hudglossaryofterms

HUD Glossary of Terms
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Affiliate	Any person or entity (including, but not limited to, a general partner or managing member, or an officer of either) that controls a PAE, is controlled by a PAE, or is under common control with a PAE.
Americans with Disabilities Act (ADA)	Federal law that prohibits discrimination against individuals with physical handicaps, including hiring practices and design of buildings intended to serve the public.
Amortization	The payment of a loan by equal, periodic installments to pay off a debt and the accrued interest on the outstanding balance at the end of a fixed period.
Annual Adjustment Factor (AAF)	A percentage by which the contract rents in a market area can be changed or raised. The factors for various size units in individual market areas are published annually as a Notice in the Federal Register.
Annual Contribution Contract (ACC)	A contract between HUD and a third party (i.e., a PAE or HFA) receiving tenant-based Section 8 assistance which the third party pays to an owner of a qualified multifamily housing project on behalf of the tenant.
Applicable Federal Rate (AFR)	Various prescribed interest rates for federal income tax purposes. [See Chapter 10(5)(c)(1)(b) for application]
Appraisal	An estimate of the value of a property assessed by a qualified professional (an appraiser), usually required to qualify for a loan and establish property value.
Appraisal Comparison/ Appraisal Comps	A property or properties similar to a subject property used to help judge and estimate the appraised value of the subject property.
Appropriations	An act of Congress that allows federal agencies to incur obligations and to make payments out of the Treasury for a specified purpose.
Asbestos Containing Materials (ACM)	Materials containing asbestos-based insulation frequently used in older buildings as pipe wrap, boiler insulation, floor tile, ceiling coating and other materials. Currently proscribed as a threat to health and is costly to remove. Discovery in buildings is likely to cause a significant loss in value.
Bad Debt	Debt that is overdue or defaulted that the lender judges to be unrecoverable.
Budget Authority	Authority provided by law to enter into obligations that will result in immediate or future outlays involving Treasury (Federal Government) funds. For housing subsidy programs, this is the amount authorized over the term of the rental assistance contracts.
C-Corporation	C-corporations are regular publicly held companies which involve “double taxation.” Unlike an S-corporation, which is only taxed though its shareholders, C-corporations pay corporate income taxes and their shareholders pay dividend taxes at the personal level.
Capital	The owner's original investment plus any retained profit reinvested and appearing on the balance sheet.
Capital Needs	The dollar amount estimated by the Physical Condition Assessment (PCA) and reviewed by OMHAR needed for deferred and long-term maintenance.
Capitalization Rate	The rate of interest used to convert a series of future payments into a single Present Value.
Case Memorandum	Document prepared by the underwriter and reviewed by the PAE to verify that the underwriter has made reasonable determinations for each of the assessment areas in the proposed Restructuring Plan.
Certified General Appraiser	An individual qualified to appraise any property, under the 1998 appraiser certification law recently adopted by most states. The certification process usually requires at least two years of general appraisal experience, 150 hours of education and passing a state exam.
Closing Costs	Costs incidental to the purchase, sale, and financing of real estate including, but not limited to, land fees, appraisal fees, title search and insurance fees.
Closing Docket	The file of all legal documents that are completed at the closing of a restructuring transaction.
Collateral Assessment	Assessment of the adequacy of assets pledged to a lender as security until a loan is repaid. If the borrower defaults, the lender has legal right to seize the collateral and sell it to pay off the loan.
Community-Based Nonprofit Organization	Civic leagues, community organizations, and other social welfare organizations that maintain at least one-third of its governing board's membership for low-income residents from the local community, or for elected representatives of community organizations that represent low-income residents.
Comparable Market Data	Information derived from multifamily projects whose rents are set by the market, which are located in the same market area, and which have similar characteristics as the subject property.
Comparable Market Rent	Rents charged for similar multifamily properties in the same market area, where practicable, that are not receiving project-based assistance and are determined by the PAE to be similar to the property as to neighborhood (including risk of crime), type of location, access, street appeal, age, property and unit amenities, utilities, and other characteristics, including rent control, considered relevant by the PAE.
Comprehensive Housing Affordability Strategy (CHAS) Plan	See Consolidated Plan.
