1 Policy Updates: Processes and Issues ORCF Policy & Risk Analysis Division The Office of Residential Care Facilities U.S. Department of Housing and Urban Development Eastern Lenders Conference Philadelphia, PA March 13 & 14, 2013

2 ORCF POLICY AND RISK ANALYSIS DIVISION: Providing fair and consistent development, interpretation and communication of policies that manage and mitigate risk.

3 PROCESSES: Enhancing Communication During Policy Making

4 ORCF Policy Processes Rules (e.g., Accountability Rule, PPC Rule)  Effective and sometimes required  Vehicle for industry input  ORCF used as key communication opportunity  Protracted process  Rule is inappropriate vehicle for many matters PRA Document Process (e.g., )  Means of addressing highly specific issues  Vehicle for industry input--through various means  Can be somewhat quicker than rule making

5 ORCF Policy Processes (continued) Mortgagee Letters/Housing Notices (e.g., Master Lease/Portfolio ML)  Long used for substantial policy matters  ORCF confers with industry when drafting  Often supplement handbooks  OHP’s small size & relationship with OGC help  Other offices involved before clearance  Budgetary impact must be considered  OMB input may be needed  Prioritization is consideration, not just in OHP  If timely ML not feasible---Looking at other alternatives

6 ORCF Policy Processes (continued) Blasts  Quick responses to industry input/concerns  Widely used in OHP’s early years  Blasts do reflect HUD input beyond OHP  Only required concurrence is Program Counsel  Blasts have limited permissible scope  ORCF balances urgency and scope  Key example is blast article on eligible debt  When a Blast won’t work, ORCF weighs interim alternatives--so business can continue

7 ORCF Policy Processes (continued) FAQs and Lean Thinking are linked tools  LT inquiries generate case-by-case responses  LT responses emerge as recurring practices  Then aggregated and added to FAQs  FAQs updated quarterly, routed through SMEs

8 ORCF Policy Processes (continued) Lean Thinking Q’s—How ORCF handles them  ORCF does not have pre-apps/pre-approvals  Questions before application is assigned go to LT  Once assigned, lender questions go to UW  Policy questions ed elsewhere—routed to LT  Policy staff check Lean Thinking frequently  Policy team reviews as group weekly  Many questions get responses w/in several days  Interim responses provided when appropriate  Input beyond Policy is obtained when appropriate

9 ORCF Policy Processes (continued) Section 232 Handbook  Intended to be comprehensive for 232 Program  Will comprise an element of “Program Obligations” referenced in many various documents  Will lay out expectations of lenders in light of:  New rule  New documents  New access to information  Anticipate posting in advance of effective date

10 Examples of Key Policy Issues: Recent and/or Pending

11 ORCF Key Policy Issues Master Leases  Links triggering master lease  Recent master lease issues Borrower Fin. Capacity/Operator Experience  Means of Addressing Enhanced Risk Insurance Issues—Mini kaizen and status AR Financing Issues—Mini kaizen and status Other Recent issues from Blast and FAQs

12 Questions (For questions that arise later, use