How the Government Shutdown Will Impact HUD Operations & Housing Programs

As if business wasn’t already hard enough, owners and managers of assisted housing properties now have to deal with the disruption and uncertainty of a federal government shutdown. But in addition to the experience of previous shutdowns, we have a good sense of what to expect during the current crisis, especially since HUD published a Contingency Plan explaining how it would operate in the event of a lapse in appropriations. 

Bottom line on top: 

• HUD will continue to make most payments allocated before the shutdown through November;  
• Payments may be disrupted if the shutdown drags on past November, leaving owners to rely on previous allocations and reserves; and
• Landlords may not increase rents or evict tenants to recover the rent shortfalls they experience as a result of disruptions to federal assistance payments due to the shutdown. 

Here’s a more detailed briefing on how the shutdown will affect general HUD operations and different assisted housing programs. 

General Impact on HUD Staff & Services

Staffing has been a problem for HUD even before the shutdown, with nearly 23 percent of its workforce having left the agency since January. The shutdown will cause even greater service disruptions and delays. As ordered by the Office of Management and Budget (OMB), HUD has closed down its regional and field offices and furloughed most of its employees, leaving only a skeleton staff to handle essential duties and emergency situations during the shutdown. Virtually all previously scheduled meetings, visits, and appearances have been cancelled. So, you won’t be able to reach HUD officials by phone or email to ask questions or get directions, except in an emergency. Check the HUD website for emergency contact information.

Although most HUD/FHA staff won’t be available to answer case-specific questions, the FHA Resource Center will remain operational, staffed by contractors who are equipped to receive and respond to general questions. But if Resource Center contract staff can’t answer a question, you won’t get a response until the shutdown ends and the government re-opens. 

Impact on Section 8 Vouchers Program

HUD will continue to make payments to housing authorities under previously obligated Section 8 contracts through at least mid-November 2025. This includes both Housing Assistance Payments (“HAP payments”) that pay voucher families’ rents, administrative fees for program operations, and shortfall funding. But if the shutdown drags on past November, PHAs will have to rely on prior allocations and reserves to make rent payments to landlords on behalf of voucher families. Landlords won’t be allowed to raise tenants’ rents to cover shortfalls. However, some private landlords may decide not to renew their HAP contracts as a result of the uncertainty and disruption in funding, which could endanger the voucher family’s lease, especially those whose leases are past their initial term.

Strategic Pointer: HUD-9250s During the Shutdown

HUD staff will continue to approve HUD-9250s for releases of residual receipts or Reserve for Replacement to offset monthly voucher requests for Section 8 housing assistance payments. Requests should be submitted to the Asset Management Division Director of the assigned HUD office to ensure they’re seen and processed in a timely manner. A signed form HUD-9250 should be sent showing the request amount, balance in the account, and a certification that the funds will be paid back when subsidies are restored.

Impact on Section 8 PBA Program 

The vast majority of Section 8 Project Based Assistance (PBA) properties that have long-term contracts that don’t expire until next year have probably received their HAP payments for October and will likely receive payments in November and December since they were allocated before the shutdown. However, properties whose HAP contracts are due to expire in October, November, or December will have to renew their contract before the end of the calendar year. The good news is that HUD has allocated staff to process HAP renewals during the shutdown. Note also that nonpayment of HAP assistance by HUD or a Contract Administrator is not valid grounds to raise a tenant’s rent, provided that the HAP contract hasn’t expired. 

Impact Section 202 & Section 811 Programs

More than 120,000 older adults live in Section 202 housing supported by Project Rental Assistance Contracts (PRAC) or Section 8 PBA contracts. HUD will continue to make previously obligated PRAC and PBA contract payments during the shutdown. But Section 202 properties whose contracts are expiring soon may face funding gaps. Moreover, tightness in PRAC and PBA contract renewal funding has taken a toll on many Section 202 landlords in recent years, including nonprofits that may not have ample reserves to cover funding gaps. 

Closings will continue for Section 202/811 new construction projects, but only on projects with firm commitments issued before the shutdown. HUD will hold construction draws using skeleton staff to determine whether Section 202/811 projects that are currently under construction may continue to access necessary funds. Inspections will be performed only to deal with an imminent threat to life or property.

Impact on Public Housing Program

HUD provides funding to Public Housing Authorities (PHAs) to supplement tenants’ rent contributions through two accounts: 

• The Public Housing Operating Fund and Money from the Operating Fund, which supports daily operations including routine maintenance, emergency repairs, processing tenant paperwork, and preparing apartments for occupancy after they turn over; and
• The Public Housing Capital Fund, which finances property upgrades and improvements. 

Because Operating Fund payments were obligated before the shutdown, PHAs will continue to receive them through November. But if the shutdown continues into December, Operating Fund payments will stop and PHAs may not have enough money to operate, depending on their reserves. 

The situation is even worse for Capital Funds, with PHAs unlikely to receive any new Capital payments until 60 days after enactment of a final appropriations bill. This may force PHAs to delay or even cancel desperately needed capital improvement projects due to lack of funding. 

Congress’s failure to appropriate Operating or Capital Funds isn’t valid grounds for PHA landlords to increase a tenant’s rent. 

Impact on RAD Program

Closings will continue on rental assistance conversions scheduled as part of the Rental Assistance Demonstration (RAD), provided that before the shutdown occurred:

• A Rental Assistance Demonstration Conversion Commitment (RCC) (for Component 1) or Rental Assistance Demonstration Approval (for Component 2) was issued; and 
• The closing was scheduled. 

Closings will also continue where the failure to close or prepare to close would threaten the property (e.g., forfeiture of tax credits). The underlying assumption is that there will actually be adequate HUD staff on hand to proceed with closing during the shutdown. And while new RAD applications may also still be submitted, they won’t be processed until the shutdown ends. 

Other Key Impacts of the Shutdown on HUD Operations

Here are other important takeaways owners and managers of HUD-assisted properties should know to operate effectively during the shutdown: 

• All HUD fair housing enforcement activity will cease during the shutdown, although individuals and organizations can still file complaints for the agency to consider when the government re-opens; 
• HUD will continue to close multifamily loans but only if a Firm Commitment or Firm Approval Letter was issued for the project before the shutdown; 
• HUD will not process Section 8 waiver requests—however, minimal staff will be available to help properties designated as troubled assets take actions to resolve imminent threats of claim or abatement;
• Performance-Based Contract Administration (PBCA) program services will continue for as long as appropriated funds remain available;
• HUD’s Tenant Rental Assistance Certification System (TRACS) will continue to process tenant certifications and electronic voucher payment requests until previously appropriated funds run out;
• HUD will process requests for emergency releases from reserves for critical repairs on a limited basis—owners or agents email requests on critical reserve releases for health and safety purposes to the Asset Management Division Director for their assigned HUD office;
• Public Housing programs will be able to draw down funds from the Line of Credit Control System (LOCCS) that had been previously obligated to them, unless those funds require HUD action or review before disbursement (except in cases of an imminent threat to lives or property);
• The Multifamily Housing End User Support Help Desk will respond to questions from users on: 

1. The Portal and Loan Underwriting System;
2. The Integrated Real Estate Management System;
3. The Tenant Rental Assistance Certification System; and 
4. Multifamily Housing Enterprise Income Verification procedures;

• You’ll still be able to access and use the Grants.gov System and Grants.gov Contact Center to find and apply for a HUD Funding Opportunity.