March 19, 2020
Affordable Housing Alert
Announced moratorium on evictions and foreclosures is limited to single-family housing and does not affect multifamily properties.
HUD has updated previously released FAQs, providing additional guidance for owners and managers of HUD-insured and HUD-assisted multifamily housing. This alert reviews the new guidance and newly established protocols for closing FHA-insured multifamily loans and other transactions during remote work situations.
Earlier this week, we issued an Affordable Housing Alert summarizing FAQs for owners and managers of HUD assisted housing issued by HUD’s Office of Multifamily Housing. As this is a fast-changing situation, HUD has updated that guidance with some key additional points extending deadlines and relaxing some requirements. The updated FAQs, as well as additional guidance from HUD’s Office of General Counsel, also establish legal protocols for closing FHA-insured multifamily loans.
The White House and HUD also announced a 60-day moratorium on evictions and foreclosures this week, but that announcement is limited to government-backed single-family home mortgages and does not affect multifamily properties. Details are discussed in this HUD press release.
HUD’s updated guidance relating to multifamily properties includes:
In addition, a new section of the FAQ sets forth HUD protocols for conducting a variety of transactions under current circumstances, including loan closings, contract renewals, and RAD transactions. HUD commits to processing these transactions while staff work remotely, accepting electronic submissions whenever practicable. In particular:
This guidance on conducting transactions also matches internal guidance provided by the Office of General Counsel (OGC) to field counsel for FHA-insured loan closings. The Office of General Counsel has discouraged in-person meetings and closings and has instructed field counsel to rely on electronic submissions, rather than hard copies. Documents can be manually executed by signatories and distributed electronically via pdf. OGC prefers documents be pre-recorded but will accept gap title coverage where available if pre-recording proves impracticable. Parties should allow extra time for closings; documents may need to be shipped to and from HUD signatories working remotely without access to scanners and/or printers. Anecdotally, one of the most challenging aspects of conducting closings remotely may be locating notaries and having documents properly notarized when necessary. To make review easier and faster for HUD staff, best practices include: (1) send drafts in Word format, so that HUD staff can comment directly in the document, (2) send redlines against prior transactions or previous drafts, and (3) make sure your electronic files are well-organized and labeled to match checklist entries and numbers.
The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.
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