In this issue:

• Status of Financial Filing Deadline Extensions
• Coronavirus and 2019 Financial Statement Disclosures
• Status of June PHA Conference

Last week HUD announced a blanket 30-day extension for the filing of all REAC financial statements. That extension is automatic and does not require any action by the project. However, REAC has clarified that the extension DOES NOT EXTEND THE 60-day RESIDUAL RECEIPTS deposit requirement.
 
Rural Development – Contacts with Rural Development indicate that they DO NOT intend to issue a blanket 30-day extension of the filing deadline. They had previously instructed state offices to consider granting extensions due to the timing of the issuance of their 2019 audit guidance. They consider that COVID-19 related extensions would fit within the same guidance. PLEASE NOTE – Clients must request such extensions by contacting state RD officials.
 
Single Audit Extension - Later last week OMB issued memo M-20-17 which among other things, granted an automatic 6-month extension of the deadline for filing audited financial statements. This extension applies to all Uniform Guidance requirements for audited financial statements due through June 30, 2020.
 
FHA Lender Submissions – Conversations with LEAP management indicate that they have granted an automatic 30-day extension for all LEAP filings. These extensions were automatically placed in the lender’s LEAP recertification screen. Evidence of such extension can be found by each client by simply accessing the LEAP recertification page. Just note the new due date.
 
Ginnie Mae, Fannie Mae and Freddie Mac Filings – Detailed searches of the related web pages of these entities DID NOT reveal any evidence of a Covid-19 related extension. Emails to those entities requesting information about possible extension have not been responded to. If any response is forthcoming we will let you know.

Over the last 2 weeks it has become apparent that the crisis surrounding the Covid-19 virus will have serious impacts to the economy of the U.S. Questions have arisen over the need to include a subsequent event footnote to 2019 financial statements. Given that HUD has extended the deadlines for annual reporting, a substantial number of annual reports have not been completed. Accordingly, there are many reports where project financial statements may be required to include a subsequent event footnote.

Multifamily:

Subsequent Event – Coronavirus Pandemic:
In December 2019, an outbreak of a novel strain of coronavirus (COVID-19) originated in Wuhan, China and has since spread to other countries, including the U.S. On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic. In addition, multiple jurisdictions in the U.S. have declared a state of emergency. It is anticipated that these impacts will continue for some time. There has been no immediate impact to the Project’s operations. Future potential impacts may include disruptions or restrictions on our employees’ ability to work or the tenants ability to pay the required monthly rent. Operating functions that may be changed include intake, recertifications and maintenance. Changes to the operating environment may increase operating costs. Additional impacts may include the ability of tenants to continue making rental payments as a result of job loss or other pandemic related issues. The future effects of these issues are unknown.

(Note) If the project has rental assistance, the potential for significant collection losses could be mitigated. This change would be reflected appropriately.
 

Lender:

Subsequent Event – Coronavirus Pandemic:
In December 2019, an outbreak of a novel strain of coronavirus (COVID-19) originated in Wuhan, China and has since spread to other countries, including the U.S. On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic. In addition, multiple jurisdictions in the U.S. have declared states of emergency. It is anticipated that these impacts will continue for some time. There has been no impact to the Company’s operations to date. Future potential impacts to the Company include disruptions or restrictions on our employees’ ability to work, lack of demand for new loans or the borrower’s ability to pay the required monthly payments. Changes to the operating environment may also be impacted. Operations include loan applications, processing or other areas requiring contact with the borrower. These changes may increase operating costs. Further impacts may include increased repurchase risk or loan defaults. The future effects of these issues are unknown.