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– Plus Memos, Unpublished “Lore”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!