Comprehensive Needs Assessment (CNA)	Independent evaluation provided by the owner of the property's immediate physical condition and rehabilitation needs, and its long term maintenance and replacement needs, including review and certification of the accuracy of the owner's evaluation.
Conforming Transaction	A conforming transaction in the context of the Mark-to-Market program restructuring is one that meets all of the following criteria: supportable first mortgage that is at least 60% of the unpaid principal balance on the original first mortgage; new restructured mortgage does not exceed $5 million; write-down does not exceed $5 million; rehabilitation costs per unit of $5,000 or less; does not involve the PAE, either directly or indirectly, as a lender or provider of credit enhancement; does not entail any conflicts of interest between the owner and the PAE; is not one of the first three to five transactions performed by the PAE; the net present value of savings to Section 8 exceeds write-down; no waivers have been requested; and, PAE has not received a warning letter regarding performance from OMHAR.
Consolidated Plan	The Consolidated Plan is the document submitted to HUD that serves as the planning document (comprehensive housing affordability strategy and community development plan) of the jurisdiction and an application for funding under any of the Community Planning and Development formula grant programs. The Consolidated Plan provides the framework for a planning process used by States and localities to identify housing, homeless, community and economic development needs and resources and to tailor a strategic plan for meeting those needs. The Consolidated Plan may be used as a reference for the underwriter in making recommendations.
Contract Amendment	Addition to or change in a contract, which is defined as an agreement by which rights or acts are exchanged for lawful consideration. When properly signed, it has the full legal effect of the original contract.
Conventional Loans	Loans not guaranteed by the FHA.
Cooperative Housing	A type of corporate ownership of real property whereby stockholders of the corporation are entitled to use a certain dwelling unit or other units of space. Special income tax laws allow the tenant stockholders to deduct interest and property taxes paid by the corporation
Cooperative Housing Project	Real estate which has: 1. five or more residential cooperative units in each residential structure, subject to separate use and possession by one or more individual cooperative unit owners whose interest in such units and in the undivided assets of the cooperative association which are appurtenant to the unit are evidenced by a membership or share interest in a cooperative association and a lease or other muniment of title or possession granted by the cooperative association as the owner of all the cooperative property, and 2. an interest which is or has been offered for sale or lease or sold, or leased directly or indirectly, through use of any means or instruments of transportation or communication in interstate commerce or of the mails.
Debt Service	A borrower's periodic payment comprising repayment of principal plus payment of interest on the unpaid balance.
Debt Service Coverage Ratio (DSCR)	The relationship between Net Operating Income (NOI) and annual debt service (ADS). Often used as an underwriting criterion for income property mortgage loans.
Department of Housing and Urban Development (HUD)	A U.S. government agency established to implement certain federal housing and community development programs. This federal agency attempts to assure decent, safe, and sanitary housing for all Americans, and investigates complaints of discrimination in housing. In the context of MAHRA, refers to the Director of the Office of Multifamily Housing Assistance Restructuring (OMHAR) or a HUD official authorized to act in lieu of the Director.
Disabled Family	Two or more handicapped persons living together, one or more such persons living with another person who is determined (under regulations prescribed by the Secretary) to be essential to their care or well-being, and the surviving member or members of any family described in the first sentence who were living, in a unit assisted, under this section, with the deceased.
Draft Restructuring Commitment	A draft document incorporating all the terms and conditions of the proposed Restructuring Plan prior to actual execution by PAE and OMHAR. This document will be provided to the Lender to issue a conditional letter of intent.
Due Diligence Contractors	Contractor hired by HUD or another oversight body to assess or hire others to assess the financial and physical condition of the property, security, market, rents, operating costs, and long-term repairs.
Easement	The right, privilege, or interest that one party has in the land of another.
Elderly Family	Family whose head of household is over age 62.
Elderly Housing	A household comprised of one or more persons at least one of whom is 62 years of age or more at the time of initial occupancy.
Eligible Project/ Eligible Multifamily Housing Project	A multifamily rental housing Project with more than four dwelling units, which is financed by a mortgage insured or held by the Secretary under the National Housing Act, with rents that exceed those of comparable properties in the same market. In addition, the property is covered in whole or in part by a Project-based Section 8 HAP contract expiring on or after October 1, 1998, and otherwise meeting the definition of “eligible multifamily housing Project” in section 512(2) of MAHRA under any of the following: new construction or substantial rehabilitation program, the property disposition program, the moderate rehabilitation program, the loan management program, section 23 of the United States Housing Act of 1937, the rent supplement program under section 101 of the Housing and Urban Development Act of 1965, or section 8 of the United States Housing Act of 1937.
