U.S. Department of Housing and Urban Development

Public and Indian Housing

Special Attention of: Notice: PIH 97-35 (IHA)

ONAP Administrators; Facilities Planning Issued: July 7, 1997

& Development Directors; Finance & Expires: April 30, 1998

Budget Directors; and

Indian Housing Authorities (IHAs) Cross Reference: 24 CFR Part 950

Subject: Amendment to Notice 97-18 , Modification of Mutual Help
Contribution

Drawdown Procedures in LOCCS, issued April 21, 1997

1\. Purpose: This Notice amends the policies and procedures issued in

Notice 97-18. All pertinent information is repeated in this Notice;

therefore, Notice 97-18 should be discarded. This Notice modifies the

policies and procedures for the drawdown of Mutual Help Contribution

funds from the Line of Credit Control System - Voice Response System

(LOCCS-VRS) for Indian Housing projects.

2\. Background: As a condition of occupancy, a Mutual Help homebuyer is

required to provide a Mutual Help Contribution. When an Indian housing

authority\'s development project reaches the Date of Full Availability

(DOFA), the Mutual Help Contribution is credited to the homebuyer\'s

account and retained by HUD. After DOFA, the Mutual Help Contribution

may only be drawn down from LOCCS-VRS to cover a debit balance in the

Monthly Equity Payment Account (MEPA) for a vacated unit, to the extent

of the credit balance in this account, or to supplement the homebuyer\'s

equity account, typically at time of purchase of the home. In order to

simplify the administration of the Mutual Help Contribution and in

anticipation of the programmatic changes which will occur with the

implementation of the Native American Housing Assistance and Self-

Determination Act of 1996, this Notice modifies the above policies and

procedures to provide for the drawdown of the Mutual Help Contribution

at the time of DOFA.

3\. Applicability: All Mutual Help projects shall be covered by the

provisions of this Notice.

4\. Policy:

a\. Mutual Help Contributions of cash are not included in the drawdown

procedures. Cash contributions are paid to the housing authority

at the time of remittance by the homebuyer.

b\. Upon entry of the DOFA date, LOCCS-VRS will disburse all Mutual

Help Contribution funds as approved on the current Development Cost

Budget, form HUD-52484 or HUD-53045A.

c\. The Mutual Help Contributions disbursed will be accounted for using

one of the following two methods.

1\) For every unit not previously conveyed by the housing

authority, and where funds have not been used to cover a debit

balance in the MEPA for a previous participant, the Mutual

Help Contribution should be used to supplement the amount in

the equity account (24 CFR 950.440(e)(4)). Previously, this

process took place at the time of conveyance.

2\) Remaining funds should be included in the housing authority\'s

proceeds from sale. These funds represent instances where the

units have been conveyed by housing authorities; but the

Mutual Help Contribution has not previously been drawn down.

d\. After conveyance of the home, the Mutual Help Contribution becomes

part of the \"proceeds of sale\" and is eligible for loan

forgiveness. The housing authority must continue to follow the

procedures outlined in Notice 96-25, Indian Housing Homeownership

Programs - Loan Forgiveness Procedures. This includes the

execution of the Consolidated Annual Contributions Contract (ACC)

or a Loan Forgiveness ACC Amendment in order to authorize the

housing authority to retain \"proceeds from sale\". Also, the use of

\"proceeds\" will be governed by the procedures in Notice 96-25.

5\. Procedure:

a\. Housing Authority Responsibilities

1\) Prior to DOFA, verify that the funds budgeted for Mutual Help

Contributions on the latest approved development budget equals

the correct number of units built times \$1,500. If

corrections are necessary, submit a revised Development Cost

Budget, form HUD-52484 or HUD-53045A.

2\) Upon notification by HUD of the disbursement of Mutual Help

Contributions funds to the housing authority bank account,

record the accounting transactions as usual. Only the timing

of the drawdowns are affected by this Notice.

b\. Area Offices of Native American Program (ONAP)

1\) For all Mutual Help projects with a DOFA date entered into

LOCCS, verify and make necessary corrections to budget line

item (BLI) 1503, Mutual Help Contributions, in LOCCS. All

corrections must be complete 20 days from the date of this

Notice.

2\) On August 6, 1997, LOCCS will automatically disburse the

balance of funds in BLI 1503 for all Mutual Help projects with

a DOFA date in LOCCS. The area ONAP will receive a report

listing the disbursement of Mutual Help Contribution funds.

Within 5 workdays of receipt of the report, the Area ONAP must

notify each affected housing authority of the amount of Mutual

Help Contributions funds disbursed from each project. The

Area ONAP may accomplish this task by providing a cover letter

and a copy of the applicable section of the report to each

housing authority.

3\) Upon notification of DOFA from an IHA, the date should be

promptly entered into LOCCS. Entry of the DOFA will

automatically create a voucher in LOCCS which will disburse

the funds in BLI 1503. The Area ONAP must verify the amount

of funds on the voucher and notify the housing authority of

the scheduled date of disbursement and the amount of funds to

be disbursed.

\_\_\_\_\_\_\_\_\_\_\_\_/s/\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Kevin Emanuel Marchman, Acting Assistant Secretary

PIH Notice 97-17

24 CFR Part 950