6400.1 REV-1

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CHAPTER 6. PROVIDING FUNDS FOR HUD-APPROVED URBAN

HOMESTEADING PROGRAMS

6-1. FUND CONTROL

A. Allotment, Assignment, and Subassignment Stages. Section 810

funds will be allotted to the Assistant Secretary for CPD at thee

beginning of each fiscal year by the Department Budget Office

using a HUD-158, Advice of Allotment. This will include the new

apportionment as well as funds not obligated during the previous

fiscal year. The Assistant Secretary will assign funds using a

HUD-185, Regional Fund and Contract Authority Assignment

(Appendix 9), validated by OFA to each Regional Office. The

Regional Office in turn will subassign funds using a HUD-185.1,

Regional Fund and Contract Authority Subassignment (Appendix 10)

validated by RAD to each Field Office. A flow chart, Urban

Homesteading Program Fund Control Procedures, is shown in

Appendix 12, and HUD-40074, Tracking Guide for HUD-718, is shown

in Appendix 13.

B. Property Reservation stage (HUD-718). Prior to acquisition of

any properties by the LUHA, the Urban Homesteading Coordinator

shall annually transmit a copy of the executed Urban Homesteading

Program Participation Agreement and approval letter to the RAD

for filing in the related program file.

The Field Office will reserve funds for LUHAs on a first-come,

first-served basis except for the temporary 60-day allocation for

LUHAs, referenced in paragraph 6-3 C. of this Handbook. The LUHA

requests a property utilizing a HUD-40050, Verification of Fund

Availability (Appendix 14). The Urban Homesteading Coordinator

shall confirm the eligibility and prepare a HUD-718, Funds

Reservation and Contract Authority (Appendix 11) for each

property that the LUHA identifies for potential acquisition.

Use of the HUD-718 ensures that obligations and expenditures do

not exceed the amount of Section 810 funds needed to acquire

properties. The HUD-718 reserves an amount for a specific

property for reimbursing the VA, FmHA, FHA, or the Section 312

Rehabilitation Loan Fund, as appropriate.

A single HUD-718 can be prepared for a bulk (group) package of

properties, if the closings on all properties within the package

will occur on the same day. Otherwise, a separate HUD-718 must

be prepared for each individual property, even though the Federal

Agency may have offered the properties at the same time and the

LUHA may have accepted thorn on the same day.

The HUD-718 merely reserves funds for the future acquisition and

obligation of funds for a specific property. The obligation of

funds does not occur until the property closing or settlement is

held and the closing documents (used as source documents for

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6-1 3/90

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6400.1 REV-1

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reimbursement to the appropriate Federal Agency) are received by

the RAD. (See item C. below.) The HUD-718 document will be

prepared in an original and one copy for the CPD Director\'s

signature and will show the current fiscal year project number in

block 1B under which the reservation was made. The original

HUD-718 and copy together with a copy of the HUD-40050 from the

LUHA are transmitted to the RAD. The acquisition price plus good

faith estimate of the closing costs of the property listed on the

HUD-40050 are to be listed in block 5E of the HUD-718. The RAD

will indicate in block 10 of the HUD-718 whether there are

sufficient funds available for transferring the property. The

RAD retains the copy for the project file and the original is

returned to the Urban Homesteading Coordinator within five

calendar days. The Urban Homesteading Coordinator shall notify

the VA, FmHA, or Property Disposition (PD) in Housing, as

appropriate, and the LUHA confirming that funds have been

reserved so closing can proceed. This notification shall state

the specific Section 810 amount, and the address of the property.

A copy of the executed HUD-718 shall be enclosed. The RAD

records the amount indicated on the HUD-718, block F, in the PAS.

