NAHMA Rural Update: USDA Rural Development Office Provides COVID-19 Multifamily stakeholder FAQ – April 6, 2020

Dear NAHMA Members,

Below, please find an update from USDA Rural Development’s Office of Multi-Family Housing.  This update includes answers to several frequently asked questions regarding the impact and effects of COVID-19 on various Multi-Family Housing stakeholders.  

COVID-19 Multifamily stakeholder FAQ – April 6, 2020

Multi-Family Housing


Multifamily Housing Partners,                                                                            

Rural Development is monitoring the effects that COVID-19 (Coronavirus) is having on the multifamily housing community and has been providing regular internal guidance to staff on how to answer questions they receive. Although your assigned Servicing Official should remain your primary contact for questions, we would like to provide answers to some frequently asked questions to our owners, agents, and other external stakeholders.


Q1: 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 recertification 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.

For tenants not receiving Rental Assistance, the CARES Act signed on March 27, 2020 suspends evictions for nonpayment for a 120 day period, and restricts owners and management agents from charging late fees or otherwise penalizing tenants who are unable to pay rent. We encourage owners to be as flexible as possible with tenants during this time.

Q2: The CARES Act provides recovery payments, up to $1,200 for individuals, and $500 per qualifying child. Should these amounts be included in tenants’ income?

A: No. These payments are refundable tax credits on an individual’s 2020 taxable income that are being paid in advance. Do not include these payments when recertifying a tenant’s income.

Q3: What if a Multifamily Section 514, 515, or 538 borrower experiences financial hardship due to COVID-19 and is unable to make their mortgage payment?

A: The 2020 CARES Act allows Multifamily borrowers experiencing a financial hardship due, directly or indirectly, to the COVID–19 emergency forbearance for up to 90 days. To qualify, the borrower must have been current on its payments as of February 1, 2020. Separate communication was distributed on forbearance on April 2, 2020, but Section 514 and 515 owners may reach out to their servicing official for information on how to request a forbearance.

Guidance on 538 forbearance requests will be released very shortly.

Q4: Can property owners and agents use property or reserve funds to alleviate financial hardship caused by non-payment of rent by residents having trouble because of COVID-19?

A: Yes. For Section 514 and Section 515 properties (see Handbook 2-3560, Chapter 4, Section 3), borrowers may utilize property operating accounts or make an authorized withdrawal of funds from a reserve account to meet an emergency shortfall in operating expenses when the emergency is beyond the control of the borrower and threatens life, safety, or the physical security of the project. Properties should reach out to their assigned Servicing Official if they anticipate needing reserve funds to pay operating expenses.

For properties with a Section 538 Loan Guarantee, the lender holds the reserves. The lender is required to protect the value of the asset, which includes proper use of reserves to protect the financial interest of the property. The lender has the discretion to use the reserves if it is in the best financial interest of the property (Handbook 1-3565, Chapter 7 Section 7).

Q5: What precautions or changes to property operations can management take to promote social distancing and prevent the spread of COVID-19?

A: We encourage owners and management agents to adhere to all state and local guidance with respect to containing the spread 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 are 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.

Please also remember that properties must consider Reasonable Accommodations to rules any COVID-19 temporary rules to accommodate persons with disabilities, such as if a tenant needs a caregiver assistance the caregiver must be allowed on the property, even if visitors to the property have been restricted.

Thank you for your critical work supporting affordable rural housing. We are proud to partner with organizations like yours to improve the quality of life and increase prosperity in rural America. We are in this together, and we will get through it together.

Nancie-Ann Bodell
Deputy Administrator
Multifamily Housing


 Thank you,


Michal Machnowski
Manager of Government Affairs
National Affordable Housing Management Association
400 N. Columbus St., Suite 203
Alexandria, VA 22314
703-683-8630 (ext. 116)
703-683-8634 (fax)
[email protected]