HUD Publishes Notice on HCV Landlord Penalties

On March 31, HUD published a notice titled “Notice on Remedies PHAs have for Poor Performing Owners in the Housing Choice Voucher and Project-Based Voucher Programs” (PIH Notice 2023-06). The notice informs PHAs of the available punitive measures or remedies they have against landlords that do not comply with their Housing Assistance Payment (HAP) contracts. The notice also discusses the punitive measures that HUD has against PHAs that do not comply with the HAP contract.

The notice discusses remedies that PHAs have for landlord non-compliance with the HAP contract. Potential breaches may include the following: violating any obligation under the HAP contract, including maintaining the unit up to Housing Quality Standards (HQS); violating any obligation under Section 8 of the U.S. Housing Act of 1937; committing fraud, bribery, or other corrupt or criminal acts related to any federal housing program; failing to comply with regulations for mortgage insurance of loan programs in certain instances; engaging in drug-related criminal activity; or engaging in violent criminal activity. If an owner fails to maintain the unit according to HQS, the PHA must take “prompt and vigorous” action to enforce owner obligations. The notice details other inspection-related scenarios when PHAs must take certain enforcement actions.

The notice also discusses instances when PHAs are required to exclude owners from the Housing Choice Voucher (HCV) and Project-based Voucher (PBV) programs. Instances when a PHA must not approve an owner’s participation include the following: the owner is debarred from participation; HUD directs the PHA not to approve the owner because the federal government has instituted an administrative or judicial action; or if HUD directs the PHA not to approve the owner because the owner has violated a civil rights law.

There are several instances where a PHA may also use its discretionary authority to exclude owners from HCV and PBV programs. Housing agencies may adopt policies that will exclude owners from participating in the voucher program. The PHA may exclude the owner for the following: violating the HAP contract; committing fraud, bribery, or other corrupt or criminal acts in connection with federal housing programs; engaging in recent drug-related criminal or violent activity; frequent non-compliance with HQS; not evicting tenants that threaten peaceful enjoyment of unit, threaten the health and safety of residents, or are engaged in drug-related or violent criminal activity; frequently renting units that do not meet state or local codes; and not paying taxes, fines, or assessments.

Housing agencies should not penalize owners that consider the nature, severity, and recency of tenant offenses, including mitigating circumstances before evicting.

For PHAs that fail to comply with program requirements, HUD has the authority to take certain punitive actions. The Department may do the following: offset administrative fees; prohibit use of funds in the administrative fee reserve account; direct the PHA to use funds in the reserve account to improve program administration; reduce HAP amounts; reduce other HUD funding amounts; or declare the PHA in default. The Department may also initiate claims against owners in certain instances.

The notice states that the Department may take similar actions against PHAs that do not follow PBV program requirements.

The full notice can be found here.

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