Note: For internal accounting purposes only, the RAD will add

an alpha-suffix to the LUHA project number to identify

the source of property in PAS. The identifying

characters are:

F=FHA

V=VA

H=FmHA

R=Section 312

M=Miscellaneous

C. Contract and Disbursement (Transfer of Funds) Stage

1\. HUD-held properties

When a HUD-held property is transferred to the LUHA, the

customary closing documents HUD-9589, Transmittal of Closing

Information (Appendix 15), and HUD-1, Settlement Statement

(Appendix 16) are prepared by the PD staff. The amount of

Urban Homesteading funds to be transferred to the FHA Fund or

the Section 312 Rehabilitation Loan Fund is indicated on the

reverse side of the HUD-9589 block 5, line 4 (see Chapter 7,

paragraph 7-5). A closing must not be held unless the amount

of funds reserved as shown on the HUD-718 is equal to or

greater than the amount to be transferred to the HA fund or

the Section 312 Rehabilitation Loan Fund. If the amount

shown on the HUD-9581 s greater than the amount shown on the

HUD-713, LUHA staff should notify the Urban Homesteading

Coordinator immediately, and a revised HUD-718 will be

prepared by the Urban Homesteading Coordinator and sent to

the RAD for

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3/90 6-2

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6400.1 REV-1

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validation. After closing it is the responsibility of the PD

staff to route a copy of the closing documents, (HUD-1 and

HUD-9589) to the Urban Homesteading Coordinator, who will

attach a copy of the executed HUD-718 or revised HUD-718, if

appropriate for the property, and immediately forward these

forms to the RAD. Upon receipt of the closing documents, RAD

will record the obligation of funds in PAS. RAD will

transfer or disburse the funds to the FHA Fund (86X4070) or

the Section 312 fund (86X4036) on the basis of the transfer

document. Executed forms HUD-718, HUD-9589 and the HUD-1

will serve to support the RAD transfer document, SF-1081,

Voucher and Schedule of Withdrawals and Credits.

2\. Veterans Administration (VA) and Farmers Home Administration

(FmHA)

When VA and FmHA properties are being transferred, the steps

related to reservations for properties remain as explained in

paragraph B. above. Again, a closing must not be held unless

the amount of funds reserved on the HUD-718 is equal to or

greater than the actual acquisition and closing costs shown

on the VA/FmHA closing documents. If it is not, the LUHA

should immediately request the Urban Homesteading Coordinator

to obtain a RAD-validated HUD-718 for the correct amount

prior to closing. The VA or FmHA shall forward its closing

documents immediately to the Urban Homesteading Coordinator

for review. The Urban Homesteading Coordinator will then

prepare a Standard Form 1034, Public Voucher For Purchases

and Services other than Personal (Appendix 17), a HUD-40075,

Costs Chargeable to Section 810 for VA/FmHA Properties

(Appendix 18), the closing documents, and an executed copy of

the HUD-718 showing the amount of funds that were reserved by

the RAD for the VA/FmHA property being transferred to the

LUHA. The Urban Homesteading Coordinator may prepare a

Standard Form 1034 to cover more than one set of closing

papers, if all closings took place within the same month.

The RAD will process the payment to the VA or FmHA and record

the obligation and disbursement in PAS.

D. Cancellation of Unused Reservation of Funds (HUD-718). When a

reservation for a specific property or a portion thereof is not

used within the time period specified in 24 CFR 590.17(c) or

590.18(d), it shall be the responsibility of the Urban

Homesteading Coordinator to review the reasons for the delay, and

if closing will not occur in a reasonable time, to prepare a

HUD-718 either decreasing a portion of a reservation to the

amount used, or cancelling a whole reservation. Upon receipt of

the HUD-718, RAD will record the decrease or cancellation.

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6-3 3/90

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6400.1 REV-1

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E. LUHA Repayment to Section 810 Account. When it is necessary for

a a LUHA to reimburse the Section 810 account (see Chapter 10,

paragraph 10-2, F., and Chapter 13, paragraph 13-2, B.3.), the

LUHA shall:

1\. (Regular Program \-- RAD Account) \-- send a letter to the

Urban Homesteading Coordinator in the Field Office providing

the Section 312/FHA/VA/FmHA case number, as appropriate,

address of the property, acquisition date, amount charged to

the Section 810 account for acquisition of the property, the

amount of reimbursement to HUD, the circumstances tinder

which the reimbursement is being made, and the LUHA\'s program

number. A copy of the letter shall be sent to the RAD and to

the Director, Urban Homesteading Program in Headquarters.

(Local Property Demonstration \-- Headquarters Account)

\-- send a letter to the Director, Urban Homesteading Program

in Headquarters, providing the local property case number and

other requisite information as noted above. A copy of the

letter shall be sent to the Urban Homesteading Coordinator in

the Field Office.

