Recently, CLPHA announced that HUD published the long-awaited Family Self-Sufficiency (FSS) Final Rule in the Federal Register on May 17, 2022, that made significant changes to program funding, enrollment, escrow calculations, extension and graduation requirements.
The second part of the rule contains new regulations, which will update 24 CFR 984 and add 24 CFR 877 (to include a few new/different regulations for multifamily owners). The final rule will go into effect on June 17, 2022. However, PHAs have 180 days, or until November 14, 2022, to bring FSS program policies into compliance. After that date, PHAs must abide by the new regulations.
CLPHA recommends members get ready for the coming FSS program changes by reading the Notice and attending two upcoming HUD webinars:
- The New FSS Final Rule: What You Need to Know - June 6 at 2 PM ET
- FSS Escrow Calculation: Regulatory Updates & the New Escrow Calculation Workbook for PHAs and Multifamily Owners – June 9 at 1:30 PM ET
Below is a high-level overview of the major changes.
Funding
- Expands eligibility for program funding from only public housing and voucher programs to now include multifamily (Project-Based Rental Assistance) owners as well
- Codifies the requirement that a PHA or owner serving a minimum of 25 participants is eligible to receive funding for a FSS Program Coordinator; a PHA or owner that meets program performance metrics may also be eligible for more coordinator funding for each additional 50 participating families
- Requires HUD to fund renewal costs for all FSS coordinators funded in the previous year, before providing additional funding for new coordinator funding
Enrollment
- Expands eligibility for program enrollment from only the Head of Household to now any adult member of the household (Head of FSS Family) as designated by the family
- One Contract of Participation (CoP) per family
- Escrow goes to the person who signs the CoP
- Allows Section 8(y) – HCV Homeownership to be in the FSS program
- Base Contract of Participation (CoP) is now 5 years “from the next rent certification after enrollment” (as opposed to 5 years from effective date)
- “120-day rule” is permanently gone. At enrollment, the most recent effective rent certification must be used to establish the baseline
Escrow
- Adds definitions for “Baseline Annual Earned Income,” “Baseline Monthly Rent,” “Current Annual Earned Income,” “Current Monthly Rent”
- Removes cap on increases in escrow monthly savings for families making between 50% and 80% of AMI
- Forfeited Escrow is no longer returned to the PHA, thus eliminating an incentive the PHA may have to not graduate families. Forfeited escrow now goes to a pot “to be used for the benefit of FSS Families” so may help with barrier reduction
Extensions
-
Expands “good cause” for extensions to include participants who are actively engaging in pursuing self-sufficiency goals (not only those who have had an impact that was out of their control)
Graduation
- The “30% rule” as an option for graduation has been removed
- “Welfare-free” requirement is now at graduation, no longer 12 months
- Adds a disposition of the CoP - “Termination with FSS Escrow Disbursement” for families that become disabled or that port in situations where they cannot continue to FSS program, but have not yet met all required goals, etc.
The rule also updated several forms, available on the HUD FSS Resources Page next week.