HUD Multifamily Notices on FHA and Asset Management Operations During Shutdown

HUD’s office of multifamily housing issued two memos regarding its operation during the partial government shutdown. The first memo details Federal Housing Administration (FHA) mortgage insurance applications and production activities and states that most activities will cease during the shutdown. However, during the first 30 business days of a shut down the following will apply:

  • Closings will be conducted for FHA Multifamily Initial Endorsements on projects with Firm Commitments issued on or prior to December 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.
  • MAP Lenders servicing construction loans and administering non-critical repair escrows may, at their and 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.
  • No applications for Multifamily FHA mortgage insurance will be accepted or processed.

The second memo details multifamily asset management activities and states that most asset management activities will cease during the shutdown. However, during the first 30 business days of a shutdown, the following activities will continue:

  1. Making payments under 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 Section 8 and PRAC renewals for expiring contracts and processing amendment funds for non-expiring Section 8 contract renewals.Please note that HAP/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.
  2. Process payments to PBCAs.
  3. Continued management of HUD-owned and Mortgagee-in-Possession projects.
  4. Approval of emergency repairs related to health and safety.
  5. Respond to issues relating to the imminent threat to the safety of the residents, or to the protection of property in HUD-insured or assisted multifamily projects.

The federal government shutdown on Dec. 21, 2018 and these notices only apply to the first 30 business days of a shutdown, likely through early February.