Civil Rights, Housing, and Community Development Organizations Call on HUD to Maintain a Critical Fair Housing Tool and Not to Roll Back the Promise of the Fair Housing Act

Washington, DC – 76 national civil rights, faith-based, affordable housing and other organizations have voiced their strong opposition to HUD’s sudden and short-sighted decision to effectively suspend the Affirmatively Furthering Fair Housing (AFFH) regulation.

Nearly 50 years ago, Congress adopted the Fair Housing Act, landmark legislation necessary to end discrimination in housing and eliminate the barriers created by segregation.  The AFFH regulation —designed with considerable public input and piloted extensively — was adopted in 2015 and was a critical and long overdue step in carrying out Congress’ intent. It provided jurisdictions with a roadmap and tools for compliance and included measures for accountability.  Without warning, HUD has decided effectively to suspend the regulation, leaving local jurisdictions confused, giving local residents less voice in important decisions about their communities, and reinstating an approach to fair housing that the Government Accountability Office found to be ineffective and poorly administered.

“HUD’s effective suspension of the rule does nothing to help local governments fulfill their fair housing responsibilities to create equitable, healthy communities and provide access to housing without discrimination,” says Angela Glover Blackwell, CEO for PolicyLink.  “It is the wrong move, particularly at a time when housing needs are so severe and housing and community development resources are so scarce.  And by taking this step, HUD is abrogating its duty to carry out the mission Congress assigned it 50 years ago.”

“Americans strongly believe that a zip code should not determine a child’s future, and that everyone – regardless of their race or national origin, the language they speak, or whether they have children or have a disability – should have access to the opportunities they need to succeed,” said Shanna L. Smith, president and CEO for the National Fair Housing Alliance.  “But we are falling short of achieving that goal.  Actions taken over many years by HUD, other government agencies and the private sector have left us more segregated than we were 100 years ago.  That has led to concentrated poverty and weaker communities and undermines our prosperity.  We need HUD to enforce this important rule, not suspend it.”

“The administration’s abrupt decision to effectively suspend this critical regulation is misguided,” says Diane Yentel, president and CEO of the National Low Income Housing Coalition.  “The federal government, states and local communities have been required by law since 1968 to work to undo the segregated communities that federal housing policy created in the first place.  Suspending the tools that help communities meet that obligation, without any input from key stakeholders, is a step in the wrong direction.”

“The obligation of local governments to ‘affirmatively further fair housing’ is essential to fulfill the promises of the Fair Housing Act, particularly this year, the 50th Anniversary of this key civil rights law,” said Sherrilyn Ifill, President and Director-Counsel of the NAACP Legal Defense and Educational Fund, Inc. “HUD’s proposed suspension would roll back one of the law’s most critical tools to correct structural inequality and racial segregation and represents yet another attack by this Administration on communities of color across the country.”

“HUD’s decision to suspend a critical rule that has helped promote fair housing across the country is firm demonstration of Secretary Ben Carson’s hostility to fair enforcement and implementation of the Fair Housing Act,” said Kristen Clarke, president and executive director of the Lawyers’ Committee for Civil Rights Under Law.  “We will not stand by idly as HUD works to roll back the important gains that have been made to promote fair housing opportunities across the country.”

HUD’s announcement today is a serious loss for fair housing and puts the promise of making every neighborhood a community of opportunity further out of reach.  We call on HUD to reverse its decision, withdraw this notice, and move ahead with implementation and enforcement of this important fair housing rule.  And we call on Congress to provide policy and budgetary oversight of HUD to ensure it is delivering on the promise of fair and equitable housing.

For media inquiries, contact:

Jessica Brady, Lawyers’ Committee for Civil Rights Under Law, (202) 662-8600 x 8317, press@lawyerscommittee.org

Phoebe Plagens, NAACP Legal Defense and Educational Fund, Inc., 212.965.2235, pplagens@naacpldf.org

Jesse Meisenhelter, National Community Reinvestment Coalition, jmeisenhelter@ncrc.org, 202-464-2737

Debby Goldberg, National Fair Housing Alliance, Dgoldberg@nationafairhousing.org, 202-898-1661 or Jessica Aiwuyor, National Fair Housing Alliance, Jaiwuyor@nationalfairhousing.org, 202-898-1661

Renee Willis, National Housing Law Project, Media@nlihc.org, 202-662-1530

Lisa Marlow, National Low Income Housing Coalition, Lmarlow@nlihc.org, 202-662-1530

