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Flexible Subsidy Program

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As of this date, HUD is no longer providing financial assistance under the Flexible Subsidy Program through Notice of Funding Availability (NOFA) publication in the Federal Register. However, through HUD's discretionary authority funding may be authorized in certain circumstances.


In the past Owners may have been awarded Flexible Subsidy funding under Flexible Subsidy Operating Assistance Payments (OAP), and executed a Flexible Subsidy Loan secured by a Flexible Subsidy Surplus Cash Note. HUD will not forgive repayment of a Flexible Subsidy Loan under any circumstances.


However, HUD will entertain requests for deferred repayment of loans. A request for HUD approval of deferred repayment of a Flexible Subsidy Loan must be in a specific format.

If an owner desires to use my consulting services for submission of a request for deferred repayment of a Flexible Subsidy Loan, please contact me and I can discuss requirements for a request for deferred repayment of a Flexible Subsidy Loan.

Flexible Subsidy Loan:

Under the Flex Program, HUD would award approved dollar amount in Flexible Subsidy Operating Assistance Payments (OAP), under a Financial Assistance Contract, Flexible Subsidy Program. Once the work under the contract is completed, a Flexible Subsidy Residual Receipts Note and Use Agreement would be executed between the owner and HUD.

The owner agrees to continue to operate the Project in according with HUD Regulatory Agreement until the mortgage term ends or until the end of the term of the Use Agreement.

The terms of the Flexible Subsidy Residual Receipts Note provides for payment of principal and interest ONLY from Residual Receipts or non-project funds, and at any time no later than the maturity of the mortgage. The loan is to be paid in-full upon a change in ownership (except for non-profit to non-profit owners), or prepayment of the mortgage. Simple interest accrues at the rate of one percent per year.

Flexible Subsidy Operating Assistance Payments (OAP) is designed to fund;

       Corrections of project deficiencies existing at the beginning of year of assistance caused by the deferral of regularly scheduled maintenance and repairs or the failure to make necessary and timely replacements of equipment and other components of the project.

       Capital improvement, only if it is necessary to meet local building codes or to maintain the project in a decent, safe and sanitary condition and it is determined that OAP is the most efficient way of funding this improvement;

       Reserve account and operating cost deficits;

       Cost-effective energy conservation improvements; and

       Reasonable alterations needed to make the project accessible to people with handicaps, as required under Section 504.

Alvin L. Sutherlin

Housing Consultant

Post Office Box 162

Mount Rainier, Maryland 20712-0162


Voice Number: 301-277-3465


Date Updated: 11/29/2018 09:14:49 PM