Title: NOTE 2 INTEREST INCOME
Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the accounts of the Massachusetts Housing Finance Agency’s (MassHousing) federal award programs, except for U.S. Department of Housing and Urban Development’s (HUD) Financial Adjustment Factor (FAF) program, which is subject to a separate triennial audit. The Schedule has been prepared on the modified cash basis, a basis of accounting allowable by the U.S. Office of Management and Budget and HUD, as it pertains to the federal award programs. The significant accounting policies followed are described below to enhance the usefulness of the Schedule to the reader.
(a) Cash and Cash Equivalents
MassHousing considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
(b) Cash Receipts/Revenue
Revenue is recognized when funds are received from federal government sources. Interest income is recognized when it is credited to accounts by banking institutions.
(c) Cash Disbursements/Expenditures
Expenditures for the loan program are based on the total outstanding loan balances at June 30, 2023, inclusive of accrued interest (Note 3). All other expenditures are recognized when paid.
De Minimis Rate Used: Both
Rate Explanation: MassHousing does not charge indirect costs to the following federal financial assistance programs: Section 8 (Federal Assistance Listing No. 14.195), Operating Assistance for Troubled Multifamily Housing Projects (Federal Assistance Listing No. 14.164) and Capital Magnet Fund (Federal Assistance Listing No. 21.011). MassHousing does charge indirect costs on the Homeowner Assistance Fund (Federal Assistance Listing No. 21.026) and elected to use the 10-percent de minimus indirect cost rate identified in §200.414 of the Uniform Guidance.
Included in cash receipts under the Housing Assistance Payments Program for Low Income Families (Federal Assistance Listing No. 14.195) is $2,968 of interest income earned on federal funds held on deposit for the year ended June 30, 2023.
Included in cash receipts under the Capital Magnet Fund (Federal Assistance Listing No. 21.011) is $350,673 of interest income earned on federal funds held on deposit for the year ended June 30, 2023. Included in cash receipts under the Homeowner Assistance Fund (Federal Assistance Listing No. 21.026) is $115,026 of interest income earned on federal funds held on deposit for the year ended June 30, 2023.
Title: NOTE 3 FLEXIBLE SUBSIDY LOANS
Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the accounts of the Massachusetts Housing Finance Agency’s (MassHousing) federal award programs, except for U.S. Department of Housing and Urban Development’s (HUD) Financial Adjustment Factor (FAF) program, which is subject to a separate triennial audit. The Schedule has been prepared on the modified cash basis, a basis of accounting allowable by the U.S. Office of Management and Budget and HUD, as it pertains to the federal award programs. The significant accounting policies followed are described below to enhance the usefulness of the Schedule to the reader.
(a) Cash and Cash Equivalents
MassHousing considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
(b) Cash Receipts/Revenue
Revenue is recognized when funds are received from federal government sources. Interest income is recognized when it is credited to accounts by banking institutions.
(c) Cash Disbursements/Expenditures
Expenditures for the loan program are based on the total outstanding loan balances at June 30, 2023, inclusive of accrued interest (Note 3). All other expenditures are recognized when paid.
De Minimis Rate Used: Both
Rate Explanation: MassHousing does not charge indirect costs to the following federal financial assistance programs: Section 8 (Federal Assistance Listing No. 14.195), Operating Assistance for Troubled Multifamily Housing Projects (Federal Assistance Listing No. 14.164) and Capital Magnet Fund (Federal Assistance Listing No. 21.011). MassHousing does charge indirect costs on the Homeowner Assistance Fund (Federal Assistance Listing No. 21.026) and elected to use the 10-percent de minimus indirect cost rate identified in §200.414 of the Uniform Guidance.
During the year ended June 30, 2023, MassHousing administered one Flexible Subsidy Loan under HUD’s Operating Assistance for Troubled Multifamily Housing Projects program (Federal Assistance Listing No. 14.164). This loan was issued to a project owner through MassHousing in a previous fiscal year for the purpose of restoring or maintaining the project’s physical and financial soundness, to assist in the management of the project, and to maintain the low to moderate income character of the project. Repayment terms of the loan are contingent upon the cash flow of the project, and the loan bears interest at 1%. The loan outstanding and included on the Schedule, inclusive of accrued interest, at June 30, 2023 totaled $376,849. Interest income earned and accrued on outstanding loans during the year then ended totaled $2,500.
