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– Plus Memos, Unpublished “Lore”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!