The following information is taken from “Submission and Review Requirements & REMS Critical Data Fields for Annual Financial Statements“
Page 27 & 28:
X. Waivers and Deferments
- Waivers of AFS Submission: Only the Assistant Secretary for Housing (FHA Commissioner) in Headquarters has authority to waive the requirement to submit an AFS. Generally, the AFS filing requirement will not be waived. The procedures for processing are presented in Attachment 2.
- Waivers to Defer Partial Year Submission. As with extensions, the Office of Asset Management provided REAC limited authority to approve or deny deferment requests of less than or equal to 90 days*. A waiver to defer is an option, not a right. The owner’s coordinator MUST submit the request on-line under the “Select An Option Menu, Waiver” in FASSUB on the REAC Secure Systems website (See Attachment 2 – page 31).* Extended to 120 days, see information at the end of article.
Agreement between Multifamily Housing and REAC
Processing Requests for Waivers and Deferments of Financial Statements
A. Waiver Request Procedures
The authority to waive financial statements and to develop policy on waivers rests solely with the Assistant Secretary-FHA Commissioner. The requirement to submit financial statements to HUD electronically cannot be waived unless HUD has entered into a legally binding agreement with the owner that waives the owner’s contractual requirement to submit financial statements. The procedures for processing waivers are:
- The owner must submit a written request for a waiver to the local Hub or Program Center along with supporting documentation indicating the reasons they believe HUD should waive the financial submission requirements.
- Project Managers should review the request and determine if it has merit for approval. If the decision is affirmative, the project manager must forward the request with their recommendation via memorandum to the Office of Asset Management. However, if the project manager determines that the request lacks a basis for approval, the Hub/Program Center should deny the request.
- The Office of Asset Management will review the request to determine if HUD has authority under the existing regulations and business agreements with the owner to extend a waiver that was previously approved, or approve a new waiver.
- The Office of Asset Management will notify the field office and REAC in writing if the request is approved or disapproved, and the project manager will inform the owner in writing accordingly. If the request is approved, the PM should instruct the owner to submit a waiver request electronically to FASS-MF.
- Upon receipt of the approval letter from the Hub/Program Center, the owner must submit a waiver request electronically via the FASS-MF system, and REAC will approve the request in the system. 6. If the Hub/Program Center denies the waiver request, the owner may appeal the decision to the Office of Asset Management.
B. Waiver Criteria
- The request must specify the specific terms or conditions and the time period for the waiver.
- The waiver cannot be for a period over one year.
C. Waivers to Defer Partial Year Submissions
During the normal course of business, situations may arise for which an owner is responsible for submitting financial statements with a reporting period of less than 12 months. Auditors refer to these as “stub” period financial statements. If the stub period is equal to or less than 90 days 120 days*, HUD allows the owner to defer reporting, and to add the stub period to the next full year financial statements (e.g. the owner would submit financial statements covering up to 15 months 16 months*). This procedure is known as a deferment of the reporting period. A deferment is different from a waiver in that the financial submission requirement is not waived, but the timing of the submission is deferred to a later date. HUD regularly approves the deferment of stub period reporting as part of Transfers of Physical Assets (TPA), refinances, and new project development thus ensuring that the owners are not flagged as being overdue. The owner’s coordinator submits this request on-line under the “Select An Option Menu, Waiver” in FASSUB on the REAC Secure Systems website located at http://www.hud.gov/offices/reac/online/reasyst.cfm.
* See the following for more information on stub period submissions: