Surplus Cash Computation: Other Current Obligations

Question:

What all goes in line S1300-110 “Other Current Obligations” on the surplus cash? Should only the mortgage principal and replacement reserve be included, or does the mortgage principle, replacement reserve, insurance escrow, and tax escrow payment?

The reg agreement states “The payment of all sums immediately due or currently required to be paid under the terms of the note, the security instrument and this agreement on the first day of the month following the end of the fiscal periods; including without limitation, all amounts required to be deposited in the reserve for replacement or other reserves as may be required by HUD.

The reg agreement states what is required for the replacements reserve, but the mortgage agreements states the insurance and tax requirements. Should only the mortgage principal and replacement reserve be included in S1300-110, or does the mortgage principle, replacement reserve, insurance escrow, and tax escrow payment?

Thank you so much for your help!


This all depends on the actual Regulatory Agreement. There are at least 3 versions. The language you quoted appears to me to be from the 2002 Agreement. That agreement only requires that interest for the month following the calculation be included. Although, the language appears to infer more, that is not the case.

~ Les

Here is the language from the various Agreements:

2002-2011

Form HUD-92466 (11/2002) states:

“’Surplus Cash’ means any cash remaining after the payment of all sums due or currently required to be paid under the terms of any mortgage or note insured or held by the Secretary; all amounts required to be deposited in the reserve fund for replacements; all obligations of the project other than the insured mortgage unless funds for payment are set aside or deferment of payment has been approved by the Secretary; and the segregation of: an amount equal to the aggregate of all special funds required to be maintained by the project; and all tenant security deposits held.”

 

INTEREST ONLY

2011-2014

Form HUD-92466M (Rev. 04/11)

“’Surplus Cash’ means any cash plus amounts received under Section 8 project-based subsidy payments (earned in the applicable fiscal period) remaining after:

“the payment of: all sums immediately due or currently required to be paid under the terms of the Note, the Security Instrument and this Agreement on the first day of the month following the end of the fiscal period; including without limitation, all amounts required to be deposited in the Reserve for Replacement or other reserves as may be required by HUD; and all other obligations of the Project (accounts payable and accrued, unescrowed expenses) unless funds for payment are set aside or deferment of payment has been approved by HUD,

“and the segregation and recording of: an amount equal to the aggregate of all special funds required to be maintained by Borrower; the greater of Borrower’s total liability or the amount held by Borrower for tenant security deposits; and all accounts and accrued items payable within thirty (30) days after the end of the fiscal period.

 

INTEREST, PRINCIPAL AND R4R

2014-present

Form HUD-2466M (06/14)

“’Surplus Cash’ means certain Project cash pursuant to the calculation set forth in Section 13.”

[Section 13] “Surplus Cash. Borrower must calculate Surplus Cash as of the last day of its fiscal year. Borrower may also, at its election, and if permitted pursuant to Program Obligations, calculate Surplus Cash as of the last day of the sixth moth of its fiscal year. Borrower shall submit a report of its Surplus Cash calculations to HUD with its required annual financial reports, pursuant to Program Obligations.

“Surplus Cash shall equal the sum of: project cash and cash equivalents (excluding the Reserve for Replacement account and other HUD-required reserves); short-term investments; project-based Section 8 Housing Assistance Payments earned but not yet received by Borrower; and any amounts approved for withdrawal but not yet withdrawn from the Reserve for Replacements or any other reserves or escrow accounts;

“after deducting: all sums due or required to be paid within the calendar month following the date as of which Surplus Cash is calculated under the terms of the Note and Security Instrument (including without limitation principal, interest, mortgage insurance premium deposits, deposits to the Reserve for Replacements and other reserves as may be required by HUD, and tax and insurance escrow deposits); all special funds required to be segregated by this Agreement, the Note, the Security Instrument, or Program Obligations, including tenant security deposits, and any other amounts held in trust for tenants; and all other obligations of the Project payable within the next thirty days, unless the obligation is paid subject to available Surplus Cash or subject funds for payment of the obligation are set aside or HUD has approved deferment of payment.”

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