MSHDA - Office of Housing Voucher Programs Policy and Procedures Manual

Chapter XI: Landlord Issues

Effective: April 2010

Introduction

This chapter contains uniform procedures regarding landlords who participate in the U.S. Department of Housing and Urban Development (HUD) Housing Choice Voucher (HCV) Program.

Section A: Payee Registrations

1. Registering for Electronic Funds Transfer (EFT)

Housing Agents (HAs) should strongly encourage HCV landlords to maintain an account on the Contract and Payment Express (CP&E) website www.mi.gov/cpexpress. An account will help reduce the time for issuing the landlord’s initial payments and allows the landlord to:

• Register for Electronic Funds Transfer (EFT),
  1. If registered for EFT, landlords can also track and review EFT payments issued to their account.
  2. Update a mailing address for payments issued through the State’s accounting system, and

Contract and Payment Express Account

The CP&E website has step-by-step instructions, which lead prospective landlords through the registration process. If the prospective landlord has questions about registration for EFT, they must contact the Vendor Registration Unit directly at:

State of Michigan
Department of Management and Budget
Vendor Registration Unit
P.O. Box 30026
Lansing, MI 48909

Vendor Registration Helpline: (517) 373-4111 or (888) 734-9749; Fax: (517) 373-6458.
Office Hours: Monday – Friday, 7:30 a.m. – 4:30 p.m.

EFT Account Limit - EFT payments can only be sent to one bank account. Landlords cannot setup EFT’s to multiple bank accounts and will only be able to register for EFT on one account. Any other payments issued to the same Tax ID number must be issued as paper warrants, or be transferred (EFT) to the one bank account established for the payee’s Tax ID number.

Electronic Funds Transfer Documentation

EFT payments do not receive a paper detail breakdown of the payment. If a landlord has questions regarding payments, they must be referred to their “contractor and payment express” account or the Vendor Registration Helpline number given above. MSHDA does not have access to a comprehensive breakdown of payment details, account numbers, or the name of the landlord’s financial institution. Refer the landlord to the Vendor Registration Unit for details on the routing and account numbers. Landlords can also request a paper detail from their financial institution, usually at a cost.

2. Completing the Payee Registration Packet (PRP)

All landlords who wish to participate in the HUD HCV Program must register on the Michigan Administrative Information Network (MAIN). To register via paper documents, the Vendor Registration Unit requires a W-9 form to be completed. In conjunction with the W-9, MSHDA requires the MSHDA-219 in order to register a landlord for participation in the Housing Choice Voucher (HCV) programs.

Items to note regarding the PRP and type of ownership:

1. The Tax ID number provided on both forms must match.
2. The MSHDA 219 and W-9 addresses do not need to match.
3. The MSHDA 219 information is used to enter a mailing address and contact information into Elite.
4. Landlord must provide a valid street address to register for payments.
5. MAIN utilizes the W-9 mailing address to issue the 1099.
6. The Internal Revenue Service (IRS) requires MAIN to have a W-9 on file for all vendors (landlords) to which the State issues payment.
7. All PRPs/Form W-9s require the signature and date of the individual owner or official of the corporation (including title).
8. The tax identification number on the W-9 must match the IRS record for the registered landlord’s name.
9. If the landlord’s name and tax identification number do not match the IRS records, the Vendor Registration Unit will issue a B-Notice (form identifying discrepancy) which could result in backup withholding being deducted from a landlord’s rental payment if the discrepancy is not corrected or addressed.

   Note:For EFTs, the landlord must complete the W-9 form either through their Housing Agent (HA) or online.

If the landlord is not on MAIN, or has a different name/Social Security Number (SSN) or Federal Employer Identification Number (FEIN)/mailing address, the landlord must provide documentation as follows:

1. PRP Form completion
   • The landlord must complete all boxes on each form. If the payee uses a Social Security number, an individual’s name must be identified in the “Name of Owner” box on the MSHDA 219 and on the first line of the Form W-9. For joint owners, write the second individual’s (or if issuing the HAP in care of) name on the first line of the “Remittance Address.” Enter the actual physical street address on the MSHDA 219. On the W-9 enter (and circle) the name of the individual whose SSN is identified on the MSHDA 219. Write the second owner’s name on the second line (if joint). Indicate the proper type of ownership (i.e. individual, partnership, or corporation) on both forms.
2. Providing a Valid Street Address
   • Landlords must provide and maintain a valid street address on file in order to participate with the HCV programs. They may provide a P.O. Box as the remittance address for payments and correspondence for the HCV programs as long a valid street address is also maintained on file.

3. Types of Ownership

Individual Ownership Versus Partnership

For IRS purposes, the definition of Partnership does not include a husband and wife unless the couple provides a Federal Employer Identification Number (FEIN). Partnerships require a FEIN whose configuration is: 00-0000000.

Corporation

All Payee’s which register as a Corporation require the use of a FEIN. A Corporation cannot use a SSN. Any PRP’s /Form W-9s indicating a business type of Corporation with a SSN (000-00-0000) must be returned to the landlord by the HA and corrected by the payee prior to submission. Incorrect forms will be returned to the landlords by the Vendor Registration Unit.

LLCs, Non-Profits, or Government-Owned must use a FEIN. However, if the owner is a LLC, s/he may use a SSN, but the ownership must be a single member. Enter the single member’s name on the “Name” line of the W-9 and enter the LLC’s name in box 2. On the MSHDA 219, the "LLC" box, Number 6, must be checked and LLC name added.

Foreign Ownership

Although rare, if a foreign owner has a Social Security number, they must complete a W-9. If they do not have a Social Security number, a Form W-8 (obtainable at any IRS office or we can supply) is required. The Payee Registration Unit will assign the foreign owner with a “dummy Tax ID #” for MSHDA to use in Elite and MAIN. The Departmental Tech (DT) will enter the foreign owner using their Social Security number or the dummy Tax ID# supplied by MAIN.

4. Landlord Address Changes

To process an address change, the landlord/owner must complete one of the following:

• A new PRP; or
• A signed and dated letter specifying the name change and including both the previous and new names and a social security number for the person whose name is changing.
• A signed and dated letter specifying the address change. The letter must contain both old and new addresses, tax identification number, and names of all current residents. An address must be a physical address, not a P.O.Box address.

Use of the Annual Re-examination Notice (MSHDA 52) will not be accepted for landlord address/name changes.

In order to issue payments, a landlord’s information must be entered into Elite with a valid mail code and they must be registered on MAIN. Refer to the Elite user guides for details on Elite entry. An error will be assessed to an HA’s transaction in Elite if the documents submitted are not correct, legible, and complete.

5. Submission of Payee Registration Forms

The HA submits the PRP/Form W-9 or change of mailing address to designated MSHDA staff person and forwards a copy to the DT for the central office file:

• Facsimile (FAX) original PRP/Form W-9 or address change documentation. MAIN requires an original PRP/Form W-9 be on file, or a signed document from the owner to change address; or
• Submit via regular United States Mail or other carrier. Staple Form W-9 on top of the MSHDA 219 and provide one photocopy or documentation identifying the address change.

Section B: Proof of Property Ownership

The HA submits the PRP/Form W-9 or change of mailing address to assigned MSHDA staff person and forwards a copy to the MSHDA Lansing office either by FAX or U.S. Mail or other carrier.

The MSHDA staff person enters the PRP/W-9 information into Elite, notifies the HA of the valid mail code, and forwards necessary documentation to MAIN.

1. Acceptable Proof of Ownership

At the time that an applicant is seeking housing, the Rental Unit Information (MSHDA 51b) form must be completed and include proof of ownership information. The property owner/landlord must provide the documentation required for proof of ownership and return the documentation to the assigned HA.

