19.4.5.5 Residual Receipts Rider

A. In some cases, other HUD programs (such as Section 8 and Section 202 Supportive Housing for the Elderly) impose Residual Receipts requirements on non-profit owners. In such cases, a Project will be subject to Residual Receipts requirements even though the FHA mortgage insurance program does not impose these requirements.

1. The Regulatory Agreement requires projects subject to Residual Receipts requirements to attach a Rider to Regulatory Agreement for Residual Receipts Requirements (see Section 19.9) and indicate whether the Project is subject to such a rider on page 1 of the Regulatory Agreement. If the rider is attached and the “yes” blank is checked, the Surplus Cash provisions of the Regulatory Agreement are thereby modified, and the provisions of the attached rider indicate that Residual Receipts account requirements are imposed by another program. The rider must clearly define the source and duration of the Residual Receipts requirements, and indicate that upon expiration of these requirements, the terms in the Regulatory Agreement regarding Surplus Cash will control.

2. In the case of FHA-insured projects that receive rental assistance from a project-based Section 8 housing assistance payments (HAP) contract, the mortgage insurance documents, including the Regulatory Agreement, are separate and apart from the Section 8 HAP contract. Thus, the maturity or prepayment of the FHA-insured Loan and the resulting release of the Regulatory Agreement have no effect on the Section 8 HAP Contract, which continues in full force and effect until the date on which it expires, unless terminated for cause.