HUD Issues Memo on Delayed RAD Closings

Recently, HUD’s Office of Recapitalization (Recap) Director Tom Davis issued a memo announcing new guidelines for closing RAD transactions after issuance of the RAD Conversion Commitment (RCC). Once an RCC is issued, agencies undergoing RAD conversions have 90 days to close their RAD transactions unless granted an extension by HUD. Recap notes that they expect PHAs to be ready to begin the closing process once the RCC is issued, however, HUD notes that some agencies undergoing RAD transactions have not submitted their closing packages “in a timely manner” once the RCC is issued. According to Recap, this “unnecessarily diverts staff attention away from transactions that are ready to close.” As a result, Recap is now introducing a “more standardized framework for processing transactions with a delayed submission of the draft closing package” through a new “Delayed Submission” RCC status.

Closing packages that are not received by HUD two months after the RCC is issued will be placed in a “Delayed Submission” status – removing the transaction from the Closing Coordinator’s and Counsel’s workload. HUD will review requests for extensions of the RCC closing deadline more critically once a transaction is placed in “Delayed Submission.” If there is no evidence the PHA is making progress toward closing the transaction, the RCC may expire and be returned to the Financing Plan stage. This would require a PHA to confirm and update the Sources and Uses, the Pro-Forma, Financing Templates, relocation plans, and the Capital Needs Assessment (which must be submitted via the e-CNA format). Expiration of an RCC will not effect a CHAP.

The “Delayed Submission” status will begin with RCCs issued on or after May 1, 2018. PHAs with “Delayed Submission” status should address any questions to RecapClosingTeam@HUD.gov.