The acceptable proof of property ownership hierarchy is:

1. A title insurance policy for the property that shows the landlord as the owner of the property,
2. Title Commitment or Title Search
3. Copy of a recorded warranty deed, quit claim deed, or covenant deed.
4. Proof from a county or city website. Note: In some instances, it will be possible to ascertain proof of property ownership via the County or City’s website where the property is located. Property look-up services provided on-line vary with each government jurisdiction. For example, the Washtenaw County Register of Deeds allows free access to property tax information, while in Wayne County you must establish a business account and pay for all services on an individual basis.

Proof of ownership required for one to four (1-4) Unit Properties: Landlords may submit a title insurance policy, title commitment or title search showing the landlord as owner. The owner of the property will be described in Schedule A, No. 3 as having a "Free Simple Interest." Ownership must be confirmed for new admissions to the program for properties with one to four units.

As long as the tenant continues to reside in that unit, re-verification of property ownership is unnecessary. If at re-examination it is noted that only a Certification of Property Ownership (MSHDA 422) is in the file, the HA must verify property ownership and submit appropriate documentation with the re-examination transaction.

Note: If an authorized representative certifies ownership of a property on behalf of an owner, the Authorized Representative Certification of Property Ownership (MSHDA 423) must be used.

If there are five (5) or more units in the property: The owner/landlord must complete a MSHDA 51b for each assisted unit. However, proof of property ownership is not required.

2. Changes in Property Ownership

At the time that a change in property ownership occurs, new verification of property ownership must be obtained. Follow procedures in Section C - Change in Individual Ownership.

3. Property Ownership not Verified

A HAP Contract cannot be executed in cases where the property ownership cannot be verified. HA who are authorized to approve transactions must verify property ownership before approving a move in transaction.

For paperwork submitted to the central offices, if appropriate verification is not received by the Departmental Technician (DT), the DT will contact the HA and allow ten days for paperwork to be submitted. Cases lacking proof of property ownership cannot be approved. If documentation is not received within the ten days, then the case will be sent back to the HA. Note: A faxed copy followed by the original document will be acceptable.

Section C: Change in Individual Ownership

Changes in ownership occur when the individual, corporation, or partnership sells or transfers the property to another entity. If the new owner is not in Elite, a new PRP/W-9 must be obtained and forwarded to the Payee Registration unit. If this change affects multiple residents serviced by multiple HA, then forward a copy to the other affected HA to update all units changing ownership. A change in ownership does not require execution of a new contract/lease.

Required Documentation

1. When a change of ownership occurs, the HA must obtain a completed Assignment of Housing Assistance Payments Contract and Lease (MSHDA 411) signed by both the former and new landlords. The MSHDA 411 must identify all residents or a list of affected residents to be included with the MSHDA 411 and have an effective date for payments to change payees. The MSHDA 411 should be accompanied by one of the following legal documents:
   1. Bill of Sale; or
   2. Warranty Deed/Quit Claim Deed; or
   3. Land Contract; or
   4. Other Legal Document.

   Note: If one of the parties does not sign the MSHDA 411, MSHDA must receive one of the legal documents.

2. Documentation for other circumstances which change ownership includes:
   1. Landlord Death – A copy of the court order appointing a Personal Representative if the landlord died “Intestate.” The Personal Representative is normally required to obtain a FEIN from the IRS.
   2. Surviving Spouse – A copy of the death certificate and proof of joint ownership of property (i.e. current property tax statement or deed to property).
   3. Not survived by spouse – A copy of the death certificate and a copy of the landlord’s Last Will and Testament.
   4. Divorce – Copy of court order transferring property.

The effective date of the change of ownership in Elite should be the first day of the month following the transfer of property unless the MSHDA 411 states another effective date. The HA must process an Interim Re-examination in Elite to identify the date of the ownership transfer. Also review a HAP register by HAP Payee report to determine if other active residents are affected by the ownership change (if the change involves more than one HA, the originating HA should advise the other agents of the change). If there are multiple residents, Elite requires an Interim Re-examination entry for each tenant to correct the owner.

If the new landlord has an outstanding account balance due MSHDA, Elite will automatically deduct the balance from future payments issued to the landlord.

Note: The PHA may deny approval of Assignment of the HAP Contract for any of the reasons identified in Section I.