Title: NOTE 4 CONTRACT ADMINISTRATION
Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the accounts of the Massachusetts Housing Finance Agency’s (MassHousing) federal award programs, except for U.S. Department of Housing and Urban Development’s (HUD) Financial Adjustment Factor (FAF) program, which is subject to a separate triennial audit. The Schedule has been prepared on the modified cash basis, a basis of accounting allowable by the U.S. Office of Management and Budget and HUD, as it pertains to the federal award programs. The significant accounting policies followed are described below to enhance the usefulness of the Schedule to the reader.
(a) Cash and Cash Equivalents
MassHousing considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
(b) Cash Receipts/Revenue
Revenue is recognized when funds are received from federal government sources. Interest income is recognized when it is credited to accounts by banking institutions.
(c) Cash Disbursements/Expenditures
Expenditures for the loan program are based on the total outstanding loan balances at June 30, 2023, inclusive of accrued interest (Note 3). All other expenditures are recognized when paid.
De Minimis Rate Used: Both
Rate Explanation: MassHousing does not charge indirect costs to the following federal financial assistance programs: Section 8 (Federal Assistance Listing No. 14.195), Operating Assistance for Troubled Multifamily Housing Projects (Federal Assistance Listing No. 14.164) and Capital Magnet Fund (Federal Assistance Listing No. 21.011). MassHousing does charge indirect costs on the Homeowner Assistance Fund (Federal Assistance Listing No. 21.026) and elected to use the 10-percent de minimus indirect cost rate identified in §200.414 of the Uniform Guidance.
MassHousing receives fee income in consideration for serving as HUD’s contract administrator with respect to project-based Section 8 subsidy programs in the Commonwealth, including both the Traditional Contract Assistance (TCA) and the Performance-Based Contract Administration (PBCA) programs. Starting in 2011, HUD sought to achieve cost savings in the PBCA program and initiated the first of several processes for re-bidding PBCA administration in multiple states. Each such process has been withdrawn or overturned following legal challenges.
On February 1, 2022, MassHousing executed a tenth amendment to the Annual Contributions Contract (ACC) as PBCA administrator to HUD. This amendment extended the term of the ACC from February 1, 2022 to January 31, 2023 with the option by HUD to further extend the contract for up to four additional and successive extension terms of six calendar months each, subject to the availability of sufficient appropriations. This amendment made certain changes to the scope of work to be performed and compensation to be received, which in MassHousing’s assessment will not significantly affect its operations or financial position.
On December 20, 2022, HUD gave notice of its election to extend the tenth amendment of the ACC, subject to the availability of sufficient appropriations, for the first extension term, which began on February 1, 2023 and ended on July 31, 2023. On May 12, 2023, HUD gave notice of its election to extend the tenth amendment of the ACC, subject to the availability of sufficient appropriations, for the second extension term, which began on August 1, 2023 and will end on January 31, 2024. Effective June 1, 2023, HUD transferred the three remaining contracts, that MassHousing administered on HUD’s behalf, from the TCA program into the PBCA program. MassHousing’s Section 8 contract administration work under the TCA has concluded.
During the year ended June 30, 2023, MassHousing earned approximately $27.5 million and $190 thousand in fees for contract administration services under the PBCA and TCA contracts, respectively.
Title: NOTE 5 CAPITAL MAGNET FUND
Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the accounts of the Massachusetts Housing Finance Agency’s (MassHousing) federal award programs, except for U.S. Department of Housing and Urban Development’s (HUD) Financial Adjustment Factor (FAF) program, which is subject to a separate triennial audit. The Schedule has been prepared on the modified cash basis, a basis of accounting allowable by the U.S. Office of Management and Budget and HUD, as it pertains to the federal award programs. The significant accounting policies followed are described below to enhance the usefulness of the Schedule to the reader.
(a) Cash and Cash Equivalents
MassHousing considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
(b) Cash Receipts/Revenue
Revenue is recognized when funds are received from federal government sources. Interest income is recognized when it is credited to accounts by banking institutions.
