# Special Attention of: NOTICE 04-22

## All Regional Directors

**All Multifamily Hub Directors** Issued: November 10, 2004

**All Program Center Directors** Expires: November 30, 2005

**All Owners and Management Agents of**

**Multifamily Insured Properties**

# All Contract Administrators

**Subject:** Disaster Recovery Guidance by Multifamily Housing After a
Presidentially-

Declared Disaster

#  This Notice is intended to provide background and up-to-date guidance on HUD's policy and procedure regarding disaster recovery efforts by Multifamily Housing after a Presidentially-declared disaster. This Notice supersedes Notice 2004-18 and all prior directives on this subject. Until rescinded or amended this will be Multifamily Housing's procedures for disaster recovery.

# [Background:]{.underline}

This Notice is being issued to provide guidance to HUD Field Offices,
owners, agents and residents. Everyone is encouraged to be sensitive to
the problems and needs of those who were seriously impacted by
Presidentially-declared disasters.

When the President declares a disaster, HUD participants must check with
the Federal Emergency Management Agency (FEMA) to learn which counties
have been designated for disaster recovery and the corresponding
declaration dates. This information can be found on the Internet at
<http://www.fema.gov/disasters> or by calling the local FEMA office.

The procedures described in this Notice are in effect for all
Presidentially-declared disasters and will remain in effect for the
duration of the emergency. Any county added to a declaration will also
be eligible for disaster relief and, in such event, the provisions
established in this Notice will apply.

The Department will rely upon FEMA eligibility determination. Those
impacted by the disaster must make an application with FEMA, receive an
application number, and obtain a letter of eligibility from FEMA, which
specifically describes the type of eligibility. To obtain temporary
rental housing, an applicant must have the FEMA letter, which will
specify the applicant as displaced from their housing and as eligible
for housing assistance.

FEMA continues to certify eligibility from time to time. Owners and
residents are advised to check with the local FEMA office for ongoing
guidance.

Owners and residents are strongly encouraged to make an application to
FEMA. Owners, residents and displaced residents will not be afforded
relief under this Housing Notice unless they have been certified by FEMA
as eligible.

**[Waivers of Handbooks, Notices, etc.:]{.underline}**

Hub Directors should process requests for waivers of provisions in the
Office of Housing Handbooks and Notices that do not reflect statutory or
regulatory requirements, as quickly as possible. Hub Directors should
prepare a Finding and Determination, which justifies each waiver
request, and forward them to Headquarters for review and approval by the
Director of Multifamily Housing Asset Management. Upon approval by
Headquarters, please maintain a copy of the justification in the project
file. The Real Estate Management System (REMS - Problem Statement
Screen) must be updated when a request for a waiver is granted.

The Hub will develop and forward to Headquarters a policy for release of
project funds, inspection repairs and rehabilitation as well as the
approval of repair invoices. Upon review and approval by Headquarters,
the policy is to be implemented by the Hub for duration of the
emergency.

**[Priority for Permanent Rental Housing:]{.underline}**

Displaced residents may be moved to the top of the waiting list in
Section 221(d) and 236 projects for permanent rental housing as long as
the residents are FEMA certified as disaster victims.

**[Multiple Occupants in a Unit:]{.underline}**

The Department will allow multiple occupants in a unit provided it does
not create a health and safety problem. FEMA-certified displaced
residents can move in with families and friends occupying HUD-assisted
units on a temporary basis, provided that the host household obtains the
project owner's approval.

In the case of a Section 8-assisted unit, if a current, eligible family
chooses to allow a non-eligible FEMA-certified individual/family to move
into the unit on a short-term basis, the non-eligible family is
considered a guest of the eligible Section 8 family. A multifamily
project owner may allow the eligible family to house the guest(s) for a
limited period (e.g., 90 days) without interruption of the subsidy.
Residence by the eligible family is the predicate for continuation of
the Section 8 subsidy.