Milly Hawk Daniel, PolicyLink, Milly@policylink.org, 917-658-6468

 

This statement is issued on behalf of:

Action Center on Race and the Economy Institute

American Civil Liberties Union

Association of Programs for Rural Independent Living

Autism Society of America

Autistic Self Advocacy Network

California Reinvestment Coalition

CarsonWatch

Center for Popular Democracy

Center for Responsible Lending

Center for Social Innovation

Center for the Study of Social Policy

Center on Budget and Policy Priorities

Coalition on Human Needs

Consortium for Citizens With Disabilities Housing Task Force

Consumer Action

Consumer Federation of America

Disability Rights Education and Defense Fund (DREDF)

Enterprise Community Parnters

Equal Justice Society

First Focus

FORGE, Inc.

GLMA: Health Professionals Advancing LGBT Equality

Grounded Solutions Network

Housing Assistance Council

Impact Fund

Japanese American Citizens League

Lambda Legal

LatinoJustice PRLDEF

Lawyers’ Committee for Civil Rights Under Law

Local Initiatives Support Corporation (LISC)

Local Progress

LOCUS: Responsible Real Estate Developers and Investors

Low Income Investment Fund

NAACP Legal Defense and Educational Fund, Inc.

National Alliance of Community Economic Development Associations

National Alliance on Mental Illness

National Asian Pacific American Women’s Forum (NAPAWF)

National Association for Latino Community Asset Builders

National Association of Councils on Developmental Disabilities

National Association of Human Rights Workers

National Center for Lesbian Rights

National Center for Transgender Equality

National Coalition for Asian Pacific American Community Development (CAPACD)

National Community Reinvestment Coalition

National Consumer Law Center (on behalf of its low-income clients)

National Council of Churches

National Disabilty Rights Network

National Education Association

National Equality Action Team (NEAT)

National Fair Housing Alliance

National Health Care for the Homeless Council

National Housing Law Project

National Housing Trust

National Juvenile Justice Network

National Law Center on Homelessness & Poverty

National LGBTQ Task Force

National Low Income Housing Coalition

National Network to End Domestic Violence

National Urban League

Paralyzed Veterans of America

PFLAG National

PolicyLink

Poor Peoples Economic Human Rights Campaign

Poverty & Race Research Action Council

Pride at Work

Prosperity Now

Public Advocates Inc.

Public Citizen

Smart Growth America

Technical Assistance Collaborative

The Arc of the United States

The Leadership Conference on Civil and Human Rights

Transgender Law Center

Treatment Communities of America

UnidosUS (formerly National Council of La Raza)

United Way Worldwide

Owning a Home with a Special Needs Trust

By Amy R. Tripp, Esq., Special Needs Alliance

To say that adequate housing options for persons with disabilities is a challenge is an understatement. As a result, in the process of future planning, housing is almost always one of the most important topics. Some people with disabilities would like to continue living in the family home, with appropriate supports, after Mom and Dad are gone, and parents often agree that would best serve their son or daughter’s interest. Other parents anticipate leaving funds that would allow their son or daughter to own appropriate alternate housing. In both cases, it must be determined if it makes sense for the house to be owned by a special needs trust (SNT) that is likely at the center of their plan. And as noted below, individuals and families must also weigh the benefits of home ownership versus renting to determine the best fit.

The short answer is that, in many cases, is does make sense for an SNT to own a home, but there are numerous considerations and caveats that come into play. This is an overview of the rules and issues that can arise when an SNT owns a home.

It is important first to identify what type of trust would own the home. We should distinguish between “first party” and “third party” trusts. A first party SNT is funded with the individual beneficiary’s assets and, after the death of the beneficiary, requires reimbursement to the state for Medicaid services. A third party SNT, which is funded with someone else’s assets, such as an inheritance from a parent or proceeds from a life insurance policy, is more flexible and does not require reimbursement to the state.

Options for Titling Homes

A threshold consideration in deciding whether a residence is better owned by an SNT or the individual is whether that person has legal capacity to hold title on their own and what decision-making supports the person might need. Minors simply cannot hold title and would require a guardian (in some states, a conservator) be appointed. Many adults may also need support to manage home ownership. If an adult is under guardianship or conservatorship, the guardian or conservator would likely have legal authority to manage the property. Many other adults with I/DD would benefit from using decision-making supporters to help them meet the obligations of home ownership.