Encumbrance	Any right to or interest in land that affects its value. Includes outstanding mortgage loans, unpaid taxes, easements and deed restrictions.
Equity	The interest or value that an owner has in real estate over and above the current indebtedness or liens against it; also referred to as owner's interest.
Escrow	An agreement between two or more parties providing that certain instruments or property be placed with a third party for safekeeping, pending the fulfillment or performance of a specified act or condition.
Escrow Agent	Any person engaged in the business of receiving escrows for deposit or delivery.
Estimated Useful Life (EUL)	Estimated period of time during which an asset subject to depreciation (i.e., multifamily property) is judged to be in productive use.
Exception Rents	Calculation of rents to be used in the place of comparable market rents only if the PAE has determined that the housing needs of the tenants and the community cannot be adequately addressed through a Restructuring Plan that provides for comparable market rents, and if comparable market rents would provide an income inadequate to operate the property (i.e., negative Net Operating Income or NOI properties).
Expiration Date	Date on which a Section 8 Housing Assistance Payment contract ceases to exist.
Expiring Contract	A Section 8 Housing Assistance Payment contract that has reached its expiration date. HUD estimates that roughly 8,500 multifamily properties with over 800,000 units are assisted by project-based Section 8 expiring contracts and financed with FHA-insured mortgages.
Fair Market Rent (FMR)	The rent “limit” calculated annually by HUD for all areas of the country that establishes the maximum monthly Section 8 tenant-based rental assistance subsidy that eligible recipients may receive, pursuant to Section 8(c) of the United States Housing Act of 1937. This limit includes rent, utilities, and all maintenance and management charges.
Federal Emergency Management Agency (FEMA)	FEMA is an independent agency of the federal government established to reduce loss of life and property and protect our nation’s critical infrastructure from all types of hazards through a comprehensive, risk-based, emergency management program of mitigation, preparedness, response and recovery.
Federal Housing Administration (FHA)	A wholly owned government corporation, established under the National Housing Act of 1934 to improve housing standards and conditions; to provide an adequate home financing system through insurance of mortgages; and to stabilize the mortgage market. FHA was consolidated into the newly established Department of Housing and Urban Development (HUD) in 1965.
FHA-Insured Properties	Multifamily residential properties that have a mortgage insured under any section of the National Housing Act.
Fidelity Bond	An assurance, generally purchased by an employer, to cover employees who are entrusted with valuable property or funds (i.e., as a landlord would purchase for a resident manager entrusted with collecting rents.)
Field Accounting Division (FAD)	The regional office in HUD responsible for liquidating various program obligations, including those for Section 8 contracts.
Field Office (FO)	Refers to an OMHAR field location receiving such delegations, or to a Multifamily Hub or Program Center specifically designated to insure loans for the Mark-to-Market program in a particular geographic area.
Final Scenario	Section of the financial model to track that actual resources and uses of funds compared to the model values.
Fiscal Year (FY)	A continuous 12-month time interval used for financial reporting; the period starts on any date after January 1, and ends one year later. For U.S. Federal Government standards, the period occurring from October 1 through September 30.
Fiscal Year End (FYE)	The end of a continuous 12-month time interval used for financial reporting. In U.S. Federal Government standards, period ending September 30.
Government Technical Representative (GTR)	Government representative assigned to provide technical project guidance and monitoring of contractor activities through the designated contract project or task leader to support the activities defined in a federal procurement.
Gross Rent	The sum of the contract rent and the utility allowance. If there is no utility allowance, contract rent equals gross rent.
Hold-Harmless Provision	In a contract, a clause whereby one party agrees to protect another party from claims.
Housing Assistance Payments (HAP)	The payment made by the Section 8 contract administrator to the owner of an assisted unit provided in the contract. This includes either the difference between the gross rent and the total tenant payment or the difference between a payment standard and 30 percent of the family's monthly adjusted income (voucher program)
Housing Finance Agency (HFA)	Entities established by state legislatures and chartered as state mortgage banks to meet the need for financing decent and affordable single-family and multifamily housing for very low, low and moderate income individuals and families.
