On May 17, 2016, HUD published a notice in the Federal Register to announce the issuance of the “Processing Guide for Previous Participation Reviews of Prospective Multifamily Housing and Healthcare Programs’ Participants” (the “Processing Guide”). A copy of the Processing Guide can be accessed here.

HUD proposes that the Processing Guide be used to supplement the proposed rule published in August that announced changes to regulations at 24 CFR Part 200, Subpart H, which govern the previous participation review process (the “Proposed Rule”). HUD reports that commenters expressed concern that the Proposed Rule was overly broad, which could further complicate the current process. In response to those comments, HUD proposes that the Processing Guide be used to supplement the Proposed Rule with specific information on review procedures, including, for the first time, detailed information on how “flags” are to be handled.

The Processing Guide is subject to a 30-day comment period ending June 16, 2016.

In addition to feedback on the Processing Guide, HUD also solicits comments on the following topics:

  1. HUD intends to revise 24 CFR 200.210 to state that the regulations are to be supplemented by the Processing Guide and that significant changes to the Proposed Guide will be subject to a 30-day notice and comment period.
  2. HUD also intends to add a definition of “Risk” to the Proposed Rule. HUD did not provide an actual definition, but states that the definition would clarify that the FHA Commissioner must determine whether the Controlling Participant (as defined in the Proposed Rule) could be expected to participate in the Covered Project (as defined in the Proposed Rule) in a manner consistent with furthering the HUD’s purpose of supporting and providing decent, safe and affordable housing for the public.