Section D: Change in Management Company

1. Required Documentation (if Owner SSN/FEIN is used)

If an owner hires a management company, and uses his/her/its own SSN/FEIN, handle as an address change. Obtain:

1. A signed and dated letter from the owner identifying the new management company; and
2. A MSHDA 219 providing the mailing address of the management company for HAPs. When the DT enters the change, Elite automatically updates the new information to individual tenant records.
3. If the new landlord displays has an outstanding balance due, Elite will automatically deduct the debt from future payments to the landlord.

2. Required Documentation (if Management Company FEIN is used

The owner’s SSN/FEIN is preferred; however, if an owner hires a management company that uses the management company’s own FEIN and issues a 1099 to the landlord at the end of the year, process the change as an ownership change and obtain a MSHDA 411 transferring assignment of the HAP to the management company (ies).

1. The former management company signs assignment.
2. The new management company signs acceptance (OR owner signs if using owner TAX ID number).
3. New management company transfer verification would include a copy of the tenant notification letter identifying the management company change.
4. The HA processes an Interim Re-examination in Elite, enters the new HAP payee Tax ID number, and submits the change for authorization.

Section E: Foreclosures/Forfeitures of Property

1. Foreclosure/Forfeiture of Land Contract)

Forfeiture of a land contract occurs when the land contract buyer (the HCV existing landlord) defaults on the land contract, usually because they did not make payments. The land contract seller has the right under the land contract agreement to go to court and have his property restored. Until the court issues a Writ of Restitution, the land contract buyer is entitled to receive HAP payments. When the HA becomes aware of a land contract forfeiture situation affecting an assisted unit, the HA must:

1. Obtain a copy of the Judgment of Forfeiture and forward it to the assigned RS/RM, who will forward the information to MSHDA’s Office of Legal Affairs;
2. Obtain a copy of the Writ of Restitution and forward it to the assigned RS/RM, who will forward the information to MSHDA’s legal affairs;
3. Determine whether or not the land contract seller desires to take an assignment of the HAP contract, enter into a new HAP contract, or terminate the current contract;
4. When the court reaches a decision, the HA advises the RM and Legal Affairs;
5. Legal Affairs issues a memo to the appropriate RM and HA advising whether the documentation is in order and the HA can proceed with an Assignment of HAP Contract, execute a new HAP contract, or terminate the current HAP contract;
6. If the land contract seller does not wish to take an assignment of the HAP contract, the HA must inform the tenant immediately via certified mail that he/she will be required to move in order to continue to receive assistance. The tenant has 60 days in which to find an acceptable unit and move. The current HAP contract must be terminated when the tenant relocates.

