As most are aware, chapter 7 of the HUD Audit Guide modified the net worth calculation requirements by classifying all real property other than the main office as unacceptable assets. This has raised a question on how this requirement is to be calculated. Are lenders required to classify the asset as unacceptable while leaving any associated debt on the balance sheet, or can the liability be “netted” from the asset to determine the total impact?
We have reached out to LEAP with this question. As of this date, we have not received a formal answer. However, informally LEAP has indicated that their position was to allow the lender to reduce the asset by the associated debt for enforcement purposes. This should reduce the impact of adopting this change.
We caution users that this guidance has not been issued as a formal policy and is therefore, subject to potential change as implementation proceeds.
We do not expect a blanket extension. We have received information from our contacts at HUD-Multifamily and FHA/LEAP that there will not be an extension to the submission deadline.
Although there may not be a blanket extension, we have been assured that HUD will entertain extensions on an individual entity basis. These requests must be processed through the applicable HUD online system. If AHACPA performs your electronic submission we can assist you with the extension request.
Any new information we receive regarding extensions will be posted on our website and Twitter.
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