Housing Plus

Housing Plus

Guidance and legal insight for all aspects of housing and community development

By the Housing Group at Ballard Spahr

HUD expands fair housing liability to include LEP discrimination

Posted in Enforcement, Fair Housing, Policy

Last week, HUD issued new guidance confirming that persons with limited English proficiency (LEP) are protected under the Fair Housing Act (FHA). LEP includes a limited ability to read, write, speak, or understand English.  The guidance reasons that LEP persons are covered by the FHA because of their close nexus with the protected class of national origin.

The new guidance confirms that discrimination against LEP persons may include intentional discrimination or disparate impact, the latter of which involves facially neutral policies that have a discriminatory effect.  Examples of prohibited or potentially discriminatory practices include:

  • Refusing to rent to or to renew a lease for a person who speaks a certain language, but renting to those who speak another language
  • Refusing to allow translation of housing-related documents, such as leases or mortgages
  • Lending on unfair terms to certain LEP groups who share national origin
  • Restricting a renter’s or borrower’s use of an interpreter
  • Requiring an English speaker to co-sign a mortgage

This prohibition on LEP discrimination in the housing context is an expansion of HUD’s regulations to assist LEP persons in programs receiving federal financial assistance. Under those regulations, recipients of federal financial assistance have an obligation under Title VI of the Civil Rights Act to assist LEP persons to access to federally funded programs, such as public housing, housing choice vouchers, and other subsidized housing. The new HUD guidance, in contrast, interprets LEP discrimination under the FHA, which applies much more broadly to most rental and home sales whether or not federal assistance is involved, as well as lending activity.  Further discussion of the new guidance is available on Ballard Spahr’s website.


HUD Issues Year-End Closing Deadlines for Mixed-Finance Deals

Posted in Government-Assisted Housing, Public Housing

The U.S. Department of Housing and Urban Development (HUD) recently issued a memo outlining its processing schedule for mixed-finance projects targeted to close by the end of 2016. According to HUD’s Office of Public Housing Investments, parties wishing to close a mixed-finance transaction by December 31, 2016 must:

  • Submit a complete Development Proposal by November 7, 2016. This deadline also applies to any Proposal revisions. Year-end approval is not guaranteed for project Proposals that HUD determines still need substantial revisions after its review.
  • Submit final, unexecuted evidentiary materials by November 14, 2016. If changes are made post-submission, HUD cannot assure its approval of those documents before December 30, 2016.

Due to staffing constraints during the last week of the calendar year, HUD strongly encourages parties to submit documents early and attempt to close before December 21st. A full copy of the HUD memo can be accessed here.

New Fair Housing Rule Extends Liability to Housing Providers for Harassment

Posted in Enforcement, Fair Housing, Government-Assisted Housing, Policy

This week, HUD issued a final rule that creates liability under the Fair Housing Act (FHA) for housing providers for occurrences of “quid pro quo harassment” or “hostile environment harassment.” The new rule takes effect on October 14, 2016.

The rule prohibits both quid pro quo and hostile environment harassment because of a resident’s protected class which, under the Fair Housing Act (FHA) includes race, color, religion, sex, familial status, national origin, or disability.

The most concerning section of the rule for housing providers relates to direct liability exposure for any type of discriminatory housing practice. The rule creates three categories of direct liability for housing providers—liability for the housing provider’s own conduct; liability for failing to take prompt corrective action relating to the conduct of its employees or agents; and liability for failing to take prompt corrective action for the conduct of a third party (such as another resident). As a result, providers could be liable for behavior among tenants if the housing provider “knew or should have known of the discriminatory conduct and had the power to correct it.” This potentially interjects housing providers into disputes among tenants related to harassing behavior.  See Ballard Spahr’s e-alert on the rule for more discussion of the new rule and it’s implications.


District Court Dismisses Disparate Impact Claims in Texas

Posted in Community Development, Enforcement, Fair Housing, Government-Assisted Housing, Low Income Housing Tax Credits, Tax Credits

After several years of litigation, the U.S. District Court for the Northern District of Texas recently dismissed disparate impact claims filed against the Texas Department of Housing and Community Affairs (TDHCA) in the fair housing case, The Inclusive Communities Project, Inc. v. The Texas Department of Housing and Community Affairs.

