FAQs regarding LTRAP
HUD regulations are constantly evolving and changing. The Questions and Answers (Q&As) below are intended to provide only general information. For reliable answers to your specific situation you are encouraged to consult LTRAP’s staff.
Moreover, since various housing agencies have discretion to adopt different policies and procedures, you must consult the staff of a specific Agency for information regarding that Agency.
Accordingly, LTRAP cannot accept responsibility for any information that you receive, unless it was given to you by one of our own caseworkers, and specifically for your particular circumstances. By the same token, LTRAP is not in a position to advise you regarding the policies and procedures of any other Section 8 Agency.
- 1. Who can benefit from Homeownership Program? How?
- 2. How much time do I have to find a unit under the Homeownership Program?
- 3. I understand that the unit I wish to purchase must be inspected by a Home Inspector and also by LTRAP’s Housing Quality Standards (HQS) Inspector. When should this inspection take place? Before or after I close?
- 4. What is income targeting? How does it work?
- 5. What is included in income, and what is not?
- 6. How is my rent determined?
- 7. May I rent from my relatives and receive rental assistance?
- 8. Is fraud worth it? Will I get caught?
- 9. I understand that HUD recently adopted restrictions on students’ eligibility to receive section 8 benefits.Who is affected, How?
- 10. How does the new tiered Asset Test work? Does this new local preference affect current program participants?
- 11. We hear that the Family Self-Sufficiency (FSS) Program has really taken-off. What are the advantages? How does it work?
- 12. What are the new Occupancy Standards? Who is affected?
- 13. Homeownership vs. Leasing: Status report:
- 14. Last year the Payment Standards went down. This year they’re going up. What gives?
- 15. I recently requested a rent increase. Not only was my request denied, but my rent was actually lowered. Why did this happen? When and how do you test for rent reasonableness? Can you provide the specific units you compared my unit to?
1. WHO CAN BENEFIT FROM THE HOMEOWNERSHIP PROGRAM? HOW?
Any Section 8 participant or voucher holder who meets the necessary requirements:
• At least one adult household member must be working a minimum of 30 hours per week for the past year, earning at least $14,500;
• You must not have owned a home in the past three (3) years;
• A two-family home is NOT eligible;
• You must secure your own financing;
• You have to come-up with a down payment of at least three (3%) percent of the purchase price, of which at least one (1%) percent is from your own money;
• Maximum term of participation is ten years on a fifteen year mortgage, and fifteen years on a mortgage of 20 or more years.
The Payment Standard (PS) grows with the household; it does not shrink. This means that if you are eligible for a three-bedroom PS, you can move into a five-bedroom house, but you will receive assistance up to the three-bedroom PS. If your family size increases, the PS will increase accordingly, up to the maximum of a five-bedroom PS. In other words, the cap on the applicable PS is household size or dwelling unit size, whichever is less. However, if your household size decreases, the PS will not be reduced below the original (move-in) size.
2. HOW MUCH TIME DO I HAVE TO FIND A UNIT UNDER THE HOMEOWNERSHIP PROGRAM?
After you are approved to participate in the homeownership program, you have 120 days to find a home, and then another 90 days to close (take possession) on the home. If your name has been reached on the Waiting List, and you are planning to buy a unit that has not yet been constructed you cannot defer your assistance until the unit is built. In order to secure the voucher you will have to rent a unit under the rental assistance program, and then move to homeownership once that home is built.
3. I UNDERSTAND THAT THE UNIT I WISH TO PURCHASE MUST BE INSPECTED BY AN INDEPENDENT HOME INSPECTOR AND ALSO BY LTRAP’S HOUSING QUALITY STANDARDS(HQS)\INSPECTOR. WHEN SHOULD THESE INSPECTIONS TAKE PLACE? BEFORE OR & AFTER I CLOSE?
