Use of Reserve for Replacement Accounts in Restructured Mark-to-Market (M2M) Properties

HUD recently published Notice H 2011-30 which specifies special requirements governing the use of the Reserve for Replacements account that arise from the Mark-to-Market (M2M) program restructuring of a HUD Multifamily property’s debt and rents. The Notice provides additional guidance on how the Reserve for Replacements account must be used for such properties that have completed a restructuring under M2M. In general, owners of M2M restructured properties are required to utilize the Reserve for Replacements account as the primary source for capitalized expenses, due to specific M2M requirements, as outlined in the notice.