2. Foreclosures of Mortgage

1. If a tenant contacts a housing agent (HA) because he or she "has heard" or "believes" the property is being foreclosed upon, the HA should:
   1. Ask the tenant to provide any documentation that he or she has or may obtain from the landlord. Key documents to obtain include (referred to hereafter as “Key Documents”):
      1. Mortgage;
      2. Published Notice of Sale;
      3. Sheriff’s Deed or Deed-in-Lieu of Foreclosure (if available and as applicable);
      4. Notice of Default (this would be given to tenants if there is an assignment of rents);
      5. Court order (if applicable – rarely will be); and
      6. Any other correspondence or documents provided by the foreclosing mortgagee.
   2. Promptly notify the applicable resource specialist (RS) of the potential foreclosure and forward all such documentation to the RS. The compliance enforcement coordinator (CEC) will assist with obtaining and reviewing Key Documents upon request. The HA should also contact the planning and development office (or other similar office) within the local units of government to inquire as to whether the unit has been or will be assisted under the Neighborhood Stabilization Program (NSP).
   3. If no documentation can be obtained, the HAP payments should continue to be made to the landlord and the tenant should be instructed to continue to make rent payments to the landlord.
   4. If documentation is provided, pending review by the RS and Legal Affairs (see Section D below), the HAP payments should continue to be made to the landlord and the tenant should be instructed to continue to make rent payments to the landlord.
   5. The HA should also inquire at this time as to whether the tenant desires to remain in the unit throughout the foreclosure process.
2. If a foreclosing mortgagee contacts the HA advising that a foreclosure proceeding has been initiated and/or a notice of default recorded that the mortgagee believes triggers an assignment of rents, the HA should:
   1. Ask the mortgagee to provide all documentation relating to the proceeding (i.e., as many of the Key Documents as are applicable; if an assignment of rents is involved, be sure to obtain the notice of default, if a foreclosure proceeding has been initiated, be sure to get the published notice of sale and, if applicable, the sheriff’s deed). The HA should also contact the planning and development office (or other similar office) within the local units of government to inquire as to whether the unit has been or will be assisted under the NSP.
   2. Promptly notify the RS of the proceedings and forward all such documentation to the RS.
   3. If no documentation can be obtained, the HAP payments should continue to be made to the landlord and the tenant should be instructed to continue to make rent payments to the landlord.
   4. If documentation is provided, pending review by the RS and Legal Affairs, the HAP payments should continue to be made to the landlord and the tenant should be instructed to continue to make rent payments to the landlord.
   5. The HA should also inquire at this time as to whether the tenant desires to remain in the unit throughout the foreclosure process.
3. If MSHDA or the HA becomes aware of the foreclosure in its normal course of business, the discovering party (CEC, RS, RM, HA, etc.) should notify the RS and the HA, as applicable, and the HA should:
   1. Immediately notify the CEC (if the CEC was not the discovering party).
   2. The CEC and the HA should review available Key Documents to determine if full title has passed to the foreclosing mortgagee (i.e., the redemption period has expired or a deed-in-lieu was given by the landlord). If it is determined that full title has passed to the foreclosing mortgagee, the RS and CEC should proceed in the manner described in Section D.II.e. below.
   3. If the documentation is incomplete or full title to the property does not appear to have yet passed to the foreclosing mortgagee, the HA should contact the tenant and the mortgagee to obtain the Key Documents to the extent applicable. The HA should also contact the planning and development office (or other similar office) within the local units of government to inquire as to whether the unit has been or will be assisted under the NSP.
   4. If no documentation can be obtained, the HAP payments should continue to be made to the landlord and the tenant should be instructed to continue to make rent payments to the landlord.
   5. If documentation is provided, pending review by the RS and Legal Affairs, the HAP payments should continue to be made to the landlord and the tenant should be instructed to continue to make rent payments to the landlord.
   6. The HA should also inquire at this time as to whether the tenant desires to remain in the unit throughout the foreclosure process.
4. Upon receipt of the applicable Key Documents, the RS and Legal Affairs will review the same and determine if a foreclosure proceeding has in fact been initiated or an effective assignment of rents triggered.
   1. Upon notice from the HA of a possible foreclosure, the RS will coordinate with the HA and, to the extent necessary, the CEC in obtaining the necessary documentation. As discussed in Sections A.-C. above, if no such documentation is provided, HAP payments should continue to be made to the landlord and the tenant should be instructed to continue to make rent payments to the landlord.
   2. All documentation accumulated by the RS will be forwarded to Legal Affairs for analysis.
      1. If Legal Affairs determines that the property is not being foreclosed upon and no assignment of rents has been triggered (or, if a notice of default has been recorded, it is ineffective), Legal Affairs will inform the RS of the same and the HAP payments should continue to be made to the landlord and the tenant should be instructed to continue to make rent payments to the landlord.
      2. If Legal Affairs determines that the property is being foreclosed upon, but no assignment of rents has been triggered (or, if a notice of default has been recorded, it is ineffective), Legal Affairs will inform the RS of the same and the RS should:
         1. If the tenant desires to stay in the unit:
            1. Continue the HAP payments to the landlord and instruct the tenant to continue to make rent payments to the landlord.
