The partial government shutdown, now well into its third week, is having an impact on HUD multifamily programs, as the agency’s spending authority expired on Dec. 21, 2018, due to the lack of appropriated funding.
On Jan. 4, HUD released information regarding FHA multifamily programs. During the first 30 business days of the shutdown, the following will apply:
- No applications for multifamily FHA mortgage insurance will be accepted or processed.
- Closings will be conducted for FHA Multifamily Initial Endorsements on projects with firm commitments issued on or prior to Dec. 21, 2018, that have a scheduled closing during the shutdown period, and closings on final endorsements that have critical external deadlines. Contact the Regional Production Division Director by e-mail to confirm scheduled closing dates.
- Multifamily Accelerated Processing (MAP) lenders servicing construction loans and administering non-critical repair escrows may, at their and the owners’ and general contractors’ risk, process interim construction draws. Contract construction inspections which have been funded will be conducted. HUD will perform or review construction inspections on a post-review basis at such time the government re-opens.
- No change orders will be processed or approved.
Project-Based Section 8 Owners
A separate HUD memorandum covering the Office of Housing's multifamily programs also stated that pending appropriations needed to operate most asset management activities will cease for the duration of the shutdown. During the first 30 business days of the shutdown, the following activities will continue:
- Making payments under Project-Based Section 8 contracts, rent supplement contracts, Section 236 agreements, and Project Rental Assistance Contracts (PRAC) on an as needed basis to ensure ongoing viability of assets and preservation of affordable housing. Payments will be contingent on budget authority being available from prior year appropriations or recaptures. Payments may require processing Project-Based Section 8 and PRAC renewals for expiring contracts and processing amendment funds for non-expiring Project-Based Section 8 contract renewals.
- NAHB has received separate confirmation that HUD is confident it has sufficient funding to make Project-Based Section 8 payments through February.
- Housing Assistant Payments (HAP) and PRAC payments from funds obligated prior to a shutdown period are anticipated to occur without any major disruption.
- Owners of properties with FHA insured mortgages or 202/811 Capital Advances may submit requests for releases from their reserve for replacement accounts to cover funding shortfalls caused by non-payment of monthly rental subsidy.
NAHB is following this situation closely, and we will let members know if and when there are changes to HUD’s multifamily operations.
For more information, contact Michelle Kitchen
at 800-368-5242 x8352.