hud multifamily housing compliance what every tax credit investor, loan server, and borrower needs...

HUD Multifamily Housing Compliance

What Every Tax Credit Investor, Loan Server, and Borrower Needs to Know

May 10-11, 2007

WHAT KINDS OF PROGRAMS ARE WE DISCUSSING?

– Grants To Local Government – HOME, CDBG

– Multifamily Mortgage Insurance

– Section 8 – Project-based, AAFs, FMRs, OCAFs, Budget Based, 50 Percent Incomes

– Vouchers

– HOPE VI

– Public Housing

Introductory Regulatory Issues In Non-Procurement Government Contracts. You Are In The Real Estate Business, But So Much More!

– You Have Extra Civil, Criminal Law Requirements

• False Statements Act

• False Claims Act

• 666 – Watch out for Faustian bargains!

Administrative Issues

– Flags

– LDP

– Suspension And Debarment -- EPLS

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Regulatory Requirements

– Audits, Inspections, Reviews

– Tax Credits -- 8823s Follow HUD Handbook 4350.3 Plus New 8823 Guide

2530 – Previous Participation Review

– 24 CFR Part 200 Subpart H

– Plus Memos, Unpublished “Lore”

– Key Concepts

– MPRC Process

• Principles

• Properties

• Officers

• GPs

• LPs

• LLCs

• Baseline

– Paper v. Electronic – APPs History Of Delay, Problems

– Substantive Changes Along With APPs – Federal Register Change

– Pending Bill, Recent Memos – January Memo, March Memo On Investors, H.R. 1675

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Starting Point For Using APPS:

– Quick Tips, Glossary

– “Absolution,” HUD “Absolves” You Of Your Sins – Sets the tone

– REMS And Interpreting With Flags – Leads To Field Office Confession

KEY BUSINESS AGREEMENTS

– Regulatory Agreement – Key Documents In FHA Loans.

– Read It All But Focus on:

• Limits – Para 2 – deposits

• Para 4 – rent schedule

• Para 6-Transfers (TPA), distribution (surplus cash, inspection)

• Para 7-Maintenance, Inspection

• Para 9-Management Contract, MOR, Audits

• Para 10-Fair Housing, but that applies in law by own force too

HAPs – Housing Assistance Payments

– Many Of The Same Requirements As Regulatory Agreement

– HAP Forms Can Differ Substantially In Different Section 8 Programs. Always Check The HAP:

• Part II in example paras. 2.4 to 2.6, 2.10, 2.17, 2.20

• Renewals – MAHRA, Section 8 Renewal Guide

USE AGREEMENTS

– Vary Widely – Seen Only In Some Programs, Such As

• Flexible Subsidy Program

• Property Dispositions

• Non-Profit Prepayments

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Audits – This Is A Regulatory Agreement And Increasingly, HAP Requirement (usually)

– 4370.2

– Hot topic – Repayment of Advances

– Project v. Owner – 4381.5 – Common concept creating conflict

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YOUR FHA LOAN IS NONRECOURSE – SORT OF

– REACs

– MOR

– Integrity Of Site Records

– Managers – Good Samaritan Can Hurt

– Use Agreements

CASE STUDIES

– How Enforcement Center Works

– Harvey Case – Project v. Owner Expenses – Penalties May Not Be Worth The Principle!

– David Case – Pays To Avoid Controversial Programs and Acts (coinsurance and default), Or Be Prepared Ahead Of Time

– Livecchi Case – Owner Advances And Repayments – Respect Surplus Cash, Get Approvals and Keep Receipts!