AFS Requirements with Prepayment

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ID Status Date Public/Private Industry AHACPA Contact
#6777 Closed public Multifamily Les Sparks
Customer Reply

If a Sec 232 is prepaid by conventional financing in 2017, my understanding is that no ongoing financial reporting requirements exist (assuming the owner has no other business agreements that require ongoing financial reporting) and no REAC would be due. If the owner (partnership) changes partners and later obtains a new Sec 232 loan in 2017 with a different FHA #, would a REAC only be required for the new loan period, or would a REAC be required for the full year? Partnership retains the building and same TIN with the change in partners.
Kathy Christensen

From Les Sparks:

That understanding is absolutely correct. I have only seen one loan that had a Use Agreement audit requirement, so for Section 232 that should almost never happen. A paid of mortgage means that the last audit required it the last full year already filed.

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