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Revised Requirements for Project Capital Needs Assessments, Estimated Reserves for Replacements and Remedies for Accessibility Deficiencies

HUD published Notice H 2012-27/ Mortgagee Letter (ML) 2012-25 “Revised Requirements for Project Capital Needs Assessments, Estimated Reserves for Replacements and Remedies for Accessibility Deficiencies” (November 21, 2012).

A copy of the notice/ML may be found here: http://portal.hud.gov/huddoc/12-27hsgn.pdf

The notice clarifies portions of Risk Mitigation guidance (ML 2010-21 and Housing Notice 2010-11) concerning Project Capital Needs Assessment (PCNA) reports and requirements for sizing initial and annual contributions to Reserves for Replacements. Appendix 5G of the MAP Guide1 is modified to implement risk mitigation measures and to align PCNA guidance for the multifamily insurance programs. A single scope of work is defined for PCNA reports for all applications under Sections 223(a)(7) and 223(f), for 10 year PCNA updates and for other Office of Multifamily Housing uses of PCNA reports provided for insured projects (except M2M or RAD transactions) on or after March 30, 2013; that is, 120 days from the first of the month following publication. Accessibility requirements are clarified and re-emphasized.

Please note that the final notice/ML applies to all applications for mortgage insurance under the FHA Multifamily Housing programs, to all 10 year PCNA updates for existing insured properties, and to all PCNAs required by the Office of Multifamily Housing except those required for restructuring of assisted housing projects under the Market-to-Market program. It does not apply to programs administered by the Office of Healthcare.

Earlier this year, HUD sought comments from NAHMA and other industry stakeholders on a draft version of the notice. The Agency has informed us that it made some changes to the final notice based on industry feedback. A copy of NAHMA’s comments on the draft Notice/ML dated June 8, 2012 may be found here: http://www.nahma.org/member/New%20HUD%20Docs/NAHMA%20Comments%20PCNA%20mortgagee%20letter.pdf

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