The continuing resolution keeping HUD programs funded through Dec. 11 may be the headline this month, but several regulatory, legal and operational developments could have a more direct impact on FHA multifamily transactions.

We’ll catch you up on the latest spending deal on Capitol Hill, but first, let’s bring those under-the-radar changes to the top. Here’s what we’re watching from Washington, D.C.:

• 1. Shorter Timeline for Fair Housing Design and Construction Complaints
• 2. HUD to Revise Migratory Bird Guidance, Potentially Reducing FHA Multifamily Review Burdens
• 3. Owners With GRRP Awards Gain More Certainty to Move Projects Forward
• 4. HUD Opens HOTMA Reporting Guide for Public Comment
• 5. Congress Passes CR, Keeping HUD Programs Operating Through Dec. 11
• 6. HUD Withdraws Reorganization Notice Hours After Posting
• 7. Fair Housing Funding Framework Remains in Place During Court Review

1. Shorter Timeline for Fair Housing Design and Construction Complaints

The story: Owners evaluating older multifamily properties now have a clearer view of how HUD will handle certain Fair Housing Act design and construction complaints. Under new guidance, an administrative complaint must reach HUD’s Office of Fair Housing and Equal Opportunity (FHEO) within one year after construction is completed, based on the property’s initial certificate of occupancy.

• The standards generally cover multifamily buildings with four or more units that were first occupied after March 13, 1991.
• Under the new guidance, HUD says the continued presence of an inaccessible feature does not restart or extend the one-year administrative filing period.
• HUD reported that its previous guidance contributed to more than $110 million in repair and retrofit costs over five years, including costs imposed on owners that did not design or construct the properties.

“Legacy accessibility issues have too often created uncertainty, costly retrofits, and unnecessary barriers to financing. This should provide substantially more flexibility and certainty for existing properties.”
– Former Federal Housing Commissioner Frank Cassidy

The follow-up: The guidance took effect immediately, but HUD has not yet said whether its Office of Multifamily Housing will adjust accessibility reviews, repair requirements, or closing conditions for FHA refinance transactions. Private lawsuits also remain subject to court interpretation and generally follow a separate two-year filing period.

The bottom line: The new timeline could give owners more clarity when evaluating legacy accessibility issues at existing properties. FHA multifamily borrowers should still expect appropriate accessibility diligence because the memo addresses FHEO complaint timing, not the underlying design standards or HUD’s multifamily underwriting requirements.

2. HUD to Revise Migratory Bird Guidance, Potentially Reducing FHA Multifamily Review Burdens

The story: HUD has agreed to revise its environmental review guidance after the Mortgage Bankers Association (MBA) sent a memo asking the agency to align its policy with the Department of the Interior’s current interpretation of the Migratory Bird Treaty Act. The change will clarify that HUD reviewers should not require bird surveys or construction delays solely to prevent the incidental take of migratory birds before clearing a property. The issue primarily affects FHA 221(d)(4) projects that involve new construction, substantial rehabilitation, or other site disturbance.

• HUD’s current guidance generally directs borrowers to schedule construction outside the nesting season or survey the site for nests before construction begins, which can add substantial development costs or project delays.
• The Interior Department’s current legal opinionstates that the Migratory Bird Treaty Act does not prohibit incidental take when an otherwise lawful activity does not aim to take or kill migratory birds.
• The change will not remove other applicable protections. Projects must still comply with the Endangered Species Act and any relevant state, local or site-specific wildlife requirements.

The follow-up: HUD plans to train staff on the revised interpretation and update internal resources, including its Environmental Assessment Factors Guide. MBA has continued working with HUD on the migratory bird policy as part of a broader effort to revise environmental review requirements.

The bottom line: The change could reduce a source of added cost and scheduling uncertainty for FHA 221(d)(4) borrowers whose projects require vegetation removal or other site work. Borrowers should continue following existing HUD requirements until the agency issues or implements the revised guidance.

3. Owners With GRRP Awards Gain More Certainty to Move Projects Forward

The story: Property owners who incorporated funds already awarded through HUD’s Green and Resilient Retrofit Program (GRRP) into their rehabilitation plans now have greater certainty that those dollars will remain available. A federal appeals court recently upheld legal protections for existing awards, enabling affected projects to keep moving toward closing and construction.

• GRRP funds, which were established under the Inflation Reduction Actin 2022, initially appeared in jeopardy when HUD suspended the process in January 2025—but then relaunched the program earlier this year.
• Under the updated program, unclosed awards generally take the form of surplus-cash loans that sit behind the first mortgage and other senior obligations.
• Owners must account for revised eligible uses and tighter submission timelines as they finalize scopes of work, rehabilitation plans, and project budgets.

