On August 28, HUD issued draft policies governing Mark To Market (M2M) properties (the proposed policies). HUD had not issued updates to the M2M policies since 2012. The new proposed guidance is available at HUD’s Multifamily Drafting Table, and the comment period is open until September 28, 2020. Comments can be submitted to email@example.com.
HUD’s Office of Recapitalization (Recap) administers the M2M and the post-M2M programs. The proposed policies make changes to the underwriting parameters applicable to the waiver of “due on sale and refinancing” clause in subordinate M2M debt. HUD also changes the qualified non-profit (QNP) guidance and replaces the M2M Operating Procedures Guide at Appendix C. Lastly, the proposed policies add in two new sections: (i) a section detailing HUD’s policies on matured, maturing, and defaulted M2M debt and (ii) a section applying Section 8(bb) budget authority transfers to M2M properties. HUD states that the purpose of the proposed policies is to streamline and revise pre-existing guidance and to reduce processing requirements.
The proposed policies reflect Recap’s ongoing experience with post-M2M transactions over the last eight years. Some of the key proposed changes in the proposed policies are listed below:
Recap has indicated it seeks comments from the industry, and we will be seeking clarification, confirmation, and feedback.
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