            2. Inform the HA, the tenant and the foreclosing mortgagee through delivery of a Tenant and Landlord/Owner Information on Forclosures form (MSHDA 411b) that the foreclosing mortgagee must contact MSHDA and enter an assignment of the HAP contract prior to the expiration of the redemption period or delivery of a deed-in-lieu of foreclosure. The MSHDA Form 411b will further provide that, in the event the foreclosing mortgagee fails to enter an assignment of the HAP contract using the Assignment of HAP Contract and Lease (Foreclosure) form (MSHDA 411a), such assignment will nevertheless be effective by operation of law (the Protecting Tenants at Foreclosure Act) and payments will be handled as follows: (i) the tenant’s portion will be paid to escrow and (ii) a hold will be placed on the HAP payment by MSHDA. In the event there is NSP assistance to the unit, all or a portion of the HAP may be used to pay for utilities that are the owner’s responsibility or for other purposes authorized by HUD.
            3. If the foreclosing mortgagee (or, more likely, its successor in interest) cannot be identified, rejects payments, fails to maintain the property in accordance with HQS or otherwise materially breaches program requirements, MSHDA should advise the tenant of the same and should refer the tenant to the local Legal Aid Office. If the new owner cannot be identified, continues to reject payments or if the violation of program requirements is not cured within a reasonable amount of time in the opinion of MSHDA, a MSHDA Form 95 will be issued and the tenant will be issued voucher to move.
         2. If the tenant desires to move, terminate the HAP contract and issue the tenant a voucher to move.
      3. If Legal Affairs determines that the property is not being foreclosed upon, but a valid and effective assignment of rents has been triggered (and proper notice given to tenants), Legal Affairs will inform the RS of the same and the RS should:
         1. If the tenant desires to stay in the unit:
            1. Contact the HA to obtain the paperwork necessary to redirect payments to the mortgagee and upon completion, commence directing the HAP payments to the mortgagee and instruct the tenant to direct rent payments to the mortgagee.
            2. Inform the HA, the tenant and the mortgagee that, if at any time in the future the mortgagee commences foreclosure proceedings, pursuant to the Protecting Tenants at Foreclosure Act, the HAP contract will be automatically assigned to the foreclosing mortgagee and MSHDA will require the foreclosing mortgagee to memorialize such assignment through an assignment of the HAP contract. In this circumstance, this should be an informal notification (oral, e-mail, etc.), but no MSHDA Form 411a should be issued until such time as a foreclosure proceeding is initiated.
         2. If the tenant desires to move, terminate the HAP contract and issue the tenant a voucher to move.
      4. If Legal Affairs determines that the property is being foreclosed upon and a valid and effective assignment of leases and rents has been triggered (and proper notice given to tenants), Legal Affairs will inform the RS of the same and the RS should:
         1. If the tenant desires to stay in the unit:
            1. Contact the HA to obtain the paperwork necessary to redirect payments to the mortgagee and upon completion, commence directing the HAP payments to the mortgagee and instruct the tenant to direct rent payments to the mortgagee.
            2. Inform the HA, the tenant and the foreclosing mortgagee through delivery of a MSHDA Form 411b that the foreclosing mortgagee must contact MSHDA and enter an assignment of the HAP contract prior to the expiration of the redemption period or delivery of a deed-in-lieu of foreclosure. The MSHDA Form 411b will further provide that, in the event the foreclosing mortgagee fails to enter an assignment of the HAP contract, such assignment will nevertheless be effective by operation of law (the Protecting Tenants at Foreclosure Act).
            3. If the foreclosing mortgagee fails to maintain the property in accordance with HQS or otherwise materially breaches program requirements, MSHDA should advise the tenant of the same and should refer the tenant to the local Legal Aid Office. If the violation of program requirements is not cured within a reasonable amount of time in the opinion of MSHDA, a MSHDA Form 95 will be issued and the tenant will be issued voucher to move.
         2. If the tenant desires to move, terminate the HAP contract and issue the tenant a voucher to move.
      5. If the RS and CEC determine that the property has been foreclosed upon and the redemption period has expired, or full title has otherwise passed to the mortgagee, the RS and the CEC should:
         1. Terminate the HAP contract with the prior landlord immediately.
         2. Issue overpayment notices (if applicable).
         3. If the tenant desires to stay in the unit:
            1. Inform the HA, the tenant and the new owner that a HAP contract must be entered between MSHDA and the new owner.
            2. If the new owner cannot be identified or fails to enter a HAP contract, the CEC should contact Legal Affairs and the CEC and Legal Affairs should work together to determine whether the Protecting Tenants at Foreclosure Act applies to the tenant:
               1. If the Protecting Tenants at Foreclosure Act is applicable:
                  1. The assignment of HAP contract (via the MSHDA 411a) will nevertheless be effective by operation of law and the tenant should be advised to make payments into escrow and a hold should be placed on HAP payments by MSHDA. In the event there is NSP assistance to the unit, all or a portion of the HAP may be used to pay for utilities that are the owner’s responsibility or for other purposes authorized by HUD.
                  2. If the new owner cannot be identified, rejects payments, fails to maintain the property in accordance with HQS or otherwise materially breaches program requirements, MSHDA should advise the tenant of the same and should refer the tenant to the local Legal Aid Office. If the new owner cannot be identified, continues to reject payments or if the violation of program requirements is not cured within a reasonable amount of time in the opinion of MSHDA, a MSHDA Form 95 will be issued and the tenant will be issued voucher to move.
               2. If the Protecting Tenants at Foreclosure Act is no longer applicable (i.e., the lease term has expired and/or the new owner has provided 90 days notice to vacate to the tenant), the tenant should be advised of the same and the tenant should be issued a voucher to move and the tenant will be required to move in order to continue assistance.
         4. If the tenant desires to move, the tenant should be issued a voucher to move.