The Inclusive Communities Project (ICP) claims alleged that TDHCA’s procedures for allocating low-income housing tax credits had a disparate impact on racial minorities and thus violated the Fair Housing Act (FHA). Following the District Court’s initial ruling that ICP made a successful prima facie showing of disparate impact, the case was appealed to the Fifth Circuit and U.S. Supreme Court. Even though the Supreme Court held that disparate impact claims were cognizable under the FHA, the case was remanded so ICP’s claims and TDHCA’s defenses could be reassessed in light of the standards in the Supreme Court verdict and new U.S. Department of Housing and Urban Development regulations for evaluating disparate impact claims.

On August 26, 2016, the District Court held that ICP failed to make a prima facie showing of disparate impact under the current standard because its claims (i) did not identify any specific, facially neutral policy that caused the disparate impact, (ii) were in essence claims disparate treatment, and (iii) failed to demonstrate that TDHCA’s policies actually caused the statistical disparities asserted by ICP. For more information, see the Housing Group’s e-alert on this verdict.

Housing Opportunities through Modernization Act of 2016 (HOTMA) Signed into Law

Posted in Government-Assisted Housing, Legislative Initiatives, Public Housing, Section 8

On July 29, 2016, President Obama officially signed H.R. 3700- Housing Opportunities through Modernization Act of 2016 (“HOTMA”). Our previous blog post highlighted some of HOTMA’s most significant changes to the current housing choice voucher program. The Section 8 and public housing components of the bill will become effective upon the issuance of notice or other regulation from the U.S. Department of Housing and Urban Development.


President Obama to sign Housing Opportunities through Modernization Act of 2016

Posted in Government-Assisted Housing, Legislative Initiatives, Public Housing, Section 8

On July 19, 2016, bill H.R. 3700, more commonly known as the Housing Opportunities through Modernization Act of 2016 (“HOTMA”), was presented to President Obama for signature after being unanimously approved by the U.S. Senate on July 14th. First introduced in October 2015, the bipartisan bill previously passed in the U.S. House of Representatives back in February of this year. Although HOTMA touches on a variety of housing issues such as veteran’s assistance, rural housing, and mortgage insurance, the bulk of the legislation deals with reforms to the Section 8 housing choice voucher (“HCV”) program and public housing. Some of HOTMA’s most notable proposed changes to the current HCV statute include:

  • Extending the length of project based voucher (“PBV”) initial contract or extension terms from 15 to 20 years;
  • Adjusting the total allowable number of PBV assisted units in a project to the greater of 25 units or 25% of all dwelling units;
  • Modifying procedures to determine tenant income and tenant rents;
  • Allowing greater flexibility in awarding and administering PBV contracts; and
  • Simplifying initial inspection procedures.

The full text of the bill can be found here. As of Monday July 25th, the bill has not yet been signed, but signature is expected shortly. Ballard Spahr will continue to monitor this legislation and related regulatory updates to come.

HUD proposes Processing Guide for 2530/Previous Participation reviews; comments due June 16th

Posted in FHA-Insured Financing, Government-Assisted Housing, Policy, Uncategorized

On May 17, 2016, HUD published a notice in the Federal Register to announce the issuance of the “Processing Guide for Previous Participation Reviews of Prospective Multifamily Housing and Healthcare Programs’ Participants” (the “Processing Guide”). A copy of the Processing Guide can be accessed here.

HUD proposes that the Processing Guide be used to supplement the proposed rule published in August that announced changes to regulations at 24 CFR Part 200, Subpart H, which govern the previous participation review process (the “Proposed Rule”). HUD reports that commenters expressed concern that the Proposed Rule was overly broad, which could further complicate the current process. In response to those comments, HUD proposes that the Processing Guide be used to supplement the Proposed Rule with specific information on review procedures, including, for the first time, detailed information on how “flags” are to be handled.

The Processing Guide is subject to a 30-day comment period ending June 16, 2016.

