Rural Development (RD) recently published an Unnumbered Letter (UL) entitled, “Section 515 and Section 514 Multi-Family Housing Reserve Deposit Resizing.” The UL was issued to provide guidance to all Multifamily Housing (MFH) program staff regarding the resizing of the reserve account deposits as it pertains to 7 CFR 3560.103(c) and 7 CFR 3560.306(j).
According to the UL, borrowers may request the resizing of the reserve account at any time throughout the year, although depending on the time of the year, budgets may need to be readjusted and resubmitted. To begin the process, borrowers must provide (1) an Agency approved Final As-Is CNA; (2) area market information (rents and square footage of similar properties) for establishing CRCU; and (3) current balances of the General Operating Account, Taxes and Insurance Account, Reserve Account and current Accounts Payable and Accounts Receivable balances.
Once the necessary documents are submitted, RD’s Servicing Specialist is required to use their Reserve Deposit Resizing Tool (RDRT) to determine if it is feasible to resize the reserve account while keeping basic rent levels at or below CRCU.