In order for homeownership assistance payments to begin, your unit must pass our HQS inspection and you must close on the home (take title and possession. We suggest that you hold-off the closing on the property until after the home passes BOTH the independent inspection AND our HQS inspection. This way you can be certain that once you do close, we will be able to promptly begin your homeownership assistance payments.
4. WHAT IS INCOME TARGETING? HOW DOES IT WORK?
Income targeting is a HUD requirement that at least 75% of all new admissions to the Section 8 program must be from the “extremely-low” income category, those whose income is at or below 30% of the area median income. The other 25% can be from households whose income is from the “very-low” income category, at or below 50% of area median income. The way it works is that when your name is reached on the waiting list, we will call you in to verify your eligibility by reviewing your income and assets to determine what income level fits your household. If you fall into the “extremely low” income category, we can help you right away. If your income falls into the “very-low” income category we can only help you if your name is next on the very low income list. This lists moves slowly since we can only help one out of every four eligible households right away. You will be advised when your name is reached. If we determine that your income is above the “very-low” income limit, then you are ineligible to participate. This means that we cannot help you at all, and your name will be removed from the Waiting List. However, if your income drops within six months of our determination of your ineligibility you may request a redetermination and a reinstatement. To do so you must contact our office immediately after your income drops, and we will recalculate your income to determine your eligibility for Voucher issuance. However, after six months have elapsed, even if your income drops, we cannot assist you. You would have to reapply.
Please see page 2 on this Table of Income Sources
6. HOW IS MY RENT DETERMINED?
For an Answer to this, and other key questions, click here for a Program Fact Sheet.
7. MAY I RENT FROM MY RELATIVES AND RECEIVE RENTAL ASSISTANCE?
Effective June 17, 1998 HUD adopted a Final Rule limiting the circumstances under which a landlord could lease a unit with Section 8 voucher or certificate assistance to a relative of the landlord. It would permit such leasing only if the Housing Agency determines that the leasing would accommodate a person with disabilities. The rule is intended to reduce the potential for misuse of Section 8 assistance.
HUD Section 8 program participants renting from relatives prior to June 17, 1998 are grandfathered, and do not have to move out to continue receiving program benefits.
Not all relatives are excluded. When any member of the tenant household is a son, daughter, grandson, granddaughter, parent or sibling of the Owner of the unit, the household is ineligible to receive Section 8 assistance in that unit. Other relatives are not excluded, including uncles, aunts, nephews, nieces, cousins, and non-blood relatives such as a sister in-law, brother-in-law or a step-parent who own the unit in their own name, provided that the spouse who is a blood relative has no ownership interest in the unit.
8. IS FRAUD WORTH IT? No. WILL I GET CAUGHT? Sooner than later.
For a fuller answer in English, please click here. Para mas iformacion en Espanol, oprima aqui.
9. I UNDERSTAND THAT HUD ADOPTED RESTRICTIONS ON STUDENTS’ ELIGIBILITY TO RECEIVE SECTION 8 BENEFITS. WHO IS AFFECTED, HOW?
On December 30, 2005 HUD published a Final Rule regarding students enrolled in institutions of higher learning, which became effective January 30, 2006. The Rule has two (2) parts:
(1) Students’ eligibility to participate, and, (2) how to calculate the income they receive. This Rule does not apply to student children who are part of the household. Accordingly: (1) If a student is enrolled at an institution of higher education, is under the age of 24, is not a veteran, is unmarried and does not have a dependent child, is individually ineligible for section 8 assistance, or the student’s parents are – individually or jointly – ineligible for assistance, no section 8 assistance can be provided to the student. Since LTRAP has a preference for families over singles, this will rarely become an issue.
(2) Included in the household income is any educational financial assistance received in excess of tuition payments, UNLESS the student is over 23 AND with dependent children, (both). This includes amounts received as scholarships or Work-Study, when these amounts are in excess of tuition. For comprehensive HUD guidance on the complex Student Rule, including more detailed Questions and Answers, please click here.