# [Leases and Rents:]{.underline}

Owners with persons to be housed under these temporary housing measures
should have the applicant execute a 30-day renewable lease. Subject to
state or local law, the lease should have a provision which states that
the lease terminates when the resident's permanent housing unit becomes
available or when FEMA no longer certifies a resident's FEMA
eligibility. Rents for these temporary housing units must be set at the
rents that were in effect immediately prior to the Presidential
declaration. In the event the rents are more than the FEMA-approved
rental assistance, the resident is responsible for paying the
difference.

**[Use of Community Space:]{.underline}**

Owners are encouraged to allow community space, kitchens, restrooms and
other facilities to be used for shelters or disaster recovery-related
activities.

**[Other Regulatory/Policy Relief:]{.underline}**

REAC Inspections -- The Department's practice is to postpone all
physical inspections of projects for a minimum of 30 days from the date
of the federally-declared disaster throughout the designated counties.
The Department will conduct an evaluation from time to time to determine
when, and for what counties, physical inspections will resume. When
inspections are resumed, information will be posted on the REAC web
site.

MF-FASS - Owners of multifamily properties located in the declared area
that sustained damage, and who are required to file an annual financial
statement (AFS), may request an extension of up to 30 days to file their
AFS. This extension request must be submitted electronically to REAC via
the Multifamily Financial Assessment Subsystem.

Occupancy Requirements -- Program occupancy requirements do not apply
for tenants who are afforded temporary housing.

Vacant Units -- Owners are encouraged to hold vacant units off the
market in anticipation of providing temporary housing to FEMA-certified
displaced residents. However, please note that for Section 202/811
projects, vacant units can only be provided for temporary housing for
FEMA-certified displaced residents, if there is no waiting list.

Evictions of Current Residents -- Owners are encouraged not to evict
residents who have not returned to their units in the impacted areas
after the units have been repaired, if the resident has a reasonable
basis for not returning (health, loss of income, loss of personal
property like furniture, etc.). Owners may hold the vacant units off the
market for a reasonable time as long as the rent is current. If the
resident is delinquent on rent payments, the owner is encouraged to make
a judgment based on the facts and circumstances of each case. Owners
must stay in contact with displaced residents and keep them informed as
to the date they can return to their units. However, if a displaced
resident moves from a shelter or from temporary housing to other
permanent housing, the owner is free to rent the unit.

Use of Escrows -- The Department will approve use of reserves for
replacements/residual receipts to make necessary repairs pursuant to
outstanding Departmental policies and Handbooks. Mortgagees have been
encouraged to provide priority processing for these requests. Once the
request for funds (Form HUD-9250) is received, the approval will be
expedited. Headquarters will use United Parcel Service for overnight
mailing. The field office must provide a specific address (not a post
office box) to ensure the release of funds can be expedited. Also, the
request for funds must be identified as "disaster relief."

Insure Loans Mortgagee Servicing -- HUD has instructed mortgagees to
allow maximum flexibility for owners with delinquent project loans in
the impacted areas. HUD encourages owners to quickly repair their
properties to reduce resident displacement and to permit the return of
displaced residents.

HUD-Held and 202 Mortgage Servicing -- The Department will allow
mortgagors to defer their payments, if they are using project funds to
repair the property while waiting for insurance benefits or disaster
financial assistance. HUD will approve a temporary forbearance plan
under these circumstances.

Resident Occupancy/Eviction -- Owners are encouraged to allow residents
who have been displaced from their unit to have a right of first refusal
for a reasonable time after their unit is repaired and ready for
re-occupancy. Owners must inform residents in writing when their unit is
habitable and can be re-occupied. Residents should be given a reasonable
time frame to return to their unit. Owners are encouraged not to evict
residents who have returned to their unit and who have reduced income
due to a job loss as a result of the declared disaster. Payment plans
for delinquent rents are encouraged. However, if a former resident moves
to other permanent housing, the owner may rent the unit.

