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HUD Notice 2013-25: Updated Guidelines for Continuation of Interest Reduction Payments

Monday, August 26, 2013

On Monday 8/26/2013 HUD posted HUD Notice 2013-25: Updated Guidelines for Continuation of Interest Reduction Payments after Refinancing: "Decoupling," as allowed by the National Housing Act, under Section 236(e)(2).


Applicability and Purpose of the attached notice: 

This Notice establishes updated procedures for the optional continuation of Interest Reduction Payment (IRP) assistance when projects assisted under Section 236 are refinanced. Under Section 236(e)(2) the IRP subsidy may continue provided the Owner enters into a new Agreement for IRP and Use Agreement to maintain the project as a low-income housing resource. For implementation of Section 236(e)(2), the Department has chosen to use the word, "Decoupling," to refer to continued IRP that may be paid after a project is refinanced because the IRP assistance is severed or "decoupled" from the original Section 236 mortgage.

 

This Notice applies to multifamily projects currently receiving IRP pursuant to Section 236, including all projects with mortgages insured or held by HUD and all State Agency non-insured projects. This Notice does not apply to any former Section 236 project owned by HUD or sold by HUD from the HUD-owned inventory. This Notice is also applicable to Section 236 Basic and Market rent computations during the term of the Decoupling Use Agreement and allowable distributions during the term of the Agreement for IRP.

 

This Notice provides updated policy on requirements for Section 236(e)(2) Decouplings, including minor changes to the process for HUD reviews of such transactions. It also describes requirements related to the refinance of formerly Decoupled projects. Many Owners have completed Decouplings and are now seeking to refinance these Decoupled projects for the purpose of making additional project repairs or improvements. This Notice provides the necessary guidance for those types of transactions.

 

To view the notice in its entirety click on the following link: HUD Notice 2013-25

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