In addition to feedback on the Processing Guide, HUD also solicits comments on the following topics:

  1. HUD intends to revise 24 CFR 200.210 to state that the regulations are to be supplemented by the Processing Guide and that significant changes to the Proposed Guide will be subject to a 30-day notice and comment period.
  2. HUD also intends to add a definition of “Risk” to the Proposed Rule. HUD did not provide an actual definition, but states that the definition would clarify that the FHA Commissioner must determine whether the Controlling Participant (as defined in the Proposed Rule) could be expected to participate in the Covered Project (as defined in the Proposed Rule) in a manner consistent with furthering the HUD’s purpose of supporting and providing decent, safe and affordable housing for the public.

Ballard Spahr provides comments to HUD’s proposed revisions to RAD documents

Posted in Government-Assisted Housing, Legislative Initiatives, Policy, RAD

As a follow-up to our March 24, 2016 post, on May 16, 2016, Ballard Spahr submitted comments to the U.S. Department of Housing and Urban Development (HUD) on proposed revisions to documents used in the Rental Assistance Demonstration (RAD) Program, including the Housing Assistance Payments (HAP) contracts, RAD Use Agreement, RAD Conversion Commitment, and Financing Plan. The proposed revisions to the RAD documents represent substantive changes, as well as the incorporation of established policies and riders into the body of the documents.  A full copy of Ballard’s comments can be accessed here.

All comments on the revised RAD documents submitted to HUD can be found on the Regulations.gov website.

HUD issues deadlines for RAD closings in CY2016

Posted in Government-Assisted Housing, RAD

Earlier this week HUD issued the following memo, which sets deadlines for RAD closing in CY2016. For efficient closing of RAD transactions in November and December, public housing authorities and developers should remain mindful of these processing deadlines. Planning ahead and incorporating the following issuance dates into operating schedules will help ensure your projects advance in a timely manner:

TO: CHAP Awardees

FROM: Thomas R. Davis, Director, Office of Recapitalization

DATE: May 3, 2016

RE: Schedule Requirements for Closing RAD Transactions in 2016

Schedule Requirements for Closing RAD Transactions in 2016

This memo is to inform you of the Office of Recapitalization’s schedule for processing and closing RAD transactions before the end of the 2016 calendar year. If you intend to close your RAD transaction by November 30, 2016 (in order to have an effective HAP date of December 1, 2016) or by December 31, 2016, you must meet or beat the following schedule. We are providing advance notice of these dates to ensure that you plan accordingly to lead to a successful closing.

To close by 11/30/16

Complete this step on or before

To close by 12/31/16 Complete this step on or before
Upload all required Financing Plan documents* July 1 August 1
Receive a RAD Conversion Commitment (RCC) September 1 October 1
Submit complete closing package September 15 October 15
All RAD documents approved and ready for HUD signatures November 18 December 16

*Note: For FHA-insured financing, the FHA application should also be submitted on or before the date associated with the Financing Plan submission.  Make plans with your FHA lender to keep your financing on track.

Please note that adherence to these dates does not guarantee that HUD will be able to accommodate your November or December closing. We expect those months to be the program’s busiest-to-date.  If transaction volume exceeds our processing capacity, as we expect it will, HUD may prioritize our processing of transaction documents based on several factors, including:

  • The prioritization categories for CHAP processing listed in Section 1.11 of the RAD Notice.
  • Critical deadlines beyond the control of the PHA and its development team. Note that HUD will require documentation of these deadlines when considering this factor.
  • De-prioritization of transactions in which the PHA has needed an extension of the original RCC expiration date.

We strongly recommend working toward closings prior to October to reduce the risk of potential delay due to increased volume in the final months of the year.

If you have any questions regarding these matters, please contact your Transaction Manager.


RAD Team

HUD publishes new Fair Housing guidance on criminal background checks

Posted in Fair Housing, Government-Assisted Housing, Policy

On Monday, HUD published new guidance for landlords conducting criminal background checks as a condition of renting housing.  This guidance is applicable to all providers or operators of housing and real estate related transactions subject to the Fair Housing Act (including private and nonprofit landlords).  Generally, HUD cautions that, while using criminal background checks in screening applicants for housing, landlords must be careful in their use of criminal convictions and must consider them on an individualized basis with a focus on the nature, severity, and recency of the conviction as it relates to the legitimate and substantial interests of the housing provider. Otherwise, landlords may face allegations that their actions had a disparate impact on protected groups.  The use of arrest records as a sole factor for denying tenancy is also prohibited.  Further discussion of the guidance is available on Ballard Spahr’s website.