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Refinance and ownership of the Reserve for Repalcement and Residual Accounts

May 17, 2017 09:30AM MDT


This is a first for me. I have a client who is refinancing their 202 direct loan with a local bank which will drop their interest rate from 9% to 4.5%. They want to know if the reserve accounts belong to them or if HUD will take them back. The outstanding loan is approximately 350K and the reserve account are approximately $300K. Please advise me, if you can. Also, will the rent subsidy be paid from a different account also. Haven't been to your classes lately because I am doing reviews for my HUD clients because HUD funding is under $750K. Thank you for your assistance.


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Kathy Christensen AHACPA May 19, 2017


Les is out of the country right now. He will be back in the country on May 27th.

I apologize for any inconvenience.

Kathy Christensen

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Les Sparks AHACPA Jun 05, 2017

David sorry for the delay. This should have been answered last week. Reserve for replacement always belongs to the project and can be used for the repayment of the loan. Residual receipts, if any, may be a different story. Rental subsidy should not be effected as long as HUD knows where to send the voucher payment.


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