Reporting Requirement: Refinance, Replacing Old FHA Loan With New FHA Loan

An explanation of HUD audit requirements and corresponding electronic submission requirements can be found in the document titled “Submission and Review Requirements & REMS Critical Data Fields for Annual Financial Statements

“Refinance – Replacing an Old FHA Loan with a New FHA Loan – No Change in Ownership or Control” section VI. E.

When a HUD-insured loan is replaced with a new HUD-insured loan with no changes in ownership, there is no break in financial reporting. The owner must file a full twelve-month AFS. REMS ownership information, including the “Date Owner Assumed Financial Responsibility (FASS)” (FASS date) remains unchanged. If the new loan is a new construction or substantial rehabilitation loan, then the FASS date is the day after cost certification cut-off.

[Note from AHACPA: At the time of the FASSUB electronic submission, the FHA number may not be updated in the template.  This is not a cause for concern.  Annual submissions are tracked in HUD’s system via Tax ID Number, not FHA number.  Additionally, there is no new setup required to access the submission.]

ASU 2016-14 Sample Financial Statements


In August of 2016 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-14 regarding the presentation of financial statements for nonprofit entities.

The main provisions of this guidance as they pertain to REAC financial statement submissions are as follows:

  • Reduces the classes of net assets from three to two. Nonprofits will report amounts for net assets with donor restrictions, and net assets without donor restrictions. Classification of net assets with temporary restrictions will be eliminated. The impact to multifamily reporting will generally be limited to those entities who were reporting Section 202/811 as temporarily restricted net assets. Owners will now be required to determine in which category of net assets amounts will be presented.
  • Nonprofits may elect to present the cash flow on either the direct or indirect methods. HUD’s handbooks require the direct method. However, REAC has elected to exercise the option to eliminate the indirect reconciliation on the direct method cash flow. Accordingly, the REAC template will remain on the direct method, but the schedule will end after the determination of cash.
  • For-Profit entities will retain the full direct method cash flow.

ASU 2016-14 also increases requirements for nonprofits to disclose expenses by both their natural and functional classifications in one of the following locations:

  • On the face of the statement of activities
  • In the notes to financial statements, or
  • As a separate financial statement (data schedule)

REAC has determined that the FASSUB template will NOT be modified to collect this data. Rather, in REAC, the data will only be includable in a footnote. In general, there is no specific guidance issued on the classification. In multifamily, the majority of the costs are program services. The general decisions will reside in the administrative costs.

The full text of ASU 2016-14 can be found here.

Change of Year End for Profit Motivated Multifamily Project

Information on changes to year-end can be found here (pages 26-27):

VIII. Changes in the Fiscal Year End

Profit-motivated and limited dividend owning entities must submit requests to change their fiscal year end to the Internal Revenue Service (IRS) on Form 1128 – “Application To Adopt, Change, or Retain a Tax Year.” Upon receipt of this request, the IRS issues a “Private Letter Ruling” indicating its decision.

Nonprofit or tax-exempt entities under section 501(c) are not required to submit Form 1128 to change the fiscal year end, unless the owning entity has changed its tax year at any time within the last 10 years. This procedure is called “Expeditious Approval.” The IRS permits nonprofit entities to change their fiscal year end without prior approval if they meet the above requirement.

PMs must not change the fiscal year end information in REMS for profit-motivated and limited-dividend entities until they receive a copy of IRS’s “Private Letter Ruling.” If the property is owned by a nonprofit entity, the owner must submit a letter to the local Hub/Program Center certifying that the fiscal year end has not changed within ten years. If this letter is not received, the PM must not change the fiscal year end date in REMS.

Fiscal year end dates apply to owning entities, not to projects. In cases where the owning entity has multiple properties, the PM must verify that the ownership information and TIN in REMS are the same for those properties before changing the fiscal year end date.

Within 30 days of approving a fiscal year end change, the PM must inform the REAC Technical Assistance Center (TAC) (888-245-4860) of a change in fiscal year end. Changing the “Fiscal Year End” in REMS triggers overdue tracking. FASS-MF must be informed of these changes to override the overdue tracking to prevent referral of the owner to the DEC.

Example: if the fiscal year end is 12/31 and is being changed to 06/30 during calendar year 2004, overdue tracking will look back twelve months for the 06/30/2003 AFS submission. The owner’s coordinator will receive a notice indicating that the 06/30/2003 AFS is overdue. Contacting the TAC within 30 days of the change allows REAC to override overdue tracking and prevents an unnecessary referral to the DEC.

Consolidated Multifamily Submission

If you have several projects that are under the same Tax ID Number a consolidated submission can be entered. The following information is required for a consolidated electronic submission:


(no details on misc.