Housing Notice	An official publication from the Office of Housing announcing and providing guidance on the implementation of changes to existing housing program rules and procedures.
Housing Quality Standards (HQS)	The minimum quality standards for housing assisted under HUD’s tenant-based programs that owners must meet and maintain. Criteria against which quality is measured include access, space, security, structure, materials, lead-based paint, light and electricity, heat, water supply, sanitary facilities, food preparation facilities, and refuse disposal.
HUD Headquarters (HQ)	Primary office of HUD's Office of Multifamily Housing Programs in Washington, DC.
HUD-held Mortgage vs. HUD-owned Project	A HUD-held mortgage is a mortgage that has been assigned to HUD in order for the mortgagee to claim benefits under the applicable FHA insurance program; upon assignment, HUD becomes the mortgagee. HUD-owned project is a property whose title has been tendered to HUD. This results from either HUD foreclosing on a HUD-held mortgage or an insured mortgagee foreclosing on a HUD-insured mortgage who signs-over the title as required by the foreclosure.
Immediate Physical Needs	An estimate of the repairs, replacements, and significant maintenance issues that will be addressed within 12 months of closing, including, but not limited to, any violations of health and safety, Section 8 housing quality or FHA's regulatory agreement standards that must be resolved prior to closing. Other immediate needs include the minimum market amenities needed to restore the property to the non-luxury standard adequate for the rental market for which the property was originally approved.
Institute for Real Estate Management (IREM)	A professional organization of property managers. Affiliated with the National Association of Realtors and publisher of the Journal of Property Management.
Lead-Based Paint (LBP)	Hazardous material considered potentially poisonous and the existence of which is required to be disclosed.
Lender	A broad term for a financial institution that provides first mortgage financing to a borrower. A lender determines the risk factors involved in a mortgage restructuring and either approves or declines new mortgage terms.
Lien	A voluntary or an involuntary attachment to an account, often rendered by a court of law.
Limited Appraisal	An appraisal of real estate under, and resulting from invoking, the departure provision of USPAP (only in cases where the appraisal user would not be confused or misled).
Limited Denial of Participation (LDP)	A list of entities such as appraisers, mortgagees or owners, proscribed from participating in HUD’s mortgage program.
Loan-to-Value (LTV) Ratio	The proportion of the amount borrowed compared to the cost or value of the property purchased.
Long-Term Affordability and Use Restrictions	Limitations on the amount of rent an owner may charge and the tenants to whom an owner may rent. Under HUD guidelines, the Restructuring Plan requires a property to maintain affordability and use restrictions for a minimum of 30 years. These restrictions are detailed in a Use Agreement.
Long-Term Physical Needs	An estimate of the repairs, replacement, and significant maintenance issues included in the property's capital improvement program over the next 20 years.
Low Income Housing Tax Credit (LIHTC)	A program created as part of the Tax Reform Act of 1986 by Congress to promote development of affordable rental housing for low-income individuals and families. The program encourages private capital investment in rental housing by providing a credit to reduce an investor's federal income tax liability.
Major Building Component	As defined in HUD Handbook 4460.1: Roof structures, wall or floor structures, foundations, plumbing, central heating and air conditioning, electrical systems or any element significant to the building and its use that is normally expected to last the useful life of the building, and is not minor or cosmetic.
Market Area	The geographic area in which a multifamily property competes for residents among other rental housing.
Market Value	The highest price a buyer would pay and the lowest price a seller would accept on a property.
Monthly Contract Rent	The monthly rent charged per type of rental unit for which HUD pays a subsidy and which is specified in the HAP.
Mortgage Insurance Premium (MIP)	The fee paid by a mortgagor to obtain mortgage insurance on a mortgage loan. The fee may be collected as a lump sum at loan closing or as a periodic amount included in the monthly payment, or both.
Mortgage Restructuring	One of three demonstration approaches. This term is used when an existing loan is divided into a performing first mortgage loan and a second loan payable out of net cash flow. Most often, a partial or full prepayment of the existing FHA-insured mortgage occurs.
Mortgage Restructuring and Rental Assistance Plan	See “Restructuring Plan”. The Mortgage Restructuring and Rental Assistance Plan is required under Section 514 of MAHRA.
