This authority will be exercised with flexibility and

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This authority will be exercised with flexibility and sensitivity to Issuer objectives, to the extent consistent with the statutory mandate to restrict savings to provide decent, safe, and sanitary housing affordable by very low-income households. HUD recognizes that projects have aged in the several years since the first refundings and wishes to support, not restrict Issuer preservation programs. The McKinney Act allows HUD some discretion in calculating the savings on a case-by-case basis. The calculation of the debt service savings subject to the McKinney requirements is a net calculation. HAP rents will remain at a level necessary to maintain physical quality, to ensure operating solvency, and to fund adequate project reserve balances. If the re-refunding savings exceed these amounts, only the excess is subject to the McKinney rules. There may be cases of substantial project need in which no McKinney savings are derived from the debt service savings. 3
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Re-refunding transactions will be reviewed pursuant to the regulatory provisions of 24 CFR 811.110(g) as to use of HAP Savings. Proposals for spending HAP savings are to be submitted in a Plan attached as an exhibit to the Refunding Agreement and will be reviewed by the HUD Office of Multifamily Asset Management, Room 6160, HUD Building, 451 7 th Street, SW, Washington, DC 20410. Processing will be streamlined compared to the detailed financial review used in the original FAF bond refundings and will rely heavily upon Field Office findings concerning the physical and financial condition of the projects. Issuer proposals for use of savings to correct project deficiencies will be evaluated by Field Office asset managers. The Issuer request for approval by the Office of Asset Management should include: (1) a description of how the proposed use of additional debt service savings meets the McKinney Act housing affordability objectives; (2) a summary of projected financing terms, including sources and uses statement, bond yield, debt service savings and, to the extent that such savings will not be used for project needs, a revised trustee sweep savings schedule (upon closing, the Issuer or its bond counsel should confirm these terms as final or provide a certification of revised terms); (3) if a proposal involves execution by HUD of FHA mortgage modification or other documents or raises regulatory issues, the Issuer should submit drafts to the HUD Field Office Counsel; and (4) if the proposal includes revisions of the existing Refunding Agreement, such proposed changes must be submitted to HUD headquarters and need not be submitted to Field Counsel. 5. HUD AUTHORITY TO REDUCE CONTRACT RENTS. HUD will review all refinancings and bond refundings of Section 8 projects in the light of Section 142(d) of the HCD Act of 1987 and applicable HAPC provisions, which MAY authorize reduction of contract rents to the extent that the periodic mortgage payment is reduced as a result of the transaction. The Office of General Counsel
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  • Summer '17
  • allen dasu
  • Finance, HUD

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