HUD announced Wednesday afternoon that it has extended the due date for the filing of all multifamily submissions by 30 days. This extension is automatic and does not require action to obtain. This announcement extends the initial filing deadline. The new deadline is now April 30th. The 10-day grace period and 30-day letter will still be issued at the expiration of this extension. 

HOWEVER....

There have been some questions regarding the applicability of this extension to FHA lenders due to the "FASS-FHA" label in the announcement. This extension DOES NOT apply to users of the HUD's Lender Assessment Subsystem (LASS). The language listed is simply a reflection of the insurance relationship FHA maintains for the multifamily loan portfolio.

Many sources have reported that FHA has informally granted a 60-day extension for supervised lenders.

Non-supervised Mortgagees HAVE NOT been granted any extension.

ISSUES FOR SUPERVISED LENDERS

We remind all supervised lenders and their auditors of HUD's recent guidance on consolidated submissions as outlined in Mortgagee Letter 11-05. The guidance indicates the following:

In considering the above guidance, lenders should be aware that there are two choices for filing under a consolidated entity. Those choices are as follows:

Choice 1- File Statements of the Approved Entity - The LASS User Manual outlines submission requirements for entities who are part of a consolidated financial report but desire to file financial data for the approved entity. The financial data for the approved entity must be derived from consolidating schedules included in the footnotes or other supplemental data. These schedules must be submitted to FHA in the LASS submission in the footnote tab.

Choice 2- File Statement of the Consolidated Entity - Mortgagee Letter 11-05 allows supervised lenders to file only the consolidated financial data according to the following guidance:

Effective immediately, FHA-approved supervised lenders in parent-subsidiary structures (i.e., subsidiaries) are permitted to submit the audited consolidated financial statements of a parent company, accompanied by internally prepared consolidating schedules, if one of the following conditions is met:

(1) the FHA-approved subsidiary accounts for at least 40% of the parent company's assets,

or

(2) the FHA-approved subsidiary provides FHA with an executed corporate guarantee agreement, acceptable to the Secretary of HUD, between it and the parent company in which the parent company guarantees the ongoing net worth and liquidity compliance of the FHA-approved subsidiary.

An FHA-approved lender electing to submit audited consolidated financial statements pursuant to one of the above mentioned conditions must also submit its fourth quarter Call Report as an attachment to its annual audited financial statements submission in HUD's Lender Assessment Subsystem (LASS). Please be reminded that a Compliance Report and Internal Control Report must still be prepared and included as an attachment to the FHA-approved lender's audited financial statements submission in LASS. The Compliance Report and Internal Control Report must reflect compliance with FHA's requirements at the FHA-approved subsidiary's level.

Apart from the changes explicitly stated above, supervised lenders must submit acceptable audited financial statements via LASS within 90 days of their fiscal year end and in conformance with all other requirements provided for non-supervised institutions as outlined in HUD's Office of Inspector General's Handbook 2000.04, "Consolidated Audit Guide for Audits of HUD Programs."

Under this method, lenders must also file the consolidating schedules. In addition, they must also attach the fourth quarter call report with the footnotes. HUD recognizes that, although these items are to be attached to the submission with the footnotes, they are not considered to be audited as are the actual footnotes. 

In either scenario, lenders must be certain to start the submission correctly. They must answer the following question as shown to ensure that the template correctly eliminates the cash flow portion. A screen shot of these choices is shown below. It would probably be a good idea to separately identify the additionally requested data as such.

Mortgagee Letter 11-05, also states that:

Mortgagees participating in FHA's Multifamily programs are now required to report loan fees earned that exceed five percent (5%) of the insured loan amount on each FHA-insured loan over $2,000,000 endorsed during the Mortgagee's fiscal year period covered in its audited financial statements. Loan fees include:

(a) origination and placement fees as permitted by the MAP Guide, plus

(b) trade profit, trade premium or marketing gain earned on the sale of the Government National Mortgage Association (GNMA) security at a value above par, even if the security sale is delayed until after endorsement, minus

(c) loan fees applied by the Mortgagee to its legal expenses incurred in connection with loan closing.

Loan fees should be reported on a separate schedule included with the Mortgagee's annual audited financial statements submitted to HUD via LASS. Mortgagees are not required to separately report on total loan fees that do not exceed five percent (5%). For each loan where the Mortgagee earned loan fees over five percent (5%), the schedule must list: (a) the FHA loan number; (b) the loan amount at Initial or Final Endorsement, and (c) the amount of total loan fees earned above five percent (5%), both in dollar amount and as a percentage of the FHA-insured loan amount.

That schedule should also be attached with the footnotes for the LASS submission.

We have a date for our Annual PHA Conference

PHA Conference 2011
June 9-10, 2011
Planet Hollywood, Las Vegas

• Click here for printable registration form

In the fall we will be offering a one-day Multifamily Update course and a one-day Lender/Banker Update Course.  Our Annual Multifamily Conference will be in early December.  The specific dates for our Fall Courses will be announced in April.