CARH'S BROADCAST EMAIL - Regulatory Update
CARH’S BROADCAST E-MAIL – Regulatory Update
October 2, 2018
RHS Issues Unnumbered Letters on Allowable Expenses in MFH Properties and on Supervisory Bank Accounts for RD’s MFH Properties
Today, the Rural Housing Service (RHS) published two Unnumbered Letters (ULs) that affect multifamily housing (MFH) providers and in which CARH members have been actively pursuing. Below is information on both ULs.
Allowable Expenses in Multi-Family Housing Properties, dated September 21, 2018.
The purpose of this UL is to clarify allowable expenses to be paid by project income in Rural Development (RD) financed Section 515/514 properties. Earlier this year, RD notified CARH that they were in the process of updating the previous UL and asked for our input. CARH’s Management Committee reviewed the previous UL and provided their comments to RD. The updated UL incorporates a majority of CARH’s comments and suggestions. We appreciate RHS Administrator Joel C. Baxley and his team listening to the concerns of business partners and residents in delivering affordable housing in a more streamlined process.
Reserve Accounts for Rural Development’s Multi-family Housing Properties (Supervised Bank Accounts), dated September 28, 2018.
This UL eliminates the dual signature requirement for reserve accounts. CARH and members of the Management Committee had raised concerns with RD during the last year, that banks generally no longer accommodate having dual signature accounts. RD has modernized its practices and has established new guidelines for Reserve Accounts. As a result of this change, RD employees will no longer have to present their federal government ID to the bank or personal information to the bank. Borrowers will no longer be required to obtain collateral pledges, as such. Funds exceeding the federally insured limit under a Tax ID Number should be moved to a different qualified banking institution that will insure the funds unless the current financial institution provides additional surety such as a collateral pledge that may already be in place.
The Agency will require borrowers and banking institutions to execute a new Deposit Agreement, which shall supersede any prior Deposit Agreement, within 120 days of the UL. Besides the regulatory sections specifically listed in this UL, all other Supervised Bank Account requirements for reserve accounts shall remain unchanged.
On behalf of the rural housing industry, thank you to CARH’s Management Committee for their continued efforts on these issues.
If you have any questions or comments on these UL’s, please contact the CARH national office at email@example.com or 703-837-9001.