CARH’S BROADCAST E-MAIL – Regulatory Alert

January 29, 2018

On January 24, 2018, the Rural Housing Service (RHS) issued an Unnumbered Letter (UL) entitled, Multi-Family Housing Financial Reporting Requirements for Fiscal Year 2017.

According to RHS, the UL was issued to clarify the new financial reporting requirements for fiscal year (FY) 2017. The Final Rule for the Multi-Family Housing (MFH) Sections 515/514 new financial reporting requirements was published in the October 25, 2017, Federal Register and became effective November 24, 2017. The Final Rule updates Rural Development’s (RD) financial reporting requirements to establish risk thresholds, align requirements with the Department of Housing and Urban Development (HUD), and reduce program operating costs to RD and its borrowers. As a result of these changes, RD has indicated that they believe that small-portfolio borrowers will realize cost savings in property operating expenses and a consequent reduction in the amount of rent subsidy (Rental Assistance (RA) and HUD Section 8).

The new rule will be effective for borrowers with fiscal years beginning January 1, 2018 and thereafter. The Final Rule changes will not affect FY 2017 reporting requirements. The reporting change will be OPTIONAL in FY2018, as proposed budgets have been submitted and will be MANDATORY starting in FY 2019.