Note: This law changes to Section 2 of the PFTA. The law sunsets on 12/31/12.

Section F: No Receipt of HAP

When the landlord/tenant contacts the HA or MSHDA to inquire why payment has not been received refer to MSHDA issued Elite Payment Inquirey Process Flow step by step guides for the proper steps to be followed.

Section G: HAP Benefit Reduced by MAIN

If a landlord notifies the HA or MSHDA that they did not receive a full HAP, refer the landlord to the Department of Management and Budget Vendor Registration Helpline (517-373-4111) to clarify and correct the discrepancy.

Section H: Late Fees

1. Landlord/MSHDA Late Fees

• MSHDA must pay (approved) late payments out of its administrative fees.
• The HAP Contract (HUD 52641) identifies that the landlord is entitled (under certain circumstances) to a MSHDA-paid late fee.
• MSHDA established a maximum late fee amount of $25 in accordance with generally accepted practices in the Michigan housing market.
• The MSHDA-paid late fee amount equals the tenant late fee amount identified in the Lease or $25, whichever is less.
• For the initial Contract period, MSHDA must pay the HAP no later than 60 days after the Contract effective date; unless the landlord causes the delay.
• Subsequent MSHDA payments must be generated by Treasury (versus mailed or received) on or before the fifth (5th) business day of the month.
• MSHDA payments are not considered late if:
  1. They were generated by Treasury (versus mailed or received) before the fifth (5th) business day of the month; or
  2. The delay occurs due to factors beyond MSHDA’s control (i.e. Elite computer problems, MAIN problems, incorrect Post Office delivery); or
  3. The delay occurs due to the landlord’s breach of the Contract (i.e. overpayment recovery, HQS abatement, cancellation); or
  4. The Landlord does not charge (and collect) a late fee (identified in the executed Lease) to assisted or unassisted residents for late tenant rent payments.

2. Procedure to Request a Late Fee from MSHDA (MSHDA 70)

• The landlord must make a written or verbal late fee request to the HA within 30 days of the late MSHDA payment date.
• The HA completes the complete and return by date (14 days) and Part A (MSHDA use only section) of the Landlord Late Fee Request Form, and mails the form to the Landlord.
• On the form, the Landlord identifies the applicable tenant and late month.
• The landlord certifies that the late fees apply to, and are collected from, assisted or unassisted residents when the tenant rent portion is late.
• The landlord must return the completed MSHDA 70 form to the HA by the 14-day deadline.