10. HOW DOES THE NEW TIERED ASSET TEST WORK? DOES THIS NEW LOCAL PREFERENCE AFFECT CURRENT PROGRAM PARTICIPANTS?
HUD’s Section 8 regulations, unlike other programs such as Food Stamps and TANF, do not cap the amount of assets a participant may have. However, income from the assets is included in calculating annual income. Within each preference group of applicants on the Sec. 8 waiting list, (e.g., Lakewood residents, families vs. singles, extremely low income households, very low income households, etc.) LTRAP will give preference first to applicants at the lowest asset tier. This means that within any preference group, we first select families with lower assets. However, so long as applicants remain income-eligible, they can have even substantial assets, still qualify for Sec. 8 assistance, and of course, remain on the waiting list.
Since the Waiting List includes both households owning a significant amount of assets and those with very little assets, the Board felt a need to reach and assist the most needy—those with the lower assets—sooner, starting from the very bottom, and moving up the ladder of asset value tiers. This does not mean that those with higher asset values will not be assisted; it will only delay the time it will take until they are reached. The asset groupings are tiered in $20,000 brackets; starting at below $20,000, then below $40,000, and so forth up to $100,000. At $100,000 and over all are in one tier. So a family with assets at or above $100,000 will wait quite long—until all lower-asset families are assisted. Based on public comment we have added $5,000 per child to the income categories. This means that a family with one child can have up to $25,000 and still be considered in the $20,000 bracket. Similarly, a family with four children can have up to $40,000 to be considered in the $20,000 bracket.
The new asset-tier preferences went into effect starting with January 1, 2007 admissions, and will in no way affect participants enrolled prior to that date, or even new admissions once they are enrolled in the program.
To make this clearer, let us take for example two families of equal size currently on the waiting list, both earning $15,000 annually, and both paying $800 in rent. One family has $20,000 in assets, while the other has only a checking account with an average balance of $325. Obviously, without Sec. 8 assistance both families are struggling to pay rent, utilities, food, and all other household expenses. But the family without assets has no savings to fall back on when things get tight. The other family can pull money from their savings in an emergency. As such we want to reach the most needy first.
The concept behind this asset-test preference is the same as the concept driving HUD’s rule that families with extremely-low income are to be assisted before families with very-low income: those with the greatest need should get the assistance soonest.
11. WE HEAR THAT THE FAMILY SELF-SUFFICIENCY (FSS) PROGRAM HAS REALLY TAKEN-OFF. WHAT ARE THE ADVANTAGES? HOW DOES IT WORK?
Family Self-Sufficiency is a win-win situation. Anyone anticipating an increase in their household income stands to benefit significantly, and is encouraged to contact the FSS Coordinator to check out this program. Basically, the FSS Coordinator will assist you in coming up with a Program Goal. As you begin to achieve the goal, and begin increasing your income, LTRAP matches the increase you are paying in rent in an escrow account for you. When you conclude the program, you get the full amount in the account. It costs you nothing.
12. WHAT ARE THE NEW OCCUPANCY STANDARDS? WHO IS AFFECTED?
In view of HUD budgetary cutbacks, we tightened our occupancy standards to 2 persons per bedroom, regardless of age or gender, so as to conserve funding. Anyone who already had a larger slot is not affected. unless they moved to another unit. The savings enabled us to lease-up more families
13. HOMEOWNERSHIP VS. LEASING: STATUS REPORT:
Homeownership is a wonderful program and has worked very well for all those enrolled in it. In fact, a good number of homeownership participants no longer need our help and are currently paying their mortgage on their own. Due to the decrease in housing prices we have seen an increase in housing closings over the past year.
