HUD Publishes Final ‘Previous Participation’ Rule

Filed in Codes and Regulations, Housing Finance, Multifamily by on October 14, 2016 0 Comments
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HUD today published its final rule, “Retrospective Review — Improving the Previous Participation Reviews of Prospective Multifamily Housing and Healthcare Programs Participants.”

HUD requires applicants who wish to participate in the multifamily and healthcare programs administered by its Office of Housing to be subject to a review of their previous participation in HUD and certain other multifamily programs.

The review is intended to ensure the applicants acted responsibly and have honored their legal, financial and contractual obligations during their previous participation.

This final rule replaces HUD’s existing previous participation (aka 2530) regulations in their entirety, effective Nov. 14.

An accompanying processing guide clarifies how the rule works. Major changes include:

  • HUD will determine whether the participants are likely to comply with applicable statutes, regulations and program requirements and may use participant records with HUD and other government agencies to exclude those who it determines are unlikely to do so.
  • Covered projects include those subject to continuing HUD requirements only if those requirements are made in connection with a program administered by HUD’s Office of Housing.
  • Controlling Participants include both Specified Capacities (for example, project owner, borrower, management agent, etc.) and the individuals and entities that control the Specified Capacities.
  • Board members of a non-profit that do not otherwise control the day-to-day operations of the non-profit are not Controlling Participants.
  • A change in Controlling  Participants is a Triggering Event if HUD consent is required for such change.
  • Controlling Participants receive at least 7 business-days advance notice of a reconsideration.
  • The final rule eliminates the bid to purchase a Covered Project or mortgage note held by the Commissioner from the list of Triggering Events.

For additional information, contact Michelle Kitchen at 800-3685242 x8352.

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