On September 19, 2018 USDA Rural Development Administrator Joel Baxley issued an Unnumbered Letter [click here to downlad] to provide guidance to State Rural Development Directors on reallocating Rental Assistance (RA) units currently held in the Administrator’s reserve back to the State in which the units originated and allow States to use RA when properties are paid in full henceforth. The RA units being reallocated are from properties that left the program via acceleration, foreclosure sale, natural maturity or prepayment during fiscal years 2017 and 2018. This action is intended to assist very low-income tenants and applicants at eligible properties. As of August 2018 a total of 2,946 rental assistance units were available for reallocation.
Administrator Baxley issued a second undated Unnumbered Letter [click here to download] to clarify to State Rural Development Directors allowable expenses to be paid by project income in Section 515 and Section 514 multifamily properties. “Servicing Officials are advised to more closely review certain expense categories that have the potential for abuse, and to apply reasonableness tests where needed. 7 CFR 3560.102(i)(3)(iii) addresses this reasonableness determination and further suggests that where administrative expenses exceed 23 percent or those typical for the area of gross potential basic income, a need for closer review of unnecessary expenditures is called for. This does not mean there is a 23 percent cap on administrative expenses or that expenses above 23 percent are not allowed. Rather, the Servicing Official should examine more closely those line items to ensure the charges are appropriate. Conversely, this does not mean that if administrative expenses are less than 23 percent, no further review is necessary; to the contrary, the Servicing Official still needs to determine if the charges are allowable.”
Administrator Baxley issued a third undated Unnumbered Letter [click here to download] to inform Rural Development
(RD) State Office and Area Office Loan Servicers of the changes to policies and procedures for establishing and maintaining supervised bank accounts of Multi-Family Housing (MFH) properties. MFH borrowers have identified certain procedures and requirements within RD’s regulations governing Supervised Bank Accounts that are outdated, obsolete, and no longer feasible in the commercial banking environment as a means of withdrawing reserve account funds. This is mainly due to current electronic banking operations. Therefore, the Agency is relieving MFH borrowers of these problematic requirements.