FSS Escrow Calculation and Regulatory Updates Summary
Comprehensive overview of the new escrow calculation workbook, regulatory updates, and changes to the Final Rule for FSS escrow calculation. Key topics include FSS terminology, calculation examples, and important points for locally generated housing funds. The Final Rule changes include uncapped escrow for higher-income individuals, gross rent-based caps, and considerations for earned income disregards. Explore the basic concepts and operational aspects of FSS escrow calculations with provided examples.
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FSS Escrow Calculation: Regulatory Updates & the New Escrow Calculation Workbook
Welcome from HUD Abt Associates | pg 1
Funding your local housing strategy Agenda 1. New FSS escrow terminology 2. Quick summary of Final Rule changes to FSS escrow calculation 3. Basic overview of the FSS escrow calculation 4. Introduce FSS escrow workbook 5. Explore examples using FSS escrow workbook 6. Explore multifamily FSS escrow workbook 7. Review of key points Abt Associates | pg 2
Uses for locally generated housing funds New FSS Escrow Terminology Term Definition Baseline annual earned income FSS family s total annual earned income from wages and business income (if any) as of the effective date of the FSS contract. Baseline monthly rent FSS family s total tenant payment (TTP), as of the effective date of the FSS contract, or the amount of the flat rent (which includes the applicable utility allowance) or ceiling rent as of that date. Current annual earned income FSS family s total annual earned income from wages and business income (if any) as of the most recent re- examination of income Current monthly rent FSS family s TTP as of the most recent re-examination of income, or the amount of the flat rent (which includes the applicable utility allowance) or ceiling rent, as of that date. Abt Associates | pg 3
Quick Summary of Final Rule Changes to FSS Uses for locally generated housing funds Escrow Calculation 1. Escrow is no longer capped for people with income above 50% of AMI 2. Escrow will be capped based on gross rent and voucher payment standard 3. Earned income disregard from EID, JPEID (or other self- sufficiency incentives) will NOT be considered in determining the family s baseline earned income but WILL be considered in determining current earned income 4. Clarifies that baseline is full TTP, so baseline rent should never be negative. 5. The new definitions and workbook will now work for families paying the flat rent or ceiling rent Abt Associates | pg 4
Basic overview of the FSS escrow Uses for locally generated housing funds calculation an example Baseline Current Month Annual Earned Income $6,000 $18,000 Monthly Rent (TTP) $150 / mo $450 / mo Conceptually: Escrow is generally calculated as the increase in monthly rent due to the increase in earned income Operationally: FSS generally equals lower of: (1) increase in monthly TTP ($450-$150 = $300) (2) 30% of increase in earned income divided by 12 (30% of $12,000 /12 = $300) Abt Associates | pg 5
FSS Escrow Workbooks Abt Associates | pg 6
Uses for locally generated housing funds FSS escrow calculations (review) When a family has unearned income, the two prongs of the FSS escrow calculation will not always be the same. The escrow equals the lower of the two prongs. When a family is paying the flat or ceiling rent, enter that amount as their baseline or current rent instead of the income-based TTP. Families whose income exceeds 80% of AMI cannot earn escrow Both the gross rent and (for HCV participants) the payment standard act as caps on escrow accumulation Abt Associates | pg 7
Uses for locally generated housing funds Remember! You must (re)compute the FSS escrow every time the family has an income reexamination Use of the FSS escrow workbook is optional The FSS escrow workbook identifies the 50058 or 50059 line items for each row Abt Associates | pg 8
