THE RAD FHA PROCESS. Southwest Mortgagee Advisory Council May 10, 2017

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1 THE RAD FHA PROCESS Southwest Mortgagee Advisory Council May 10, 2017

2 Background on RAD The Problem Public housing at risk due to deferred capital repairs caused by a long history of underfunding of the program. 10,000-15,000 public housing units lost each year Current needs exceed $25B across the portfolio Section 9 platform (PHA) creates barriers to accessing private capital Multifamily legacy assisted housing properties also at risk A Tool to Start the Solution RAD created in FY12 Appropriations, expanded in FY2015 Preserves at-risk public housing and multifamily legacy properties by targeting the risk issues through conversion to long-term Section 8 Housing Assistance Payment (HAP) contracts

3 RAD Terms CHAP Commitment to Enter into a Housing Assistance Payment Contract (CHAP) A conditional commitment from HUD to issue a Project Based Voucher (PBV) or Project Based Rental Assistance (PBRA) HAP Contract at closing provided that the PHA meets the requirements outlined in the RAD Notice Can be amended to reconfigure unit types, add additional units, or split the existing units from one CHAP into multiple CHAPs (to process as separate transactions) Kickoff Call Similar to an FHA Concept Call, held within weeks of RAD CHAP award All Internal and External Stakeholders Included

4 RAD Terms Financing Plan For transactions using FHA insurance, the Financing Plan is the standard FHA Application plus other items that must be included for RAD: Accessibility and Relocation Plan Checklist Significant Amendment to the PHA Plan (If MTW Agency, MTW Plan and MTW Attachment A) List of Non-Dwelling Features (Units, Buildings, Vacant Land) Evidence of Removal from PIC * Subsidy Layering Review (if applicable) * PIC is the Public Housing system that tracks properties

5 RAD/FHA Timeline RCC Executed Conversion/F HA Loan Closing ( Days) RAD Kick- Off Call CHAP Issued. Date set for Financing Plan submission FHA Concept Mtg. Financing Plan/ FHA Firm Application submitted. (180 Days*) RAD Approval Committee (210 days) FHA Loan Committee Held and Firm Commitment issued ( Days) ( days) *Days are from when the CHAP was issued. Note that the Financing Plan due date is likely to change if other layered financing such as LIHTC is required.

6 RAD/FHA Timeline Firm and RCC Issuance RAD Approval Obtained RAD Approval Committee RAD FHA Addendum Produced (streamlined document that supplements the FHA Loan Committee memo) RCC Template Completed Ensure any Special Conditions are included FHA Firm Issued RCC Issued by HUD Authorized signature obtained RCC sent to PHA RCC Executed by the PHA and returned to HUD

7 RAD TM / FHA UW Coordination Recap TM s Activities Transaction Manager assignment begins at CHAP Issuance Focuses on non-underwriting aspects of the transaction Ensures that the RAD policies are complied with Gathers necessary inter-departmental approvals Provides program document reviews and provides RAD TA to concept meeting and thru Firm review Issues the Restructuring Conversion Commitment Transitions the transaction to the RAD Closing Coordinator Recap Closing Coordinator s Activities Quarterbacks the RAD closing process & coordinates w/fha Closing Coordinator

8 RAD TM / FHA UW Coordination TM & UW Roles & Responsibilities RAD TM Understands the RAD portion of the transaction Has an established relationship with the PHA Does not underwrite the RAD Financing Plan Coordinates the required HUD (FHEO, PIH) Approvals Presents to the RAD Approval Committee FHA UW Evaluates the proposed transaction; including rehab and financing Has the relationship with the FHA Lender Underwrites the FHA Firm Application (i.e., RAD Financing Plan) Completes Part 50 Environmental Review Presents to the FHA loan committee (following receipt of RAD/FHA Addendum from TM)

9 Before RAD Properties are typically not funded at 100% in Public Housing In Public Housing, PHAs cannot borrow money to perform necessary repairs The funding fails to keep up with the deteriorating living conditions of residents Residents cannot choose to move without losing housing assistance

10 After RAD Properties are placed on a more stable Section 8 funding platform PHAs and owners can more easily borrow money and perform rehabilitation work The living conditions of residents are improved Residents may receive a tenant-based voucher, or similar assistance, and move after 1 year in PBV and 2 years in PBRA

11 RAD Deals in the SWRC Casas Del Rio and Villa Hermosa - Del Rio, TX Northview Village - Brenham, TX Pennsylvania Place - Fort Worth, TX

12 Contacts FHA Underwriters: Northeast Region: Southwest Region: Barbara Listokin Kenneth E. Byrd Senior Underwriter Senior Underwriter Midwest Region: Southeast Region: Scott Greuel Kathryn J. Brewer Chief, Underwriter Branch Senior Underwriter Recap Office: FHA Liaison Patricia Burke Senior Advisor