Multifamily Assisted Housing Reform and Affordability Act or MAHRA	The Multifamily Assisted Housing Reform and Affordability Act of 1997, title V of Pub. L. 105-65 (approved October 27, 1997), 42 U.S.C. 1437f note (MAHRA), is the underlying legislative authority provided to HUD to restructure certain FHA-insured multifamily mortgages. MAHRA was enacted to reduce the cost of Federal housing assistance, enhance HUD's administration of such assistance and to ensure the continued affordability of units in certain multifamily housing projects.
Multifamily Claims Branch	The office in HUD responsible for liquidating FHA mortgage insurance claims.
National Housing Act (NHA)	The National Housing Act, 12 U.S.C. 1702 et seq., was enacted in 1934 to assist and support the development of single-family home ownership and multifamily rental housing in the U.S. Among other provisions, it created the Federal Housing Administration.
Negative Net Operating Income (NOI)	Negative NOI occurs when operating expenses from rental property or business exceeds operating income.
Net Cash Flow	Net Cash Flow is equal to the NOI minus replacement reserves and debt service on the first loan and second loan(s), if any. 75% of the Net Cash Flow is used to pay subordinate debt and the remaining 25% is for the owner’s distribution.
Net Operating Income (NOI)	Income from rental property or business after operating expenses have been deducted, but before deducting income taxes and debt service costs (gross income minus operating expenses).
Non-Public Entity	A non-profit organization, law firm or accounting firm that meets MAHRA requirements to be eligible as a PAE.
Notice of Intent	Notice to be filed by an owner with the HUD Multifamily Hub or Program Center with jurisdiction over the property identifying their option to opt out of the Section 8 program, restructure debt, or renew without restructuring.
Office of General Counsel (OGC)	U.S. Department of Housing and Urban Development's Office of General Counsel serves as the chief legal advisor to the Secretary and other Principal Staff on the effectiveness of Field operating policies and procedures, and serves as the Secretary's principal advisor in all legal matters dealing with the Field Offices. The General Counsel provides legal opinions, advice and services for all programs and activities of the Department; and provides counsel and assistance in the development of the Department's programs and policies.
Office of Multifamily Housing Assistance Restructuring (OMHAR)	Office established within HUD by the Multifamily Assisted Housing Reform and Affordability Act of 1997 to develop and actively manage, administer, and oversee the Mark-to-Market Program through a decentralized structure of Participating Administrative Entities (PAEs).
Operating Cost Adjustment Factor (OCAF)	Factor derived from analysis of the change in operating expenses in various geographic areas to be used in adjusting rents for contract renewals under a Restructuring Plan and to be published by HUD annually.
Owner	The holder of a fee simple title to the Project, the lessee under a lease arrangement, or the purchaser under a land installment sales contract, but excluding an Owner as referred to in Section 516(a) of MAHRA. The person responsible for repayment of the mortgage. Initiates the restructuring process with a Notice of Intent and makes key decisions throughout the process. Has the right to decline finance mechanisms approved or suggested by HUD/or a lender.
Owner's Distribution	The portion of cash flow which an owner may receive after meeting all operating expenses, contributions to reserves for replacement, and first mortgage debt service costs (See “Net Cash Flow”). Under current rules, an owner may receive a distribution of up to 25% of a property’s net cash flow.
Partial Payment of Claim (PPC)	Section 517(b)(1) of MAHRA specifically directs that a partial payment of claim (PPC) be made as an insurance claim from the appropriate insurance fund under section 541(b) of the National Housing Act, which authorizes partial payments on mortgages not in default in connection with the Mark-to-Market Program. HUD payment of a section 541(b) claim is the means by which one or more FHA-insured or HUD-held mortgages will be paid down to the level of debt that can be supported at market rents.
Participating Administrative Entity (PAE)	A public agency (including a State housing finance agency, a local housing agency, or a community development corporation), a nonprofit organization, or a non-public entity (including a law firm or an accounting firm), or a combination of such entities, that meets the statutory and regulatory requirements under section 513(b) of MAHRA to implement mortgage restructuring and rental assistance sufficiency plans (Restructuring Plans) for eligible multifamily housing properties.
Physical Condition Assessment (PCA)	Independent evaluation provided by the PAE of the property's immediate physical condition and rehabilitation needs, and its long term maintenance and replacement needs, including review and certification of the accuracy of the owner's evaluation.