INDIVIDUAL PROJECT – Info needed for
EACH project
(details needed for misc accounts)
Balance Sheet x x
Profit & Loss x x
Equity x x
Cash Flow x x
Reserve for Replacement   x
Residual Receipts   x
Computation of Surplus Cash   x
Schedule of Changes in Fixed Assets   x
Footnotes x  
Auditor Reports (on audited financials only) x  
Findings (on audited financials only) x  
Certification Page (on audited financials only) x  
SEFA (on audited non-profit financials only)  x  

Update UII

When merging a firm into another existing firm, there is more than one way to proceed.

You can go ahead and use the UII number associated with [Firm #2]. If you need to update the contact information you can do so by following the directions at the end of this message.


You can register for an entirely new UII. One thing to note is that UII numbers are tied to the Tax ID Number PLUS the zip code. So, if there is already a UII in existence for a certain TIN + Zip Code, the system will not let you register for a new one using the exact same TIN & Zip. As a workaround, you can go into the existing UII and change the TIN or Zip. Then you will be able to register for a new UII using the correct TIN & Zip.

Most larger firms do register for a UII for each location.

UII Numbers – How to Create, Update or Recall

Log into REAC & Click on Quality Assurance Subsystem (QASS)

  1. To Create a New UII:
    • Click on Create
    • Click on Independent Public Accounting Office
    • Fill in the TIN & Zip Code, click GO
    • Verify information, click GO
    • A new UII number will be displayed – PRESS SUBMIT
  2. To Recall or Edit an Existing UII:
    • Go to create new
    • Fill in the TIN & Zip Code, click GO
    • If there is already a UII with that TIN & Zip code combination the UII information will be displayed, otherwise a blank form will be displayed
    • Fill in/change information as needed, click GO
    • Verify Information – PRESS SUBMIT

Penalties for Non-Filing

If you know ahead of time that your submission is going to be late you can submit an extension request. Bear in mind that HUD rarely grants extensions.

If you do not get your electronic submission completed by the end of the “Grace Period” you may be referred to the Departmental Enforcement Center (DEC).

The DEC’s primary goal has been to obtain owner compliance in filing the required statements. However, the DEC has authority to impose civil money penalties (CMPs) against owners of HUD-insured and assisted multifamily properties who do not comply.

The following Q & A is taken from the DEC page on HUD’s website.

Q: What is the maximum civil money penalty that can be imposed?

A: Effective June 29, 2017 the maximum civil money penalty that may be imposed upon a borrower of an FHA insured Multifamily Housing property is $48,114 per violation.  In cases where there is only a Housing Assistance Payments (HAP) Contract, the maximum amount is $37,396 per violation.  See 82 Fed. Reg. 24521, at 24524-24525 (May 30, 2017).

Federal Register 83 FR 32790 Update: Effective August 15, 2018, civil money penalties for Multifamily & Section 202 or 811 violations increase from $48,114 to $49,096.

Project funds cannot be used to pay the penalty.  See 24 CFR 30.45 (g) and 24 CFR 30.68 (c).

Q: I received an email letter from REAC indicating that REAC/FASS has not received the annual financial statement (AFS). Can I get an extension of time to file the AFS?

A: Requests for extensions must be filed electronically through the REAC website at through the “online systems” selection. Please refer to Chapter 2 of the online REAC User Guide for Financial Assessment Subsystems – Multifamily Housing (FASS). The DEC is not authorized to grant extensions for filing.

Q: I need to talk to someone for technical assistance in understanding the electronic filing requirements. Is there a telephone number I can call to speak to someone?

A: Yes. To discuss a FASS technical problem or get assistance, contact the REAC Technical Assistance Center at 1-888-245-4860.

Q: If a property changed owners, what are the obligations of the seller and purchaser for filing an AFS?

A: The seller must file an AFS covering the period from the beginning of the seller’s fiscal year through the day before the deed was signed. The date the deed was signed marked the beginning of the purchaser’s (new owner’s) financial reporting responsibilities. The purchaser must file an AFS from the date the deed was signed until the end of the purchaser’s selected fiscal year.

Q: If my mortgage is paid off, does HUD require an AFS for the property?

A: Owners are required to submit an AFS for the full fiscal year ending before the year the owner paid off the mortgage. Owners must continue to file the AFS after prepayment if any other contract and/or agreement with HUD requires an AFS (i.e., a Section 8 Housing Assistance Payments Contract or Use Agreement). Please contact the local HUD multifamily program center if there is any question concerning the AFS filing requirements.

Q: If HUD sold my mortgage in a Multifamily Note Sale, why am I being contacted to file an AFS?

A: Owners of mortgages sold under the Multifamily Notes Sale Program are required to submit the annual financial statements covering the fiscal year ending before the year in which the note sale closing occurs.

Q: If my property is in foreclosure what AFS filing rules apply to me?

A: Owners of HUD-held properties included in a foreclosure sale, that have a business requirement to submit an AFS, are required to submit financial statements covering the full fiscal year before the year in which the foreclosure sale occurs.

Q: I received a Prepenalty Notice; can I pay a civil money penalty and not be required to file the AFS?

A: No. All owners who have a regulatory or contractual agreement to file AFS must do so.

Q: Who is subject to the civil money penalties?

A: Recent rules have expanded the parties against whom HUD may seek a civil money penalty. In most cases, for AFS due after January 7, 2002, HUD may seek a civil money penalty against mortgagors, general partners of mortgagors, officers or directors of corporate mortgagors, identity of interest agents, and members of limited liability companies that are mortgagors or partners of partnership mortgagors. The rules also expanded liability for penalties against Section 8 owners, their general partners, and identity of interest agents.


Multifamily Grace Period – Submission Due Date

Multifamily Projects have a 10 day grace period followed by the 30 day letter as outlined in “Submission and Review Requirements & REMS Critical Data Fields for Annual Financial Statements“:

Page 11 – V. Overdue Financial Statements

If an AFS is not received by the 10th day of the month following the AFS [Annual Financial Statement] due date, an e-mail letter is automatically sent to the owner’s Secure System coordinator on the 11th day. The message informs the owner the AFS is overdue and that a noncompliance flag has been entered into APPS. It also advises the owner if the AFS is not received within the next 30 days (grace period), HUD will refer the owner to the DEC.

Once the AFS has been submitted, if within the grace period, the APPS flag will be removed.

See Also: Requesting an Extension

Enter your FYE in the red-text field below to view the various deadlines.

Requesting an Extension for a Multifamily Electronic Submission

An extension request must be completed online through REAC’s online systems. It has to be requested before the due date. If AHACPA does your electronic submissions, we will request the extension for you. The information needed for an extension request is as follows:

  1. A short explanation of why the request is needed. (See below for Approval and Denial Criteria)
  2. Audit firm’s name
  3. Audit firm’s phone number
  4. Audit engagement date (must be at least 60 days prior to year end).

HUD has issued guidance on the extension process in “Submission and Review Requirements & REMS Critical Data Fields for Annual Financial Statements”. On Page 29 it states:

Extension Request Procedures

The procedures for the submission and review of the requests are:

  1. The owner’s coordinator accesses FASS and enters an explanation as to why they believe an extension is warranted, and enters personal contact information in case REAC needs to discuss the request.
  2. The request is electronically transmitted to REAC via FASSUB.
  3. The REAC analyst assigned to that Hub would act on the request based on the Office of Asset Management’s approval/denial criteria as outlined below.
  4. Once the request is approved or denied, the decision, and an explanation for the decision, is posted in FASSUB and is available for viewing in the submitter’s online Administrative Request Status Box.
  5. If the request is approved, then the due date is automatically changed in the FASS-MF overdue tracking module, thus preventing an overdue letter from being emailed to the owner’s coordinator.

Approval and Denial Criteria

The following criteria will be used in approving and denying extension requests:

  • Approve requests when:circumstances exist that are beyond the owner’s control
  • database problems beyond the control of the Project Manager and the owner prevent the owner from filing (examples include situations in which a former owner’s information was deleted from REMS, or problems with the FASS effective date or expiration date)

Deny requests when:

  • the hard copy audit report was not prepared in time to meet the electronic submission deadline
  • the owner failed to register as a coordinator in secure systems at least 30 days prior to the end of the fiscal year the owner does not have Internet access
  • the owner has overdue submissions from previous years that have not been received
  • the owner fails to engage an auditor at least 60 days prior to the end of the fiscal year

REAC understands that these criteria constitute a Housing policy decision and that the Office of Housing retains the authority to amend, adjust, or suspend these criteria at their discretion.

To request an extension you must log into the REAC system and then click on FASSUB.  Click through the announcements.  You will then be to a screen in which you can select “Extension Request”.  Fill out the following form.  HUD does not notify you of their decision.  You must go back to the REAC system in a day or two.  Click on the “Administrative Requests” link to view HUD’s response.

Click here for some samples of extension requests and their approval/denial from HUD.

Definition of Federal Government Expenditures (Threshold)

The Threshold for Profit Motivated is $500,000 and Non-Profit is $750,000. 