(c) Cash Disbursements/Expenditures
Expenditures for the loan program are based on the total outstanding loan balances at June 30, 2023, inclusive of accrued interest (Note 3). All other expenditures are recognized when paid.
De Minimis Rate Used: Both
Rate Explanation: MassHousing does not charge indirect costs to the following federal financial assistance programs: Section 8 (Federal Assistance Listing No. 14.195), Operating Assistance for Troubled Multifamily Housing Projects (Federal Assistance Listing No. 14.164) and Capital Magnet Fund (Federal Assistance Listing No. 21.011). MassHousing does charge indirect costs on the Homeowner Assistance Fund (Federal Assistance Listing No. 21.026) and elected to use the 10-percent de minimus indirect cost rate identified in §200.414 of the Uniform Guidance.
Effective November 17, 2021, the Commonwealth of Massachusetts (the Commonwealth) provided a subaward of $47.0 million to MassHousing, in its capacity as a “Contractor”, to provide administration and project management for the distribution of federal financial assistance received by the Commonwealth through the Homeowner Assistance Fund (HAF) authorized under Section 3206 of the American Rescue Plan Act of 2021, H.R. 1319 (the ARPA) and administered by the U.S. Department of Treasury (Treasury). The contract was amended on June 22, 2022 and the subaward was reduced by $7.0 million to $40.0 million. The contract was further amended on May 31, 2023 and the subaward was reduced by $13.0 million to $27.0 million.
HAF was setup to prevent mortgage delinquencies, foreclosures, loss of utilities or home energy services, and displacement of homeowners experiencing financial hardship after January 21, 2020. Funds from HAF may be used for assistance with mortgage payments, homeowner’s insurance, utility payments, and other specified purposes. The law prioritizes funds for homeowners who have experienced the greatest hardships, leveraging local and national income indicators to maximize the impact. Effective November 17, 2021, the Commonwealth also provided a subaward of $3.0 million to MassHousing to establish and manage a statewide marketing, outreach and public information campaign to encourage homeowners experiencing hardships due to the Covid-19 pandemic to take advantage of financial assistance under the Massachusetts HAF Program (the Statewide HAF Program). The contract was amended on May 31, 2023 and the subaward was reduced by $1.0 million to $2.0 million.
During the year ended June 30, 2023, MassHousing received $843.5 thousand for reimbursement of administrative expenses from the funds.
Title: NOTE 6 SUBSEQUENT EVENTS
Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the accounts of the Massachusetts Housing Finance Agency’s (MassHousing) federal award programs, except for U.S. Department of Housing and Urban Development’s (HUD) Financial Adjustment Factor (FAF) program, which is subject to a separate triennial audit. The Schedule has been prepared on the modified cash basis, a basis of accounting allowable by the U.S. Office of Management and Budget and HUD, as it pertains to the federal award programs. The significant accounting policies followed are described below to enhance the usefulness of the Schedule to the reader.
(a) Cash and Cash Equivalents
MassHousing considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
(b) Cash Receipts/Revenue
Revenue is recognized when funds are received from federal government sources. Interest income is recognized when it is credited to accounts by banking institutions.
(c) Cash Disbursements/Expenditures
Expenditures for the loan program are based on the total outstanding loan balances at June 30, 2023, inclusive of accrued interest (Note 3). All other expenditures are recognized when paid.
De Minimis Rate Used: Both
Rate Explanation: MassHousing does not charge indirect costs to the following federal financial assistance programs: Section 8 (Federal Assistance Listing No. 14.195), Operating Assistance for Troubled Multifamily Housing Projects (Federal Assistance Listing No. 14.164) and Capital Magnet Fund (Federal Assistance Listing No. 21.011). MassHousing does charge indirect costs on the Homeowner Assistance Fund (Federal Assistance Listing No. 21.026) and elected to use the 10-percent de minimus indirect cost rate identified in §200.414 of the Uniform Guidance.
On August 4, 2023, the HAF contract was further amended and the subaward was increased by $2.8 million to $29.8 million.
MassHousing has performed an evaluation of subsequent events through
November 30, 2023, which is the date the Schedule was available to be issued. No material subsequent events have occurred since June 30, 2023, that required recognition or disclosure in the Schedule and accompanying notes.