Polychlorinated Biphenyl's (PCBs)	Hazardous class of chlorinated compounds, mostly in the form of oily liquids and found to be persistent, hydrophobic and mobile in oil if in a volume large enough to migrate. Exposure to PCBs considered to cause serious long-term health effects, including disrupted hormone balances, reproductive failures, teratomas or carcinomas.
Portfolio Restructuring Agreement (PRA)	Agreement entered into by OMHAR HQ and all selected PAEs to establish each party's obligations and to identify the properties for which the PAE must develop and implement an OMHAR-approved Restructuring Plan. The agreement also requires the PAE to review and certify to the accuracy and completeness of the properties’ rehabilitation needs.
Positive NOI	Positive Net Operating Income from property or business due to a lower ratio of operating expenses to income.
Principal	Insofar as it refers to the entity or person that is the principal party in the ownership entity of a HUD multifamily housing project, including: all individuals, joint ventures, partnerships, corporations, trusts, or non-profit organizations that is the mortgagor; any public or private entity serving as the management agent; all general partners, any limited partner with at least a 25% ownership interest, and any member of a Limited Liability Company with at least a 10% ownership interest in any such public or private corporation; and affiliates or individual members of entities that directly or indirectly control the policy of a principal, or that have the power to do so.
Priority Purchaser	A purchaser meeting qualifications established by HUD as a organization representing project tenants, a tenant-endorsed community-based nonprofit organization, or public entity that receives a preference to purchase a multifamily project when an owner has been deemed ineligible for restructuring (if owner or an affiliate is debarred or suspended, or if the owner or an affiliate has engaged in material adverse financial or managerial actions or omissions).
Project Information Files (PIF)	A database of project information used by HUD staff for asset management purposes.
Project-Based	Type of assistance program in which assistance is tied to a specific physical building or units for a specified term. The contract administrator enters into a HAP assistance contract with an owner for a specified term, providing the contract unit is occupied by an eligible family.
Project-Based Assistance	Rental housing assistance in the form of a federal payment to the owner of a qualified multifamily housing project (landlord) on behalf of an individual tenant. In a Section 8 certificate tenancy, the household pays 30 percent of their income for rent. The difference between 30 percent of the household income and the set “fair market” rent of a unit is paid by the federal government.
Public Agency	An administrative governmental entity acting on behalf of and for the good of the people or community.
Public Housing Authority (PHA)	Entity that manages and administers government-owned housing units made available to low-income individuals and families at no cost or for nominal rental rates.
Public and Indian Housing (PIH)	Program established to provide funds for the development, operation and modernization of public housing, including such housing for American Indians, and to promote resident management and ownership of public housing.
Qualified Mortgagee	An entity approved by the Secretary that is capable of servicing, as well as originating, FHA-insured mortgages and that: is not suspended or debarred by the Secretary; is not suspended or on probation imposed by the Mortgagee Review Board; and, is not in default under any Government National Mortgage Association obligation.
Real Estate Assessment and Enforcement Center	Office within HUD responsible for tracking, monitoring and enforcing the regulatory agreements of multifamily housing projects with FHA insurance or project-based assistance.
Recapture	The de-obligation of contract, budget and/or loan authority incurred in a prior fiscal year.
Rehabilitation Costs	The dollar amount required for repairs to the property.
Rent Comparability Review	The study performed by the PAE to make an independent determination in cases where the OMHField Office disagrees with the owner’s assessment that Section 8 contract rents are below comparable market rents.
Rent Roll	A list of tenants, generally with the lease rent and expiration date for each tenant.
Rent Supplement Program (SUP)	Rental assistance program similar to but pre-dating project-based Section 8 and used only for Section 236 projects.
Rental Assistance Assessment Plan (RAAP)	Plan developed by the PAE (after consultation with the property owner) to determine whether assistance should be renewed with project-based assistance or whether some or all of the assisted units should be converted to tenant-based assistance, as in Section 515(c)(2) of MAHRA.
Request for Proposal (RFP)	A solicitation for all qualified potential candidates to submit information and documentation for consideration in a competitive bid to enable the solicitor to determine their capabilities and competency to perform a stated task.
