race, color, religion, national origin, sex, disability or familial status.”
HUD: “During the COVID-19 National Emergency, HUD will temporarily permit the deferral of the submission of the capital needs assessment (CNA) for Section 223(a)(7) projects until the earlier of the following: when a capital needs assessment can be safely completed or one year after endorsement of the loan. The current reserve for replacement balance must be transferred in full at time of endorsement, and the lender must continue existing monthly payments into the reserve for replacement account until a CNA has been completed.
All distributions from surplus cash will be temporarily suspended from time of endorsement of the loan up to the submission, review and approval of the updated needs assessment. Once the CNA has been prepared, reviewed and approved by HUD, the borrower must first use surplus cash funds to offset repairs and/or to increase reserves. Depending on the financial analysis included as part of the CNA, the annual deposit to the reserve for replacement account may also be revised downward.
This flexibility to delay submission of the CNA is only available to the existing servicing lender and for projects with a REAC score of 80 or better. The lender must also certify in its narrative that to the best of the lender’s knowledge, there are no physical needs that would otherwise exceed the repair limitations permitted by the Section 223(a)(7)
HUD: “Certain State Historic Preservation Offices (SHPOs), Tribal Historic Preservation Offices (THPOs) and federally recognized tribes have indicated that they are unable to participate in the standard 30-day consultation period during an office closure. The National Conference of State Historic Preservation Offices maintains a database https://www.achp.gov/coronavirus with the operating status of each SHPO office and whether or not it can accept electronic submissions. There is no equivalent database for THPOs or for federally recognized tribes; therefore, federal agencies must reach out directly to assess their status.
According to the ACHP, the Section 106 deadlines for a SHPO and/or THPO response will be considered paused while an office is closed or work conditions are such that the SHPOs and/or THPOs are unable to carry out their Section 106 duties due to the COVID-19 outbreak. This pause would also apply to consultation with federally recognized tribes for projects that involve ground disturbance.
HUD will not issue a Firm Commitment (for FHA-insured loans), the RAD Conversion Commitment (RCC) (for public housing conversions), RAD Conversion Agreement (for Project Rental Assistance Contract (PRAC) conversions)), or RAD Approval Letter (for Section 8 Moderate Rehabilitation/Single Room Occupancy (Mod Rehab/SRO) conversions until it has met its obligations under Section 106.
HUD can generally accommodate a consultation process that requires more than 30 days. However, HUD will be monitoring this situation closely to minimize or avoid any adverse effect that office closures may have on applications. Please alert HUD if a project has an urgent time frame.”
HUD: “Due to the COVID-19 pandemic, Multifamily Housing is allowing the postponement of regular 10-year PCNA updates (as outlined in Section 10.10 of the MAP Guide) until September 30, 2020, for properties with PCNA reports that are due between March 15 and September 30, 2020. This postponement will allow for additional time for the scheduling, conducting, and submitting of the 10-year PCNA.”
HUD: “PHAs may use Capital Funds to cover costs of capital expenditures designed to improve the safety of residents such as improved ventilation systems and high-grade filters, portable air filtration equipment, and portable humidifiers.
Capital Funds may be used to pay for necessary equipment to protect people engaged in modernization activities (e.g. PPE for workers involved in construction). In addition, they can be used to pay for transportation costs of people engaged in modernization activity if transportation is disrupted by COVID-19 (e.g. because public transit is suspended).
PHAs may also use Capital Funds as Management Improvements to cover costs such as emergency planning, public health training, IT equipment and upgrades to allow for remote public meetings or telework by PHA staff, and sanitation equipment for common areas.
In accordance with 2424 CFR 905.314(l), all PHAs may transfer up to 25 percent of a Capital Fund grant to Budget Line Item (BLI) 1406 to be used for costs that are eligible under the Operating Fund Program. PHAs with fewer than 250 units, that are not designated as troubled, and have no significant modernization needs or debt service payments may transfer up to 100 percent of a Capital Fund grant to BLI 1406 to fund items eligible under the Operating Fund Program.
PHAs may use Capital Funds to cover these activities even if they are not in an approved 5-Year Action Plan as stated in 24 CFR 905.200(b)(18). However, PHAs will need to update affected 5- Year Action Plans and corresponding Annual Statements/Budgets within a reasonable period of time.”
HUD: “Operating Funds can be used to cover staff labor hours for planning and response, PPE, and cleaning supplies such as disinfectants, sanitizers, etc. If a PHA chooses to contract out specialized cleaning services, operating subsidy can be used. Additionally, Operating Funds may be used for costs to transport staff to perform essential functions.
