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USDA/RHS RIN: 0575-AD23 Publication ID: Spring 2021 
Title: ●Changes Related to Reserve Account Administration in Multi-Family Housing (MFH) Direct Loan Programs - 7 CFR 3560, Subpart  

The Rural Housing Service (RHS) Multi-Family Housing (MFH) Direct Loan Programs will publish a proposed rule to update 7 CFR part 3560 to implement changes related to the administration of property reserve accounts under the Multi-Family Housing (MFH) Rental Assistance (RA) program. The proposed changes will allow owners to access surplus cash notes as a new source of capital for property improvements, and to implement operating cost increases in property reserve contributions. The programs covered by this part are authorized by title V of the Housing Act of 1949, as amended. 

In the proposed rule, RHS is considering amending section 3560.306 to update the definition of surplus general operating funds, clarify that surplus operating funds may be used to reduce debt service for debt other than agency debt, and allow for an annual increase in reserve contributions by utilizing the Department of Housing and Urban Development's (HUD) Operating Cost Adjustment Factor (OCAF). 

Proposed changes to 3560.306 Reserve account may also include updates to section (d)2 to define surplus cash and explicitly include other third party debt as an allowable use of those funds, allowing borrowers to access state and local government funding available as a capital source for property improvements. If proposed this could improve property condition and increase tools available to borrowers to preserve properties as affordable housing resources. 

Additionally, the proposed rule may allow for an annual adjustment to increase reserve account funding levels by Operating Cost Adjustment Factor (OCAF) as published by HUD annually. This would require a modification to the Loan agreement and the increase documented with budget submission for Agency approval as outlined in 3560.303.  This could allow properties to increase their savings for capital repairs and incorporate the appreciation of the cost of repairs, ensuring funds could be available as needed to make these improvements. 

Agency: Department of Agriculture(USDA)  Priority: Substantive, Nonsignificant 
RIN Status: First time published in the Unified Agenda Agenda Stage of Rulemaking: Proposed Rule Stage 
Major: Undetermined  Unfunded Mandates: No 
CFR Citation: 7 CFR 3560   
Legal Authority: 42 U.S.C. 1480   
Legal Deadline:  None
Action Date FR Cite
NPRM  09/00/2021 
Regulatory Flexibility Analysis Required: No  Government Levels Affected: None 
Small Entities Affected: No  Federalism: No 
Included in the Regulatory Plan: No 
RIN Data Printed in the FR: No 
Agency Contact:
Jennifer Larson
Department of Agriculture
Rural Housing Service
1400 Independence Avenue SW,
Washington, DC 20250
Phone:202 720-1615