Request for Qualifications (RFQ)	A solicitation for all qualified potential candidates to submit information and documentation regarding the candidates qualifications in a competitive bid to enable the solicitor to determine their capabilities and competency to perform a stated task.
Reserves for Replacement / Replacement Reserve	A fund into which a specified dollar amount is to be made each month by the owner and from which withdrawals are used to pay for capital improvements during the life of the property.
Residual Receipts	Value or income remaining after deducting an amount necessary to meet fixed obligations. Fixed obligations include debt service and operating expenses. The residual net operating income is then left to support the value of the site.
Restructured Rent	Rent levels that are equivalent to rents derived from comparable properties if the PAE makes the rent determination within a reasonable period of time and the market rent determination is based on not less than three comparable properties; or if those rents cannot be determined, are equal to 90 percent of the fair market rents for the relevant market area.
Restructuring Commitment	A document prepared by the PAE and executed by the owner and Director setting forth the terms of the restructuring for a project involving a contract renewal with debt restructuring, and which incorporates a Restructuring Plan containing the information required by the Regulations at 24 CFR 401.404.
Restructuring Plan	A plan that a PAE or its underwriter is required to develop for each eligible multifamily property undergoing restructuring in cooperation with the Owner. Among other information, the plan specifies conclusions for sizing the first, second, and third mortgages (if any), and for assessing rehabilitation needs, and the financial return to the owners. Also referred to as the “Mortgage Restructuring and Rental Assistance Sufficiency Plan” described in Sections 514 and 515 of MAHRA.
Risk Sharing Program	This program provides new insurance authority independent of the National Housing Act. Under it, HUD provides full mortgage insurance on multifamily housing projects whose loans are underwritten, processed, serviced and disposed of by qualified State and local HFAs. This is a pilot program to assess whether risk-sharing partnerships between HUD and HFAs will lead to more affordable multifamily housing.
S-Corporation	A small-business corporation that qualifies under the Internal Revenue Code and that can pass through profits and losses directly to its shareholders.
Safe Harbor Standards	Criteria by which a property is guaranteed project-based (rather than tenant-based) assistance in a Section 8 restructuring, including cases where more than 50% of the units in the project are occupied by elderly families, disabled families, or elderly and disabled families. (Also see “tight market safe harbor”.)
Second Mortgage	Advancing funds to a borrower that are secured by real estate previously pledged in a first mortgage loan. In the case of default, the first mortgage has priority of claim over the second.
Section 541 (b) Claim	HUD payment of an insurance claim from the appropriate insurance fund on one or more FHA-insured or HUD-held mortgages not in default in order to bring down the debt to a level that can be supported at market rents.
Section 8 Certificate Program (Certificates)	A Section 8 rental subsidy is a federal payment to a landlord on behalf of an individual tenant. In a Section 8 certificate tenancy, the household pays 30 percent of their income for rent. The difference between 30 percent of the household income and the set “fair market” rent of a unit is paid by the federal government.
Section 8 Contract Administrator	Entity that executes an Annual Contribution Contract (ACC) with HUD in order to administer Section 8 HAP contract(s).
Section 8 Housing	Privately owned rental dwelling units participating in the low-income rental assistance program created by 1974 amendments to Section 8 of the 1937 Housing Act. Under the program landlords receive rent subsidies on behalf of qualified low-income tenants, allowing the tenants to pay a limited proportion of their income toward the rent.
Section 8 Loan Management Set-Aside	In the Loan Management Set-Aside program, HUD contracts with owners of HUD-insured multifamily or HUD-held housing projects that are experiencing financial problems. Section 8 assistance to those properties provides financial support to prevent default.
Section 8 Moderate Rehabilitation SRO	Housing providers may only use the funds for rehabilitation of housing into SRO units that will be coupled with rental assistance. One quarter of the units proposed for assistance must be vacant at the time of the application so that a significant portion of those served are homeless. To qualify, a unit must need between $3,000 and $16,000 in rehabilitation, which may be amortized by the rental assistance.
Section 8 Voucher Program (Vouchers)	The purpose of the Section 8 Voucher Program is to assist very low income families and individuals in their rental housing needs. The tenant obtains a voucher for a set amount of money based on the area and if they are willing to pay more than 30% of their adjusted gross income on rent, they are free to rent a unit that exceeds the “fair market” rent figure used in the certificate program.