Small PHAs (fewer than 250 public housing units) may use operating funds as described above, or to pay for activities listed in the question related to eligible uses of capital funds as described below.”
HUD: “Yes, a PHA may apply for an extension to the obligation end date of its Capital Fund grants, as long as the request is received prior to the obligation end date. In most cases, the obligation extension justification related to COVID-19 would be pursuant to 24 CFR 905.306(d)(5), ‘An event beyond the control of the PHA.”
HUD: “Assisted families in the public housing and HCV programs currently have the ability to report decreases in income. PHAs adjust the family share of the rent and granting hardship exemptions consistent with applicable regulations and the PHA’s policies. A decrease in family income is not the basis for a termination of tenancy action (HCV program) or eviction from public housing.
In light of these extraordinary circumstances, HUD encourages PHAs and Owners to prevent the displacement of families through eviction which significantly increases the risk of homelessness and overcrowding.
Tribes and TDHEs administering the IHBG program are encouraged to use their discretion and best judgment to provide relief to any residents who cannot meet their rent obligations under these circumstances.”
HUD: “Waivers are not needed for voucher extensions and lease up. With respect to HQS inspections, HUD encourages PHAs to use existing inspection flexibilities. If they have not already, PHAs should consider adopting biennial inspections (Notice PIH 2016-05: Attachment K: Biennial inspections and the use of alternative inspection methods and inspection timeframes). Under this notice, a PHA that moves to biennial inspections for all of the units in its portfolio does not need to update its Admin Plan to reflect the change. However, if for any reason, this change would require an update to a PHA’s Administrative Plan, HUD will consider waiving the requirement for the Admin Plan changes to be formally adopted by the board in order to become effective (24 CFR § 982.54 (a)). For a full list of PHA flexibilities involving HQS inspections please refer to PIH Notice 2017-20.”
HUD: “Currently, there is no new or dedicated funding to create emergency plans for the COVID-19 virus. For PHAs operating public housing, the time for staff to prepare plans should be considered an operating expense. For PHAs operating the HCV program, the time for staff can be considered an administrative expense.”
HUD: “If a lender is uncertain as to the market, then the appropriate response is to delay submission of the application. Should an unforeseeable event occur at the time of submission of the application (plant/office closings in the market directly impacting the project) which would void or alter the underwriting conclusions, then any refund would depend upon the time that HUD spent in review. The application fee is earned at time of submission, per requirements in the MAP Guide.”
HUD: “No, outside of HUD’s use of the ‘stop the clock’ option to respond to deficiencies, there is no mechanism to pause the process. There can be no assurance that previously submitted due diligence reports will remain acceptable. If a lender is uncertain as to the market, then the appropriate response is to delay submission of the application. The alternative is to incorporate mitigants to offset the impact of current market challenges. The lender may also choose to withdraw the application and resubmit at a later date with updated reports, as further discussed in Question #18 in this section.”
HUD: “Owners, general contractors, and lenders should proactively assure that Surety Bonds and Builder’s Risk insurance policies will remain in place and will not be impaired by any job slow- down, temporary cessation of work, or any failure to report or communicate emergency conditions or consequences.”
HUD: “HUD requires that lender or third-party appraisers inspect the property and the subject comparables in accordance with MAP Guide requirements to insure the credibility of the resulting valuation conclusion. To the extent that the contracted appraiser cannot physically inspect the site, the appraiser should contract with a local, appropriately credentialed appraiser to perform the site inspection in his/her stead. In this situation, the report must identify the appraiser conducting the site visit, their credentials, and a certification regarding the limit of their inspection, if any.
When appraisers are unable to inspect units on-site due to COVID-19 concerns, they should consider the following options:
- Conduct inspections of vacant units. If vacant units are the only ones inspected, the appraiser should make an extraordinary assumption that the sample units viewed are representative of all the units. The inspector should provide a detailed review of the differences between these units and the others considered for the valuation.
- Use of construction drawings and other available documentation to supplement their physical inspections
- Use of information from CoStar or other reporting services and other available documentation to supplement their physical inspections.
- Note any previous inspections, if applicable.
Any/all sources of information used for valuation purposes must be documented, and multiple sources of information on interior site conditions are preferable to enhance the reliability and credibility of the valuation, in lieu of an actual physical inspection.
Appraisers and lenders should contact the HUD field office that will be processing the application for additional guidance.”