**[Section 8 Assisted Units:]{.underline}**

Owners with residents under a project-based Section 8 contract whose
unit was rendered uninhabitable can temporarily lease a unit in another
building, which is habitable, under Uniform Physical Condition
Standards. The owner can sign a temporary lease on behalf of the
displaced Section 8 resident and begin to voucher for the contract rent
for that temporary unit. The owner then pays the contract rent on the
temporary dwelling until the resident's permanent rental unit has been
restored to a habitable condition and the owner notifies the resident
that they may resume occupancy of their unit. The resident is still
responsible for resident's share for the temporary unit.

Should the displaced resident fail to return, the owner may rent the
repaired unit to an eligible Section 8 applicant. Before doing so,
however, the owner must inform the tenant in writing that their
assistance is terminated. In the event that the owner rents the unit to
an eligible Section 8 applicant, the owner must first terminate the
lease that the owner executed on behalf of the displaced resident. In
addition, should the temporarily displaced resident move from the
temporarily leased unit before their permanent rental unit is repaired
and made available for their return, the owner can no longer voucher for
the temporary unit.

Once the original unit is fully repaired and ready for occupancy, all
Section 8 provisions apply. This arrangement calls for close contact and
cooperation between the owner and the resident.

In the event the owner may wish to rent temporarily a vacant Section 8-
assisted unit to a FEMA-certified displaced resident, the Department
will allow an owner to house this resident. However, the owner can only
voucher and the Department may only pay Section 8 housing assistance
payments for units occupied by eligible Section 8 families. Therefore,
there would be no housing assistance payment made on behalf of a
non-eligible Section 8, FEMA certified resident.

## [FHA-Insured Projects in Development Phase:]{.underline}

Vacant units in pipeline properties may be made available for temporary
housing and permanent housing, if they can be released early for this
purpose. Owners and local officials are encouraged to take the necessary
steps to make units available.

**[Insurance Loss Draft Approval:]{.underline}**

The Hub Director has the authority to execute insurance loss drafts.
Mortgagees are encouraged to expedite their approval of the draft as
well.

**[Office of Affordable Housing Preservation (OAHP) (Formerly Office of
Multifamily Housing Assistance and Restructuring --
OMHAR):]{.underline}**

For properties going through the mark-to-market process, OAHP will grant
a reasonable extension of time for owners impacted by the declared
disaster. This will allow for additional time to hold resident meetings
and for delays in property inspections and/or appraisals for affected
properties. For owners whose OAHP properties are not affected, but who
have documented properties elsewhere affected by the declared disaster,
causing them to be delayed in their responsiveness on any property going
through debt restructuring, OAHP will take these factors into account
when exercising its discretion about an owner's responsiveness and in
imposing time-related penalties.

**[Use of Reserves/Owner Contribution:]{.underline}**

The Department will allow the use of reserve escrows for immediate
project use to augment cash flow for the period of the emergency. Owners
must negotiate and sign a repayment plan with HUD. Reserves must be
replenished from local, state, or federal benefit programs as well as
insurance proceeds. Owner contributions during the emergency period can
be repaid to the owner under a plan approved by HUD.

**[Departmental Enforcement Center:]{.underline}**

Owners adversely affected by a declared disaster are encouraged to
contact the appropriate satellite office of the Departmental Enforcement
Center (DEC), in writing, if they are unable to respond in a timely
manner to any correspondence or notices issued by the DEC. Based on the
documentation submitted by owners, the DEC will consider the effect of
the disaster on the owner's ability to comply and will exercise
discretion in judging responsiveness before imposing any time-related
penalties or delaying inspections, as appropriate.

**[Questions:]{.underline}**

Questions about this Notice should be addressed to the Office of
Multifamily Housing Asset Management.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

John C. Weicher

Assistant Secretary for Housing-

Federal Housing Commissioner

**Distribution: W-3-1,**