14. SOME YEARS THE PAYMENT STANDARDS GO DOWN. THIS YEAR THEY’RE GOING UP. WHAT GIVES?
Due to the soft rental market and the budget cuts that we experienced, LTRAP’s Payment Standards are set usually at 90% of the Fair Market Rent. By reducing the Payment Standard, and thus the amount we pay for each family, we were able to assist more families. By law, we must keep the Payment Standards at no lower than 90% of the Fair Market Rent. HUD recently increased the Fair Market Rents, so we had to conformingly raise the Payment Standard to 90% of the new Fair Market Rent.
15. I RECENTLY REQUESTED A RENT INCREASE. NOT ONLY WAS MY REQUEST DENIED, BUT MY RENT WAS ACTUALLY LOWERED. WHY DID THIS HAPPEN? WHEN AND HOW DO YOU TEST FOR RENT REASONABLENESS? CAN YOU PROVIDE THE SPECIFIC UNITS YOU COMPARED MY UNIT TO?
Overview of the rent reasonableness system used by LTRAP. As required by HUD regulations, this Agency performs a rent reasonableness assessment: (1) before approving initial move-in to a unit, and, (2) annually, only if a landlord requests a rent increase. To perform this assessment, LTRAP purchased the Comp+Smart Rent Reasonableness System software from Novogradac, Inc. This program was developed in conjunction with Quadel Consulting, one of the leading management consulting firms for the HUD-assisted housing industry. Novogradac completed a comprehensive rental market survey in Lakewood. The data they obtained was programmed into their rent reasonableness software, using regression analysis and proprietary algorithms. The final product is a web-based program. In assessing rent reasonableness for a specific unit, the pertinent data components are entered, e.g., address, bedroom size, number of bathrooms, square footage, type of utilities and who provides them, as well as unit and housing complex amenities. The system searches for 3 comparable units, and then performs a mathematical algorithm to match the survey database of units as closely as possible to the subject unit. The software assigns different weights and values to the different unit components to arrive at a composite rent amount. A specific unit’s rent valuation is based on its comparable, overall component evaluation. LTRAP has been successfully utilizing this system, and finds it an accurate, reliable tool. The system enables LTRAP to approve approximately 90% of landlords’ rent increase requests. Property owners and managers are invited to visit Novogradac’s website, at www.novoco.com for a free demonstration of the system.
In view of the fact that the rental market in Lakewood is constantly changing, an updated survey is undertaken periodically, as determined by market conditions. Therefore, if a unit is approved or denied an increase one year, that may not be the case the following year, depending on how the rental market has changed, as reflected by updated surveys. If a landlord does not request a rent increase, HUD regulations do not require a rent reasonableness “test” to be performed. For example, if a landlord did not request a rent increase one year, even if the unit’s rent may have been above the market, LTRAP would not unilaterally lower it to market level, since no increase was requested. If the landlord does request an increase the following year, and the assessment finds the rent to be above the market, LTRAP has no choice but to lower the rent to market, per HUD regulations. The rent increase request is the ‘trigger’ which activates the rent reasonableness assessment, and the regulatory action it may mandate LTRAP to implement.
There are two reasons why LTRAP cannot disclose the comparable 3 units relied upon in the program’s rent reasonableness assessment: (a) confidentiality, and (b) complexity:
(a) Owners participating in the rental market survey shared their financial information, (as to the rents charged for a specific unit), on the specific assurance that the information would not be made public.
(b) The software assigns specific numerical weights (points) to specific unit features, such as unit type, location, size, number of bedrooms, bathrooms, etc. A specific value is then assigned to each corresponding weight factor, and a composite weight/valuation is then reached for each unit. In the rent reasonableness assessment process, the software compares and analyzes comparable componentized valuations, using regression analysis, to arrive at a composite, total valuation for the subject unit, and 3 comparable units. Thus, while the individual components may not necessarily be similar, the overall composite ‘score’ and resultant valuation will be the closest available from the large dataset. To anyone unfamiliar with the specific componentized breakdown of the respective units, and the corresponding weights and valuations, the internal comparison is undecipherable: meaningless at best, and most probably, entirely misleading.