Multi-Family Housing Portfolio Mgmt. Update Presented by Janet Stouder Multi-Family Housing Portfolio Mgmt. Update Council for Affordable and Rural Housing

Agenda for Discussion Status of Rental Assistance / Vouchers Performance Status Unnumbered Letters Issued relating to Portfolio Management Issues Regulation Update HB- 2-3560 Chapter 4 - Financial Management Overview Automation Initiatives

Status of Rental Assistance / Vouchers Fully expect to fund all RA renewals & Vouchers RA Obligation Tool continues to be performing well Improper Payments Elimination And Recovery Improvement (IPERIA) Currently Reviewing FY18 Review of documentation and calculation of Rental Assistance Randomly selected tenant certs Letters sent to Mgmt in May FY 16 Rate – 1.1% FY 17 Rate – 1.4%

PERFORMANCE STATUS National Receivership Prop. Gov. Owned Properties 1 2 Gov. Owned Properties 1 Delinquency 1.7% Vacancy – Section 515 6.08% Proposed Budget Due Rec. % 14,119 13,288 94.1 Actual Budgets 13,519 12,483 92.3 Annual Inspection Due Compl. % 2,794 543 19.1 Supervisory Visits 4,798 1,823 38.0 AS of May 31, 2018

Recently Issued Unnumbered Letters/ Administrative Notice 6/13/18- Income Limits 5/30/18 - Non-Profit Asset Management Fee 05/11/18 – FY 15 Management Control Review for MFH Sec 515 RRH & Sec 514/516 Off-Farm Labor Housing Servicing Result of MCR Teams review 04/20/18 - 2015 Management Control Review for MFH Sec 514 On-Farm Labor Housing Servicing 4/06/18 – Results of MFH Annual Occupancy Report

Recently Issued Unnumbered Letters/ Administrative Notice (continued) 02/27/18 – Hosting the 2018 Summer Meals Program Approximately 15.3 Million or 21% of school age children are in families living in poverty. These children might not have access to healthy meals during the summer when school is out. Sign up to host Summer Meals 01/24/18 – MFH Financial Reporting Requirements for FY17 Procedure Notice for FY 18 Management Fee Increase

Unnumbered Letters (In Process) Updated and Re-Issue of 04/28/17 – Allowable Expenses in MFH Properties Issued due to recent OIG Audit requirement Re-issue of 12/28/16 – Management of Loan Payoffs in MFH Properties Estimate Pay-off based on Promissory Note (as long as principal is being paid at same rate) Options Reamortize loan to existing Promissory Note term Request to Ream Lite – to extend the terms up to 20 years Apply to Prepay Loan Updated Rent Incentive UL Flexibility for Owners/Management With or Without a SWOP H2A Farm Workers Extends Farm Labor Housing (FLH) occupant eligibility to H-2A temporary agricultural workers (H-2A worker).

Regulation Update HB-3-3560 Chapter 6 – Project Suitability Portfolio and Property Assessment Incorporating old guidance on Dynamic Servicing Determine needed course of action into the agency's overall guidance Procedure Notice No. 513 dated June 4, 2018 HB-3-3560 Chapter 9: Unauthorized Assistance/ HB-3-3560 Chapter 10: Compliance Violations (pending) Civil Monetary Penalties - Violation of regulations or agreements Submitting false information or certifications Failing to timely submit information Failing to maintain real property Failing to comply with civil rights and regulations Finishing updating Handbook guidance

Regulation Update HB- 2 -3560 Chapter 4 Financial Management Financial Reporting – updating handbook guidance Regs aligned with Dept of Housing & Urban Development (HUD) Using HUD Audit format (less the tenant file review) Elimination Agreed Upon Procedures Changing to $$ vs. number of units for audits Risked based threshold

For-Profit / Limited Profit Regulation Update HB- 2 -3560 Chapter 4 For-Profit / Limited Profit Current New Financial Rule Per property Based on size of property 1-15 Units RD Forms & Borrower Cert 16-23 units RD Forms, Borrower Cert & AUP 24 + units RD Forms Borrower Cert & AUP & Audit* Per Borrower Based on Total Financial Assistance For-Profit / Limited Profit Less than $500,000 RD Forms & Borrower Certification $500,000 or greater RD Forms, Borrower Certification & Audit

State & Local Governments, Indian Tribes & Nonprofit Orgs Regulation Update HB- 2 -3560 Chapter 4 State & Local Governments, Indian Tribes & Nonprofit Orgs Current New Financial Rule Per property RD Forms & Borrower Cert Audit is in accordance with OMB Circular A-133 and submitted to the Agency as part of the Financial Reporting Requirements. Per Borrower Based on Total Financial Assistance Less than $750,000 RD Forms & Borrower Certification $750,000 or greater RD Forms, Borrower Certification & Single Audit in accordance with 2 CFR part 200 subpart F

Regulation Update HB- 2 -3560 Chapter 4 Combined Federal Financial Assistances A combination of any of the following sources: Principal balance at the beginning of the fiscal year of all USDA Mortgage, a mortgage insured by the Federal Housing Administration (FHA) or HUD- held mortgages and other Government insured loans); Any USDA Rental Assistance or Project based Section 8 assistance received during the fiscal year; Interest reduction payments received during the year (interest subsidy); Federal grant funds received during the year and/or; Outstanding principal balance at the beginning of the fiscal year of an existing USDA Section 538 Guaranteed Rural Rental Housing loan.

Transition; per UL dated January 24, 2018 FY 17 - No change - Regulation Update HB- 2 -3560 Chapter 4 Transition; per UL dated January 24, 2018 FY 17 - No change - Borrower can opt out of providing an AUP. FY 18 - OPTIONAL in FY 18 FY 19 – Mandatory Budgets and Year ends will be submitted in accordance with the new regulations

AUTOMATION PROJECTS For past three years – using IPAD for completing Supervisory Visits & Physical Inspections We have just ordered over 300 new 2/1 Devices to replace iPad’s Enhanced connectivity and compatibility Start to be issued to Field in next 60 days MINC – Update FY18 Income Limits Working towards Electronic Customer Files (ECF) Held 7 Internal Webinar Trainings Scanning essential documents and current servicing file MFIS RA Obligation Monitoring Tool Ensure Reasonableness of Rental Assistance Estimates GAO recommendation

AUTOMATION PROJECTS Enterprise Income Verification (EIV) FY 18 Appropriation Act allows RHS access Working with HUD/HHS on data sharing requirements LSS – Borrower Financial Reporting Held Rapid Improvement Meeting September 2017 in St Louis Completed scopes of work/business rules for Top 5 identified improvements. Customer Portal, Validation Checks, Internal/External Training, MFIS Submitted Mission Needs document to IT on Customer Portal, awaiting bid Held 2 webinars (9/17 Proposed Budgets & 4/18 on Actuals) over 300 trained Implemented several data integrity checks in MFIS Core Group to meet and brief new leadership on project by September 2018

Questions and Answers

MFH Portfolio Management Division 202-720-9728 www.rd.usda.gov Janet Stouder Rural Development MFH Portfolio Management Division janet.stouder@wdc.usda.gov 202-720-9728 www.rd.usda.gov