HUD Lays Out Priorities to Address Shutdown Backlog

On Feb. 1, HUD released two memos on multifamily production and asset management that lay out the prioritization and timetables for addressing the backlog of activities caused by the government shutdown.

Regarding resumption of multifamily production activities, HUD announced it will do its best to continue to process and close loans as quickly as possible. However, lenders, borrowers and other affected program participants will likely experience longer than normal application processing times.

HUD’s first priority will be to identify and prioritize work on loans that were ready to go to closing prior to Dec. 21, the day the shutdown occurred. Loans with critical external deadlines such as Low Income Housing Tax Credits, rate lock extension fees, and purchase sale agreements with substantial penalties will take precedence, followed by other loans ready to close.

By close of business today, HUD plans to have conducted an inventory of applications received prior to the shutdown, and assign them to underwriters through workload sharing.

Lenders may continue to submit new applications for mortgage insurance, which will be date stamped and either processed within the region they were submitted to or assigned to another area for workload sharing.

As HUD works through its asset management backlog, top priorities for action include work related to tenant health and safety, such as contract renewals and subsidy payments. HUD is currently allocating new funding provided by the continuing resolution to support the renewal of expiring Section 8 Project Based Rental Assistance (PBRA), Section 202, and Section 811 contracts.

Also, additional funding is now available for ongoing Section 8 PBRA contracts to ensure timely payments through April 1.

Properties with expiring contracts whose renewals were not fully processed by Feb. 1 and have HUD-controlled reserves may request loans from reserve accounts in the interim.

HUD will attend to critical external deadlines, such as servicing actions in connection with FHA closings, and property sales that require HAP Assignment processing or previous participation clearance (also known as 2530 clearance). For other requests such as standard reserve for replacement withdrawals, work items will be processed in the order received.

For more information, contact Michelle Kitchen at 800-368-5242 x8352.