HUD: “If the lender’s travel is restricted (thereby limiting the lender from inspecting the site), the capital needs inspection report may be accepted for underwriting purposes on the condition that the lender inspects the property prior to the issuance of the insurance commitment. Therefore, to the extent that a lender is not able to physically inspect the property due to COVID-19 concerns, the conclusions of the report must be included without modification as part of the application.
HUD’s appraisers and market analysts, as necessary, must inspect the property and subject comparables in accordance with Multifamily Accelerated Processing (MAP) requirements to insure a credible valuation conclusion.”
HUD: “If a third-party capital needs inspector cannot physically inspect the required sample of units due to COVID-19 concerns, the Regional Production Director may waive the sampling requirements in favor of inspecting only vacant and model units on a case-by-case basis for recently built insured properties (within 10 years of submission) or non-insured properties built within the past five years. All other properties will require a complete inspection prior to issuance of the firm commitment.”
- “Production: For FHA insured transactions, please see the section on Office of General Counsel-MFH Closings below for specific information.
- Asset Management: Electronic signatures are allowed for all subsidy administration, including contract renewals, rent schedules, and HAP Assignments, and all other Multifamily Housing submissions.
- Recapitalization: For RAD and other real estate transactions, the recorded documents typically have “wet” signatures that are notarized. The HUD closing attorney will have to advise if electronic signatures are acceptable in the recording offices in their jurisdictions. Documents that will not be recorded may be signed electronically.
For all transactions, electronic signatures must conform to applicable federal, state, and local requirements.”
HUD: “Mortgage forbearance repayment is a negotiation between borrowers and lenders. HUD will not participate in those negotiations except where the loan in question is a HUD-held loan. While the forbearance agreement is entered into between the borrower and lender, a copy of the forbearance agreement must be provided in connection with actions requiring HUD approval, if any are included in the agreement. HUD provided guidelines in Mortgagee Letter (ML) 2020-09, dated April 10, 2020, to assist in borrower/lender negotiations; however, these guidelines are not required to be followed. This ML also provides information on the process for HUD-held loans.”
HUD: “HUD published guidance on a standard forbearance protocol, Mortgagee Letter 2020-09, dated April 10, 2020, to implement the provisions of the CARES Act and reduce paperwork and streamline processing for multifamily borrowers, servicers, and lenders. These guidelines can be found at: https://www.hud.gov/sites/dfiles/OCHCO/documents/2020-09hsngml.pdf
This guidance outlines the protocol for all Multifamily HUD loans, followed by separate guidance for FHA-insured, risk share, and HUD-held loans, including continuing program obligations.
Ginnie Mae has also published a blog post on forbearance as it relates to its issuers, which can be found here.”
HUD: “Yes MFH authorizes the use of guidance in this chapter for program participants under the Emergency Declaration for COVID-19. Note, however, the statutory and regulatory displaced person/family occupancy preference for properties with insured mortgages under Sections 221(d) and 236 and the refinance of Sections 221(d) and 236 mortgages under Section 223(a)7 of the National Housing Act as amended, only applies to states that are subject to a presidential Major Disaster declaration.”
Fannie Mae: “Leases for the current school year are already in place. Typically, these leases are paid on a monthly basis and very few leases are pre-paid for the semester or year. Most of the leases carry some form of parental guarantee that should help counteract any short-term destabilization of occupancy.”
HUD: “Congress appropriated additional funding for several Multifamily Housing programs through the CARES Act, most of which is designated for increased rental subsidy in HUD- assisted housing to cover tenants’ loss of income during the COVID-19 National Emergency. Through the CARES Act, HUD is also authorized to use designated funding to take necessary actions to respond to situations resulting from the COVID-19 National Emergency, including addressing unusual operating costs such as increased cleaning costs.”
Under the CARES Act, Congress provided the following additional funding:
- $1 billion to support Project-based Rental Assistance properties (Section 8 project-based properties),
- $50 million to support Section 202 Supportive Housing for the Elderly properties (with
- $10 million of that amount for additional service coordinator support), and
- $15 million for Section 811 Supportive Housing for Persons with Disabilities properties.
HUD: “HUD encourages borrowers and lenders to access any available Federal assistance or other resources, as may be necessary, to assist in meeting project operations and debt service. It is important to note that some forms of Federal assistance may come with requirements for recipients to ensure that they do not receive multiple forms of Federal assistance that serve duplicative purposes, as required under the Stafford Act.”