For an adult with I/DD, home ownership can be empowering, as it is for all of us. The responsibilities of home ownership, as well as the status of a property owner, can have very positive impact. Families should take care to ensure that appropriate decision-making supports are in place.

If direct ownership isn’t practical, leaving a family home to a third party SNT, or buying one with trust assets, protects the property from creditors and leaves financial and maintenance issues in the hands of a trustee.

While a residence purchased by a first party SNT gains these advantages during the beneficiary’s lifetime, the home is subject to recovery by the state upon the beneficiary’s death to the extent of the costs paid by Medicaid.

Finally, it is important to look at who else might be living in the home. If the home is owned outright by a first party SNT, there may be complications if other family members also reside there. Distributions from first party SNTs are supposed to be for the sole benefit of the beneficiary, and this may be interpreted differently by various Social Security offices. Depending on the level of caregiving performed by family members, they may be required to pay rent in order to avoid affecting the beneficiary’s eligibility for government benefits. There may even be issues regarding what maintenance the trust should pay for.

Some trustees, seeking to avoid a first party trust payback, arrange for the SNT to purchase a life estate interest in the family residence. By paying a portion of the home’s value, the beneficiary has a right to live there, rent free, as long as he or she lives. In some states, however, this won’t avoid the Medicaid lien, and other family members residing in the home still may need to pay rent to avoid conflict with the sole benefit rule.

Running the Numbers

Of course, as attractive as the idea is, whether it is practical to plan to provide a house to an adult son or daughter with disabilities after you’re gone comes down to dollars.

Any time the purchase or transfer of ownership of a residence is begin considered, it is critical to prepare a detailed budget which takes into consideration things such as the cost of modifications needed for accessibility, long-term maintenance, utilities, taxes, insurance, and general upkeep. A common planning mistake is for people to create SNTs which purchase homes, only to have the housing costs consume such a large part of the available resources that other important purposes of the SNT are compromised, leading to deterioration of the property and forcing sale at a discounted price.

On occasion the solution may be as simple as finding a roommate. The trend today is for families to consolidate resources and purchase housing that provides for more than one adult. While there are some great examples of these types of arrangements, there are also many situations in which such plans simply don’t work. And many trustees are unwilling to deal with their complexity.

Beyond the numbers, persons with disabilities and their families should consider other pros and cons to homeownership, including whether the person may in the future want to live in a different neighborhood or area, the suitability of the home for future family configurations and the potential for aging in place.

Effect on Benefits

The ownership of property and the payment of housing expenses can impact the government benefits the individual may be receiving, including Supplemental Security Income (SSI) and Medicaid.

Notably, for persons who receive SSI, mortgage payments, property taxes, utilities and other housing costs paid on their behalf by an SNT are considered in-kind support and maintenance (ISM) and will reduce SSI. Good planning can often reduce the impact of these rules, but not always.

Likewise, depending on how a home is titled, the purchase or sale of a home can trigger interruptions or reductions in benefits in the months in which these events occur. While the home is an exempt asset for SSI and Medicaid benefits, the sale of the home in the future, if titled to the individual, will result in converting an exempt asset into countable resources. If the home is titled to the SNT, then the sale of the home would have no impact on eligibility.

Medicaid liens and other estate recovery claims are potential pitfalls when persons receiving benefits own their own homes, or have homes held in some SNTs. When a first party SNT owns the home, extra attention needs to be provided if other family members are living in the home and providing support to the beneficiary. When the beneficiary dies, Medicaid is reimbursed from the remaining assets in the first party SNT. If the Medicaid lien exceeds the balance of the assets in the first party SNT and the house is owned by the SNT, then the house may be lost. This can be a great hardship for some families who provide support and services to the beneficiary.

Conclusion

Housing is always a challenge in future planning for persons with disabilities. Arranging for a stable living environment is a high priority, but the considerations are many and complex, and families and their counselors are becoming increasingly creative as they struggle with the housing shortage. Whether an SNT can or should own a house involves a number of considerations, and families should seek advice from a qualified attorney to ensure that their objectives are met.

Amy Tripp is a member of the Special Needs Alliance, a national nonprofit dedicated to assisting individuals with disabilities, their families and the professionals who serve them. SNA is partnering with The Arc to provide educational resources, build public awareness and advocate for policies on behalf of people with intellectual/developmental disabilities and their families.