Maximizing Revenues by Getting the Most out of HUD’s Special Claims Provision

Squeezing more revenue out of rent is cumbersome for Affordable properties. HOME Rent Limits calculated and provided by the Department of Housing and Urban Development (HUD) limit the amount of rent that can be charged, leaving operators to find other ways to generate income from their properties. While HUD’s Special Claims provision isn’t truly a revenue generator, it is a way for operators to realize extra cash flow when followed accordingly. However, seeking reimbursements for lost rent days or make-ready or damage repairs requires a lot of attention. Managers can spend many hours processing claims, enough that it detracts from other day-to-day functions. And Affordable executives don’t always get a clear picture of how a portfolio is managing the claims unless they look at each property separately. It’s not at all uncommon for Affordable owners and executives to dismiss what are critical opportunities to recoup lost revenue or expenses. Ignoring special claims – or failing to work them to their fullest – is potentially a wasted opportunity. The need for recouping lost revenue, expenses in Affordable As part of its commitment to provide affordable housing, HUD recognizes that operators and owners face financial risk because of lost rent revenue and damage and that owners should be reimbursed for their financial loss through the special claims process. Some of the most common claims owners can make are for losses attributed to a vacant property, damages beyond normal wear and tear, and losses resulting from unpaid rent. Owners can also be reimbursed for loss of rental income on unleased units during the initial lease-up of a property, and rental income shortfalls that hamper an owner’s ability to meet financial obligations on their FHA-insured or HUD-held mortgage loan. Since the onset of the COVID-19 pandemic, HUD has amended some special claims provisions affected by stay-at-home orders and social distancing. Vacan...