In a nutshell:

  • The outstanding beginning balance of HUD-insured or HUD-held mortgages, USDA Mortgage, USDA Section 538 Mortgage
  • The outstanding beginning principal balance of a USDA Mortgage, a mortgage
  • The original amount of 202/811 capital grants
  • Project-based rent subsidies received during the year
  • Interest reduction payments receiving during the year
  • Retained excess income
  • Other federal grants received during the year (e.g. service coordinator)

[Information originally obtained from HUD’s Financial Assessment of Multifamily Housing (FASS-MF) Page.  This page is no longer active on HUD’s site.  The basic information remains relevant]

Clarification of Notice H2013-23

Housing Notice H2013-23 allows profit-motivated owners that receive less than $500,000 [Non-profit that receive less than $750,000] in combined federal financial assistance to file owner-certified financial statements in lieu of audited statements. The $500,000 profit-motivated [$750,000 non-profit] threshold applies to owning entities and not to individual projects. If an owner owns more than one HUD assisted project then the federal awards threshold would apply to all Section 8 contracts and HUD mortgages owned by the entity. Combined federal financial assistance is calculated the same as it is for OMB A133 nonprofit audits. Instructions for the calculation can be found here.

[Information originally obtained from From HUD’s REAC>Single Audit Act Page.  This page is no longer active on HUD’s site.  The basic information remains relevant]

DID YOU KNOW that $500,000 (profit motivated) / $750,000 (non-profit) is made up of more than expenditures?

Important! The Office of Management and Budget has issued a revision to Circular A-133, Audits of State and Local Governments for Non-Profit Organizations increasing the audit threshold from $300,000 to $500,000  $750,000 [1] of Federal Awards for Fiscal Year ending after December 31, 2003. (03/22/04)

In order to comply with OMB Circular A-133 standards, all PHAs and non-profit Multifamily Projects expending $500,000 $750,000 [1]  or more in Federal funds must have an independent audit conducted by an IPA. (03/22/04)

To determine whether your PHA or non-profit Multifamily Project has expended more than $500,000 $750,000 [1], you should consult the definition of Federal government expenditures according to A-133. (03/22/04)

According to OMB Circular A-133, Section .205(d), loans and loan guarantees for the proceeds of which were received and federal awards for which the proceeds were received and expended in prior years are still considered to be expended in the current year if the laws, regulations, and the provisions of contracts or grant agreements impose continuing compliance requirements. Thus, OMB Circular A-133 requires independent audits conducted by an IPA as long as you must comply with provisions in your regulatory agreement in addition to the repayment of the loan. Capital grants are also included in this calculation of Federal funds.

To assist you in determining if your PHA or Non-Profit Organization is required to have an independent audit in accordance with OMB Circular A-133, we have designed the following questionnaires  These questionnaires have not been updated to reflect the change from $500,000 to $750,000[1].

These questionnaires are intended to provide assistance in making the determination, however, you should obtain and review the requirements in OMB Circular A-133 to ensure your determination of total federal expenditures is complete and accurate.

Other References:

[1] The Office of Management and Budget (OMB) has raised the threshold for compliance audits of entities that receive federal award money from $500,000 per fiscal year to $750,000 per fiscal year.

How to Setup a Coordinator ID and Assign Access to Others

Initial Setup of Coordinator ID

  1. Log in to REAC Online Systems
  2. Enter the Coordinator’s ID and Password
  3. Scroll to the bottom of the Welcome Screen and click “Accept”
  4. Click on User Maintenance
  5. Enter the Coordinator’s ID
  6. Click on the drop down box and select “Maintain User Profile – Actions”
  7. Click the box for each applicable role. Multifamily Submissions use the FASSUB system. Then scroll to the bottom of the page and select “Assign/Unassign”
    • You will receive a confirmation message, click OK
  8. Now click on the drop down and select “Maintain User Profile – Roles”
  9. Click the box for each applicable role.  Then scroll to the bottom of the page and select “Assign/Unassign”
  10. Click Confirm and then click “OK”

Assigning Cordinator & then Others Access to REAC Systems

  1. Select Property Assignment Maintenance
  2. Enter the Coordinator ID in the “User ID” Box. Do not fill out anything else. Press Submit. (You will return to this step to set up other users)
  3. Hold down the CTRL key and select the role or roles from the top box and then the property or properties from the bottom box. Press submit.
  4. Press the Confirm button and then “OK”.
  5. Go back to step A for any other users that need to be assigned.
  • The information contained on this site is designed to provide accurate information in regard to the subject matter covered. However, this site is not a substitute for the promulgated standards or regulatory guidance. The information is provided with the understanding that AHACPA is not engaged in rendering legal, accounting, or other professional advice. If such advice is required, the services of a competent professional should be secured.