Apply Rent Reduction Retroactively After Income Decrease Recertification

If a tenant waits some amount to time to report a decrease in income, after an income recertification, you must then retroactively apply any reduction in rent starting with the first day of the month after the date of the action that caused the decrease in income. So, for example, if a tenant lost her job on March 4, 2020, you would reflect this change in income starting with the first day of the following month, which would be April 1, 2020.

Tenants may request an interim recertification due to any changes in family income that may affect their Total Tenant Payment (TTP) or tenant rent and assistance payment occurring since the last income recertification [HUD Handbook 4350.3, par. 7-10(B)(1)].

According to the HUD Handbook, there are only two instances in which an owner may refuse to process an interim recertification when the tenant reports a decrease in income. First, the decrease was caused by a deliberate action of the tenant to avoid paying rent. For example, the owner receives documented evidence that a tenant quit a job in order to qualify for a lower rent [HUD Handbook 4350.3, par. 7-11(D)(1)].

The second case occurs when the owner has confirmation that the decrease will last less than one month. For example, an owner receives confirmation from the tenant’s employer that the tenant will be laid off for only two weeks. If the owner determines that the decrease in income will last less than one month, the owner may choose, but is not obligated, to process an interim recertification. The owner must, however, implement this policy consistently for all tenants who experience a decrease in income that will last for less than one month [HUD Handbook 4350.3, par. 7-11(D)].