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From Denise Murphy Edwards:
HUD's desire is to reduce the workload burden for Previous Participation reporting, simplify the reporting process, and limit the number of principals who require such review. I am not sure the Proposed Rule has fully achieved that goal.
The regulations being proposed, do a good job in outlining:
- the events that trigger Previous Participation clearance
- the Applicant entities that fall under the review
- the basis for disapproval, and options if disapproved
- exclusions for PHA's and Tax Credit Investors
HUD's proposed regulations are otherwise largely general in nature, leaving much up to HUD's discretion. This is to allow HUD flexibility of implementation and ease in making future changes. I understand HUD's view, but many in the industry hoped to see regulations that were more specific, rather than less specific.
The Proposed Rule does not clearly identify who in an organization will be considered a principal. Since principals must receive Previous Participation clearance and would also be subject to Flags for certain performance elements, this is an important matter. The Proposed Rule does not provide clarity regarding which projects must be disclosed as Previous Participation, nor how far back the reporting must go. I appreciate that HUD's focus is to assure that impermissible risks do not fall under the radar, but we would hope for more transparency regarding what HUD plans to review. The questions you need to ask yourself are:
- What is best for my organization?
- How might this impact my transactions?
HUD understands that some tweaks need to be made to the Proposed Rule. On a call with industry leaders on August 12th, HUD repeatedly requested feedback.
I urge you to take the time to read the Proposed Rule, discuss the implications with industry colleagues and provide HUD with your thoughts - good or bad.
The comment period closes on October 9th. This may be your only opportunity to provide feedback. Don't miss it! | 