2\. (Remittances under \$1,000.00) \-- send a check to the RAD made

payable to the U. S. Department of Housing and Urban

Development (see paragraph 1 above).

3\. (Remittances of \$1,000.00 or more) \-- wire funds to the

Treasury for credit to the RAD\'s account or to the

Headquarters\' account (see paragraph 1 above) utilizing the

Treasury Financial Communications System (TFCS). A list of

HUD agency location codes which corresponds to the

appropriate accounting office is contained in Appendix 19.

a\. The LUHA must furnish the financial institution making

the funds transfer with the following information:

Treasury Department Code: 021030004

(This item is constant.)

Amount: \$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (Include appropriate

punctuation, including dollar sign and

cents, e.g., \$1,000.00.)

Treasury Department Name, Agency Location, Code,

Agency Name: (These items are, computer read and

must appear in this precise manner.)

EXAMPLE: TREAS NYC/(86010301) HUD-PHIL PA

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3/90 6-4

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6400.1 REV-1

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Third Party Information: (This item provides

information needed by the accounting office to

identify the LUHA\'s account to be credited.)

EXAMPLE: Urban Homestead-Regular Program/

Philadelphia, Pa. - Project H87UH420001PHL

-Reimburse Improper Use of Property-\$15,100.00 Acct.

86X0171/Excess Charge-\$8,000.00 Acct. 863220

EXAMPLE: Urban Homestead-Demo/Harrisburg, Pa.

Project H85UL420013HAR LOC 8600H052 Excess

drawdown-\$10,000.00 Acct. 86X0171/Interest

-\$18.20 Acct. 861435

NOTE: - Funds returned to reimburse the Section

810 account are credited to Acct. 86X0171.

\- Funds returned in excess of the amount to

reimburse the Section 810 account are

credited to Acct. 863220 (general fund

proprietary receipts - not otherwise

classified).

\- Interest earned on funds on deposit in a

financial institution are credited to

Acct. 861435.

F. Individuals Authorized to Sign Documents Routed to Regional

Account Division (RAD).

It will be the responsibility of each Field Office Manager to

provide specimen signatures of the individuals who are authorized

to sign documents that are routed to RAD for processing. When an

individual is no longer authorized to sign documents, the RAD

must be advised.

6-2. FUNDING ASSESSMENTS

A. The funding needs and allocation process will begin at least 60

days prior to the end of the Federal fiscal year as follows:

1\. The active LUHAs will make annual funding level requests in

their annual requests for program participation no later than

August 1 (see paragraph 4-7 A.).

2\. The Urban Homesteading Coordinator will evaluate the basis

for requests from the LUHAs and adjust the funding levels

reflecting PD, VA and FmHA data (see paragraph 4-7 B. 3.) to

arrive at an overall summary of Funding needs for the Field

Office.

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6-5 3/90

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6400.1 REV-1

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3\. An assessment of funding needs for existing LUHAs (includes

newly approved LUHAs that were not funded in the current

Fiscal year) and potential new applicants will be forwarded

to the Regional Office by September 1. The Field Office will

show by LUHA a breakdown of proposed funding needs and

numbers of properties, and names, telephone numbers and

addresses of LUHA contacts.

4\. The Regional Office will forward a summary of its proposed

suballocations (based on 3 above) for each Field Office under

its jurisdiction. This summary will include the names,

telephone numbers and addresses of the LUHA contacts. (This

may simply be a copy of the Field Office memorandum,) This

summary shall be submitted to the Director, Office of Urban

Rehabilitation, no later than October 15.

6-3. FUNDING ALLOCATIONS.

A. Headquarters. The Assistant Secretary for CPD will make fund

assignments to the Regional Administrator based on prior year

performance and inventory of eligible properties within the

Regional Offices. Headquarters will generally hold back a

percentage of funds, which will be earmarked for use by specific

Regional Offices, providing they are able to expeditiously

reserve all their previously assigned funds by a date determined

by the Assistant Secretary for CPD.

The Regional Offices that are not able to reserve all their

previously assigned funds by HUD-718 for specific properties by

the specified date will lose their earmarked funds. These funds

will be made available on a first-come, first-served basis to

other Regions that are able to reserve their initial allocations

and their initial percentage of the holdback.