3. Approval/Denial Procedure

• Upon receipt of the MSHDA 70, the HA reviews the lease to verify a tenant late fee provision exists.
• If the request is acceptable, the HA completes Section B of the form and forwards all copies of the form to the assigned RM within five (5) days.
• The RS completes Part C of the form and forwards all copies of the form to the assigned MSHDA staff member for processing of the landlord’s payment within seven (7) business days.
• If the request is denied, the RM forwards a copy of the MSHDA 70 (with Part C highlighted) to the landlord providing written verification of the denial and informs the HA of the denial via e-mail.
• The RS will monitor the frequency and reasons for approved late fee requests. Repeated late approval requests for unacceptable reasons will require further investigation by the RS.

4. Payment Procedure

• The assigned MSHDA staff member processes a manual adjustment within seven (7) business days and identifies the payment as administrative fees account code (070-910-007) on the adjustment.
• The assigned MSHDA staff member completes Part D of the request form and sends one copy to the resident file and one copy back to the HA to confirm that the payment voucher has been processed.
• The landlord can normally expect to receive the late fee payment within seven (7) business days of the payment check request date.

Section I: Owner Disapproval and Restriction

When this action occurs, the owner does not have a right to participate in the program. MSHDA disapproves owners for the following reasons:

1. HUD informs MSHDA that the owner has been disbarred, suspended or subject to a limited denial of participation under 24 CFR Part 24.
2. HUD informs MSHDA that the federal government has instituted an administrative or judicial action against the owner for violation of the Fair Housing Act or other federal equal opportunity requirements and such action is pending.
3. HUD informs MSHDA that a court or administrative agency has determined that the owner has violated the Fair Housing Act or other federal equal opportunity requirements.
4. Unless their lease was effective prior to June 17, 1998 (and the family has not moved), the owner cannot be a parent, child, grandparent, grandchild, sister, or brother of any family member. MSHDA may waive this restriction as a reasonable accommodation for a family member who has a disability.
5. The owner has violated obligations under a HAP contract under Section 8 of the 1937 Act (U.S.C.1437f).
6. The owner has committed fraud, bribery, or any other corrupt acts in connection with any federal housing program.
7. The owner has engaged in drug-related criminal activity or any other violent criminal activity.
8. The owner has a history or repeated practice of non-compliance with HQS for units leased under tenant-based programs or with applicable housing standards for units leased with project-based HCV assistance or under any other federal housing program.
9. The owner has a history or repeated practice of renting units that fail to meet State or local housing codes.
10. The owner has a history or practice of failing to terminate tenancy of residents of units assisted under the HCV program or any other federally assisted housing program for activity by the tenant, any member of the household, a guest or other person under the control of any member of the household that:
    1. Threatens the right to peaceful enjoyment of the premises by other residents; or
    2. Threatens the health or safety of other residents, of agents of MSHDA, or of owner employees or other persons engaged in management of the housing; or
    3. Threatens the health or safety of, or the right to peaceful enjoyment of their residences, by persons residing in the immediate vicinity of the premises; or
    4. Performs drug-related criminal activity or violent criminal activity.
11. The owner has not paid State or local real estate taxes, fines or assessments.
12. The owner has failed to comply with regulations, the mortgage or note, or the regulatory agreement for projects with mortgages insured by HUD loans or loans made by HUD.

If an owner has committed fraud or abuse or is guilty of frequent or serious contract violations, MSHDA may restrict the owner from future participation in the program for a period of time commensurate with the seriousness of the offense. MSHDA may also terminate some or all of the contracts with the owner. Before imposing any penalty against an owner, MSHDA reviews all relevant factors pertaining to the case, and considers such factors as the owner’s record of compliance, the number of violations, and the age of such violations. Note: If an “Entity Alert” appears on Elite which states that the owner is prohibited from participating in MSHDA’s program as the result of an investigation into fraud or other illegal activities perpetrated by said owner, contact the Fraud Investigator.

Section J: Applicable Forms List