5-4. CONTRACT — HUD Section 8 Renewal Policy Guidebook

A. General Policy: Once Recap processing is completed, Lites and Fulls are renewed as follows:

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Lites: Lites are renewed under Section 524 of MAHRA. For multiyear contracts, contract rents are adjusted annually, per the renewal contract, by application of an OCAF or, if HUD approves, on a budget basis.
Fulls: Upon the closing of a debt restructuring, Fulls are renewed under Section 515 of MAHRA, generally for a term no greater than 20 years. Budget-based rent adjustments are not permitted during the term of a Full Mark-to-Market Renewal Contract or any renewal thereof, and under no circumstances may a Full Mark-toMarket Renewal Contract be terminated prematurely to permit the owner to participate in any other renewal option, including Mark-up-to-Market. Owners are required to combine contracts (including those that expire in later fiscal years) under a Full Mark-to-Market Renewal Contract.

B. Once Recap (and the PAE) complete processing, the Section 8 contracts for Lites and Fulls will be executed as follows:
1. Recap Lites: Upon notifying the PAE and owner of Recap’s approval of the Lite, Recap contacts the OAMPO’s Assisted Housing Division Director via email, requesting funding for the HAP Contract. A copy of Exhibit A, which includes a breakdown of unit number and type, rents, utility allowances and monthly totals, is provided in the email.

Once a notification of funding (in the form of an email, or a Notice of Funding Authorization, from OAMPO’s Assisted Housing Division Director, has been received by Recap, Recap completes the one-year Basic Renewal Contract (HUD9636) or the multi-year Basic Renewal Contact (HUD-9637) and forwards the contract to the PAE for the owner’s signature. An electronic copy is also provided to the AE. The PAE will forward the contract to the owner for signature with instructions to return the contract to the AE/CA, for HUD execution and processing.

Recap Fulls: Upon notification to the PAE and owner of Recap’s approval of the Full transaction, Recap contacts OAMPO’s Assisted Housing Division Director via email, to provide early notification that the restructuring plan has been approved by Recap and a Restructuring Commitment is being issued to the owner. A copy of Exhibit A, which includes a breakdown of unit number and type, rents, utility allowances and monthly totals, is provided in the email (this is for early notice only, OAMPO’s Assisted Housing Division Director may choose to process the request at this point, or wait for official funding request from Recap). When Recap is notified by the PAE that the Restructuring Commitment has been signed by the owner, an official funding request is sent to OAMPO’s Assisted Housing Division Director, requesting the amount needed and the tentative closing date. An updated copy of Exhibit A, (in the case that rents have changed) is provided with this email. If the funding request was not processed by OAMPO’s Assisted Housing Division Director upon early notification, it must be processed now. Once a notification of funding (in the form of an email, or a Notice of Funding Authorization, from OAMPO’s Assisted Housing Division Director), has been received by Recap, Recap completes the Full Mark-to-Market Contract and forwards the contract to the

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PAE. The PAE will forward the contract to the owner for signature with instructions to return the contract to the AE/CA, for HUD execution and processing, prior to Mark-to-Market closing. An electronic copy is also provided to the AE, OAMPO’s Assisted Housing Division Director, and HQ Closing Coordinator.

C. Post-Closing: After closing, the Recap Regional Preservation Office will provide a “Closing Docket Transmission Memorandum” to the Multifamily Regional Center summarizing the details of the debt restructuring. Most of the information included in the Transmission Memorandum is also available through the Recap Management Information System database system. Refer to Chapter Seven, Closing, and Chapter Eight, Post-Closing Document Distribution of the Recap Operating Procedures Guide (OPG) for further information.
D. Owner Opt Outs: If an owner has decided to opt out of the project-based Section 8 contract while assigned to Recap for a rent or debt restructuring, and the Multifamily Regional Center has confirmed that the owner has decided to opt out, Recap will complete the rent determination, inform the AE of the rent determination, and cease processing. If additional time is required to either process tenant vouchers or to complete the tenant notification period, the AE/CA will prepare a one-year Basic Renewal Contract, (HUD 9636), at comparable market rents using Recap’s rent determination.
E. Owner Prepayments: If an owner decides to prepay the FHA-insured mortgage after submitting a Contract Renewal Request Form, and the Multifamily Regional Center has confirmed that prepayment has occurred, Recap will complete the rent determination, inform the AE of the rent determination, and cease processing. Under these circumstances, the project is not eligible for renewal under Option Four (i.e., as an Exception Project) and would not be eligible for renewal under Option Four in the future except as provided for in Section 6-4 (Section 202 Refinancings). The AE will prepare a Basic Renewal Contract at comparable market rents using Recap’s rent determination.
F. Interim Section 8 Processing Guidance for Recap Projects: Processing Section 8 contracts for Lites, Fulls and Watch List properties should be done in accordance with the Multifamily policies and procedures regarding renewals of Project-Based Section 8 Housing Assistance Payments Contracts .
G. Performance-Based Contract Administrator: The Financial Management Center (FMC) will execute the Annual Contributions Contract (ACC) as well as complete the fund reservation process.
H. Contract Types: Please refer to Section 2-6 A of this Guide for a list of appropriate contracts to use when renewing a MTM contract.