Regional Offices that are not able to reserve all funds from the

initial assignment by a date to be determined by the Assistant

Secretary for CPD will be required to return the funds to

Headquarters for reallocation to other Regions.

B. Regional Offices. In determining subassignments of Section 810

funds to Field Offices, the Regional Director for CPD may

consider:

1\. Subassigning funds to Field Offices for their active LUHAs

based on their performance. Performance should be based on

utilization of Section 810 funds assigned previously,

monitoring reviews, program audits, production reports, and

any other management information obtained during the program

year.

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3/90 6-6

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6400.1 REV-1

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2\. Setting aside a reasonable holdback amount for those Field

Offices that utilize their funds quickly.

C. Field Offices. Field Offices may designate a temporary, minimum

initial allocation of Section 810 funds to be exclusively

available for each LUHA each year. The period of this temporary

allocation cannot exceed 60 days from the date the LUHA is

notified of the allocation. During this temporary period, all

reservations made by HUD-718 for specific properties will be

charged to the temporary allocation. After the allocation has

been used or the 60 days has expired, Field Offices will reserve

Section 810 funds on a first-come, first-served basis for each

LUHA from the balance of the Field Office subassignment.

HUD-718s will he prepared based upon receipt of a HUD-40050 from

each LUHA for specifically identified properties.

6-4. FOURTH QUARTER FUNDING ADJUSTMENTS

A. At the beginning of the fourth quarter of the fiscal year, Urban

Homesteading Coordinators shall evaluate their actual and

projected fund use. If funds are needed for the remainder of the

fiscal year, a request to the Regional Office by the Field Office

shall be made stating the amount and reasons for the funds

needed. If previously projected funds usage has not materialized

in the Field Office, previously assigned funds which are not now

expected to he used by the end of the fiscal year shall be

withdrawn from the Field Office by the Regional Administrator

using a HUD 185.1.

B. The Regional Office shall attempt to accommodate Field Offices\'

requests by shifting funds among Field Offices (HUD-135.1).

Generally when funds are shifted it is not for punitive reasons,

but due to change in the housing market and the unavailability of

affordable properties which have occurred since the request for

funds for that fiscal year was submitted. If Field Office

requests cannot be met, the Regional Office shall make a request

to the Assistant Secretary for CPD only after all funds within

the Region have been reserved for properties. If projected funds

usage within the Region has not materialized, funds which are not

projected to be obligated by the end of the fiscal year shall be

returned to Headquarters by the Regional Office as early as

possible (HUD-185), in order for the Assistant Secretary for CPD

to assign returned Funds to other Regions needing funds.

6-5. ANNUAL RECONCILIATION AND RETURN OF FUNDS TO HEADQUARTERS

A. As of September 30 of each year, the RAD will assist the Field

Office Urban Homesteading Coordinator and Regional Director for

CPD in performing a reconciliation of all transactions for the

year, and report the results to the Office of Finance and

Accounting and the Director, Urban Homesteading Program, in

Headquarters. On a

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6-7 3/90

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6400.1 REV-1

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monthly basis, the disbursements made by the RAD and the reports

on the automated OFA PAS shall be reconciled with the assistance

of the Regional Director for CPD.

B. All unobligated outstanding Section 810 funds as of September 30

shall be dereserved and returned to Headquarters for inclusion in

the succeeding year\'s allotment and reassignment.

1\. The RAD will cancel any reservations upon receipt of a

decrease HUD-718, if the closing on a property has not taken

place on or before September 30.

2\. The Regional Budget Officer will prepare a decrease HUD 185.1

for each Field Office\'s unused subassignment balance and

forward it to the RAD who will process it to return the funds

to Headquarters.

3\. The Headquarters Budget Office will prepare a HUD-185 to

withdraw the unused balance from the Region.

C. All property closings must be completed by September 30 and

closing documents must reach the RAD by close of business of the

third work day in October unless prior arrangements are made with

the appropriate accounting office (See Handbook 1971.19, Fiscal

Year End Closing Requirements). The HUD-718 is not an obligating

document. The obligation of funds occurs upon settlement.

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3/90 6-8