What You Need to Know About the Revised HEROES Act

October 1, 2020 |

Updated October 1, 2020

7 minute read

On Thursday, October 1, the U.S. House of Representatives passed H.R. 925, a $2.2 trillion, slimmed-down version of the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act), originally passed by the House in May. The new, 2,154-page package passed by a vote of 214-207 and was advanced by House Democrats after negotiations on a compromise agreement with the Trump Administration and Senate Republicans broke down.

While all parties pledged to continue talking, the likelihood of an agreement passing before election day has diminished. There remain significant differences over the top-line cost of any agreement as well serious substantive disagreements over what should be included in the legislation, including liability protection and aid to states and localities. NAA has been, and remains, a part of these ongoing conversations.

Provisions of Interest to the Rental Housing Industry:

  • Division A – Appropriations
    • Title I – Rural Housing
      • Authorizes $10 million in supplemental funding for USDA’s salaries and expenses, as well as $309 million to prevent, prepare for, and respond to coronavirus, including reductions in resident rent contributions and to provide rental assistance to unassisted households living in USDA subsidized properties who are struggling to pay rent during the COVID-19 pandemic.
    • Title II – Transitional Housing Assistance for DV Victims
      • Authorizes $375 million for “Violence Against Women Prevention and Prosecution Programs”, including $40 million for transitional housing grants for victims of domestic violence, stalking or sexual assault.
    • Title V – Coronavirus Relief Fund
      • Authorizes $238 billion in funding to assist state governments with the fiscal impacts from the public health emergency caused by the coronavirus, as well as $179 billion in funding to assist local governments.
      • State and local governments are authorized to transfer funding to non-profits, as defined under section 401 of the McKinney-Vento Homeless Act. Non-profits may use the funds to distribute rental assistance. Similar allocations under the CARES Act have been used for rental assistance.
    • Title VIII – Higher Education
      • Authorizes $11.9 billion for higher education to enable grants to students for expenses directly related to coronavirus and the disruption of university operations including housing.
    • Title XII – HUD
      • Tenant-Based Rental Assistance
        • Authorize $4 billion to allow public housing agencies (PHAs) to respond to coronavirus and the ability to keep over 2.2 million families stably housed even when facing a loss of income, including:
          • $500 million for administrative expenses.
          • $2.5 billion for adjustments in the calendar year 2020 section 8 renewal funding allocations for PHAs that experience a significant increase in voucher per-unit costs due to extraordinary circumstances that would otherwise be required to terminate rental assistance for families as a result of insufficient funding.
          • And $1 billion for new, temporary, vouchers for individuals and families who are homeless or at risk of becoming homeless or fleeing domestic violence.
      • Project-Based Rental Assistance
        • Authorizes $750 million to ensure the continuation of housing assistance for low-income individuals and families living in project-based rental assistance properties, and to ensure housing providers can take the necessary actions to prevent, prepare for, and respond to the pandemic.
      • HUD-VASH
        • Allows public housing agencies administering HUD-VASH rental assistance vouchers to process applications electronically and waive in-person inspection requirements to rapidly house veterans during the COVID-19 public health emergency.
      • Housing Counseling
        • Authorizes $100 million for the Neighborhood Reinvestment Corporation (NeighborWorks) to enable housing counselors to respond to the surge of demand for services, which include foreclosure and eviction mitigation counseling, due to the economic impact of the COVID-19 pandemic.
      • Fair Housing Activities
        • Authorizes $14 million for fair housing enforcement and education.
  • Division E – Small Business Provisions
    • Title II – Modifications to the Paycheck Protection Program
      • Sec. 202. P4 Loans (second PPP loans)
        • Creates a Prioritized PPP (P4), otherwise known as a Second Draw program for businesses that can demonstrate deep financial impact from COVID-19.
        • Businesses must have less than 200 employees and demonstrate a 25 percent loss in revenue.
      • Sec. 204. Eligibility of certain organizations under PPP
        • Opens PPP access to all 501(c) organizations and non-profits; restricts use of PPP funds for lobbying compensation; and retains vague language excluding organizations with fewer than 500 employees that generate more than 10% of gross receipts from lobbying activity.
    • Title III
      • Sec. 301. Improved coordination between paycheck protection program and employee retention tax credit
        • Grants businesses access to both the PPP and the ERTC, which were originally restricted under the CARES Act.
        • Directs the Secretary of the Treasury and the Small Business Administration to determine rules and guidance for organizations wishing to utilize both programs.
    • Title III—Net Operating Losses
      • Sec. 301 – Limitation on excess business losses of non-corporate taxpayers restored and made permanent.
        • Repeals changes made by the CARES Act to suspend the denial of deductibility of excess business losses of a taxpayer other than a corporation for 2018-2020.
      • Sec. 302 – The ability to carry back a net operating loss (NOL) is significantly modified and limited.
        • Allows only an NOL arising in a taxable year beginning after December 31, 2018, and before January 1, 2021 to be carried back, and it cannot be carried back to any taxable year beginning before January 1, 2018.
  • Division O
    • Title II
      • Sec. 201 – Emergency Rental Assistance
        • Authorizes $50 billion for additional grants under the Emergency Solutions Grant program to be used for short- or medium-term assistance for rent and other rent-related costs, including renter-paid utility costs, utility- and rent-arrears, fees charged for those arrears and security and utility deposits.
        • Housing assistance would be distributed through an agency that the state identifies to administer the program. The maximum amount of rental assistance provided to a household per month is 120 percent of the fair market rent or the small area fair market rent for their area, whichever is greater, or a higher amount that HUD determines is needed to cover market rents in the area. Only income that the household is receiving at the time of the application will be considered.
      • Sec. 203 – Federal Eviction Moratorium Extension and Expansion of Forbearance
        • Sec. 203(a) extends the federal eviction moratorium for 12 months beginning on the date of enactment of the Act. Housing providers would be prohibited from initiating an eviction action against the renter based upon nonpayment of rent or assessing fees or other charges due to nonpayment during the covered period. It applies to virtually all single-family and multifamily housing and contains the same restrictions on notices to vacate as the CARES Act.
        • Sec 203(b)(7) expands the eligibility of mortgage forbearance (originally made available in the CARES Act) to all multifamily borrowers who are experiencing a financial hardship “due, directly or indirectly, to” the COVID-19 emergency; allows borrowers to take forbearance for up to 12 months from the date of enactment in alignment with the proposed extension of the federal eviction moratorium; provides an additional 12 months at the end of forbearance to bring the loan current; and proposes consumer reporting protections for borrowers in forbearance.
      • Sec. 205(b) - Credit Facility for Rental Property Owners
        • Enables the Board of Governors of the Federal Reserve to establish a credit facility that makes loans available to residential rental property owners to temporarily compensate owners for rent shortfalls in exchange for mandated renter protections, including suspension of evictions, source of income restrictions and overreaching reporting requirements on property ownership.
    • Title IV—Suspending Negative Credit Reporting and Strengthening Consumer and Investor Protections
      • Sec. 401. Reporting of information during major disasters.
        • Suspends negative consumer credit reporting during the COVID-19 pandemic and other declared major disasters plus 120 days. Credit score furnishers would be prohibited from implementing new credit scoring models that would lower existing consumer credit scores during the COVID-19 pandemic or during other major disaster periods.
        • Enacts a moratorium on furnishing adverse information during COVID-19, with an exception on information related to a felony criminal conviction.
        • Credit furnishers would be required to remove any adverse information (except information related to a felony criminal conviction) that was a result of an action or inaction that occurred during a covered period or in the 270-day period following the end of a covered period.
      • Sec. 402. Restrictions on collections of consumer debt during a national disaster or emergency.
        • Provides a temporary moratorium on consumer debt collection during this COVID-19 crisis, and for 120 days thereafter, except for mortgage loans covered by Sections 4022 and 4023 of the CARES Act.
      • Sec. 403. Repayment period and forbearance for consumers.
        • Ensures reasonable forbearance and repayment options for consumers when payments resume following the moratorium provided by Section 402, including simply maintaining the same payment schedule by extending the maturity by the same period of time that payments were suspended under Section 402.
      • Sec. 404. Credit facility.
        • Provides creditors access to a Federal Reserve facility to receive a low-interest, long-term loan where payments would be deferred until a borrower resumes making payments to the creditor pursuant to the debt collection moratorium and forbearance provided in this title.

More information on the bill can be found here.