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Section 3

  Residual Receipts Procedures

1. The following types of properties are required to establish a residual receipt account:

• All projects owned by non-profit mortgagors
• All Section 236 and 221 (d) (3) projects owned by limited distribution (LD) mortgagors
• All Section 8 New Construction/ Substantial Rehabilitation projects subject to the 1979/80 revised Section 8 regulations
• MHDC Fund Balance/Home properties when annual surplus cash exceeds the total amount available for distribution in any given year

2. Deposits are required when the amount of any net earnings in any one fiscal year that are not allowed to be distributed. This usually occurs when a project is owned by non-profit mortgagors, or a project’s surplus cash exceeds the unpaid earned distributions for the project.

3. Any excess of surplus cash that exceeds the unpaid earned distribution amount must be deposited by the project into an MHDC approved account no later than 90 days after the project’s fiscal year-end.

4. Residual Receipt requests must be submitted in writing to the MHDC – St. Louis Office.

5. Requests may be submitted at any time through out the fiscal year. All requests must state an amount and a reason on the request. Copies of invoices, cancelled checks, and pictures are required when residual receipts are use to cover expenses.

6. MHDC will first determine if there is any available surplus cash to cover the requested amount before residual receipts are used.

7. MHDC reviews the reason to the residual receipt requests. Acceptable purposes include:

• Reduction of operating deficits when cash flow deficits exist;
• Making mortgage payments when default is actual or imminent;
• Making repairs to the property for items not covered by the Reserve for Replacement;
• Making enhancements to the property or providing additional project amenities;
• Making payments on approved Residual Receipts Notes; or paying unpaid earned distributions in years that have insufficient surplus cash available.

8. MHDC confirms there are no outstanding compliance items including:

• Delinquent debt service payments
• Delinquent escrow deposits
• Below a 24 month minimum of reserve for replacement balance
• Residual Receipt deposits have not been made timely
• Unsubmitted budget and/or financial statement
• Open Budget and/or Financial Statement questions
• Failure to submit monthly occupancy
• There is an open inspection

9. MHDC will send the project an approval or denial letter for the release. If a release is approved, a memo is sent to the MHDC - Kansas City office to release payment.

Note: If the property is set up as a Joint Residual Receipts Account this means the property was allowed to deposit their residual receipt earnings into a joint account held by MHDC and the property at the property’s bank of choice. However, all releases from the residual receipts account still requires MHDC’s approval and check signature. The MHDC St. Louis office notifies MHDC’s Loan Servicing Department of the approved request, and then MHDC’s Loan Servicing Department follows up with the property to make arrangements for MHDC to sign the residual receipt check.