Everything you need to know about compliance requirements for HUD 223(f) loans for the purchase and refinancing of apartment and multifamily properties.
Compliance Requirements for HUD 223(f) Loans
HUD provides a list of suggested Compliance Requirements and Audit Areas for HUD’s FHA multifamily housing programs. A few of these requirements are listed below:
Mortgage Status: All payments must be made promptly according to the terms of the the note and mortgage.
Federal Financial Reports: Projects must ensure that all financial reports contain reliable data. These reports must be presented according to terms of agreements between HUD and the project owners and managers. If a project experiences management or financial difficulties or is suspected of noncompliance, HUD may require monthly reports.
Fair Housing and Nondiscrimination: In accordance with the Fair Housing Act, owners and management cannot engage in discriminatory practices regarding the acceptance of applications, renting units, and designating units for renting.
Replacement Reserves: If necessary, owners must set up a replacement reserve account and make deposits according to HUD requirements. The account must be placed under the lender’s control. Disbursements may be made only after HUD’s consent.
Cash Disbursements: Disbursements from a project’s regular operating account must only be used to pay reasonable expenses and must be backed up by bills, invoices, or other approved documentation.
For a more extensive discussion of Compliance Requirements, read Chapter 3 HUD Multifamily Housing Programs.