Settlement Sheet	A statement completed at closing of a restructuring transaction showing all sources and uses of funds involved in the transaction.
Subsidy Budget Authority	The allowable subsidy amount as determined by that year's budget.
Subsidy Layering Certification	Procedure to ensure that any HUD assistance provided to the owner of a property under the Restructuring Plan is no more than is necessary to permit the property to continue to house a tenant mix comparable in income to the tenant income mix of the property before the Restructuring Plan is implemented, after taking into account other Federal, State or local governmental assistance of any kind, such as grants, loans, guarantees, tax credits or other tax benefits.
Subsidy Restructuring Recommendation	For a Project, a recommendation by PAE regarding whether a contract renewal of the Section 8 Assistance without debt restructuring, not exceeding comparable market rents, is sufficient to maintain an adequate debt service coverage ratio on the first mortgage and necessary Project reserves to ensure the long-term physical integrity of the Project. Also referred to as reduction of Section 8 rents without restructuring.
Substantial Rehabilitation	As defined in HUD Handbook 4460.1, Chapter 4, required repairs, replacements and improvements involving (1) the replacement of two or more major building systems, or (2) costs which exceed either 15% of the property’s replacement cost (fair market value after completion of all repairs, replacements and improvements) or $6,500 per dwelling unit.
SuperNofa	Economic Development and Empowerment Program published on April 30, 1998 in the Federal Register (63 Fr 23876), to provide funding for Intermediary Technical Assistance Grants (ITAG) and Outreach and Training Grants (OTAG). These programs will assist tenant and local community groups, State and local governments, and other groups with funding for technical assistance so they can participate meaningfully in the Mark-to-Market Program. State- or community-wide nonprofit or public entity intermediaries are selected competitively to distribute these funds.
Supportable Debt	The estimated level of debt a property could financially sustain from property revenue, if all of the units were rented at the lower of Low-Income Tax Credit or market rents.
Take-out Loan	Long-term mortgage loan made to refinance a short-term construction loan (interim loan).
Tenant-Based	Types of assistance programs wherein the assistance is tied to the tenant rather than to a specific building or unit. In tenant-based programs, eligible families can move into other buildings and continue to receive assistance, in the form of a portable voucher or certificate for a set amount of money based on the project area.
Tight Market Safe Harbor	Legislative provision included in MAHRA requiring HUD to renew expiring Section 8 contracts with project-based assistance, if the property is located in a tight rental market, which is defined as a market with rental vacancy rates below 6%.
Title Company	One in the business of examining title to real estate and/or issuing title insurance.
Title Examination	An examination or search of municipal or county records to determine the legal ownership of property, usually performed by a title company.
Title Review	Review by title company that the owner of a qualified multifamily housing project is in lawful possession thereof.
Transfer of Physical Assets (TPA)	Document included with the restructuring transaction to reflect conveyance of the current ownership entity if the underwriter determines that the HUD mortgagor of record is not the same as the current ownership entity.
Unassisted Unit	Rental unit in which the resident does not receive any rental subsidy, either Section 8 (or equivalent) assistance or regulated rent, and must pay the full monthly cost for the unit.
Underground Storage Tanks (UST)	Tanks placed below ground-level and used to store various materials, such as heating oil and gasoline. Due to possible leakage, these tanks present environmental problems for the site in which they are located.
Underwriting	The process by which a lender analyzes the current and potential future risk of a loan in order for the purchaser to qualify for the loan amount.
Uniform Resource Locator (URL)	The address or location of a particular page on the World Wide Web.
Uniform Standards of Professional Appraisal Practices	Set of requirements covering research and reportings promulgated by the Appraisal Subcommittee of the Appraisal Foundation, and adhered to by its members.
Unit of Local Government	The unit of general local government with jurisdiction in which a project is located.
Unpaid Principal Balance (UPB)	Outstanding amount of a mortgage remaining to be repaid, including principal and accrued interest.
Utility Allowance	An amount used when calculating the payment required by the tenant under certain Section 8 programs when the cost of utilities is not included in the contract rent. A telephone is not considered a utility.
Weighted Average Rents	The sum of each rental unit type times the average rent for each type and times the number of units in each type, divided by the total number of units. In FHA programs, unit types are based on the number of bedrooms.