“[HUD is] thoughtful and creative about finding ways to preserve and make the program work. It’s better to have these dollars flowing, albeit in a slightly different format, than to have the program on permanent hiatus or dead altogether.”
– Alex Rosso, Partner, Nixon Peabody, told Tax Credit Advisor in March

The follow-up: The federal government could seek further review of the ruling. In the meantime, owners with existing GRRP awards can continue coordinating with HUD to meet the current program requirements and advance their transactions. Any additional appeal would determine the longer-term legal status of the funding protections.

The bottom line: The ruling provides greater near-term certainty for borrowers with existing GRRP awards, but it doesn’t change the revised program terms or open a new application round. Current GRRP awardees have more clarity as they align the funding with their rehab scope and broader capital stack.

4. HUD Opens HOTMA Reporting Guide for Public Comment

The story: HUD released a draft of the TRACS 203A Monthly Activity Transmission (MAT) Guide for public comment as the agency prepares to implement the Housing Opportunity Through Modernization Act (HOTMA) across its multifamily rental assistance programs. (View the text in the “drafts” section on HUD’s website.) TRACS 203A will support tenant-certification and reporting requirements that the current TRACS 202D system cannot fully accommodate. Comments are due Oct. 2.

• The draft addresses HOTMA requirements involving income calculations, assets, deductions, hardship provisions, and interim recertifications.
• The materials provide an early look at how HOTMA policies would translate into HUD-50059 reporting and day-to-day compliance procedures.
• HUD’s deadline for full multifamily compliance with HOTMA remains Jan. 1, 2027.

The follow-up: Owners should review the draft for provisions that could affect their certification procedures, compliance policies, and software preparations. Comments should identify the relevant chapter, section, and page whenever possible.

The bottom line: The draft guide moves HUD closer to operationalizing HOTMA, giving multifamily owners a limited window to flag implementation concerns before the Jan. 1 compliance deadline.

5. Congress Passes CR, Keeping HUD Programs Operating Through Dec. 11

The story: Owners of HUD-assisted properties don’t need to fear interruptions in near-term funding after Congress passed a continuing resolution to keep the federal government running through Dec. 11. The president signed the bill into law. Policymakers on Capitol Hill were facing a Sept. 30 deadline, when current funding would’ve expired, and have said they intend to complete the fiscal 2027 budget after the midterm elections in November.

• The stop-gap funding measure generally maintains HUD programs at fiscal 2026 funding levels.
• It gives HUD targeted flexibility to support voucher renewals and households affected by expiring Emergency Housing Vouchers.
• The extension allows HUD to continue processing and issuing mortgage insurance commitments while Congress completes the fiscal 2027 budget.

“The passage of the CR pushes the funding fight to the end of the year, when the midterm election results and the imminent holiday season could raise the stakes for negotiation between political parties.”
– LeadingAge

The follow-up: Congress now has a new deadline to finalize full-year fiscal 2027 funding for HUD and other federal agencies. Congress could also pass another continuing resolution in December if lawmakers do not complete full-year fiscal 2027 appropriations by the new deadline.

The bottom line: The extension gives owners and developers more near-term stability as they manage HUD-assisted properties and advance transactions through the agency. It does not set HUD’s final fiscal 2027 budget, but it keeps current programs operating while Congress completes that work.

6. HUD Withdraws Reorganization Notice Hours After Posting

The story: HUD posted a notice of intent to reorganize on the Federal Register’s public-inspection docket Sept. 4, then withdrew it later that day before its scheduled publication. HUD did not provide an explanation for the withdrawal, and it remains unclear whether the agency will revise or revive the plan.

• The draft notice proposed changes across several HUD offices, focusing on shifting FHA’s single-family operation from a geographic structure to a function-based model.
• The notice did not outline a comparable restructuring of FHA’s multifamily operation or changes to existing multifamily processing pathways.
• HUD said the proposal involved no additional staffing reductions, office closures or employee relocations.

“Current staffing levels are almost 35% below historic staffing levels, and this reorganization will provide HUD with the ability to operate even more effectively.”
– An excerpt from the withdrawn HUD notice

The follow-up: With the notice withdrawn, the reorganization is not moving forward under the timeline described in the draft. Borrowers should watch for a revised notice or separate guidance addressing whether any future restructuring would affect multifamily staffing or processing.

The bottom line: The withdrawn plan offered few clear implications for FHA multifamily processing. If HUD issues a revised proposal that includes multifamily operations, borrowers should watch for potential effects on staffing, turnaround times, and coordination across HUD offices.

7. Fair Housing Funding Framework Remains in Place During Court Review

The story: HUD-assisted owners will continue working with the established network of organizations that provide fair housing education, complaint assistance, and compliance resources. A federal court temporarily directed HUD to use the previous Fair Housing Initiatives Program (FHIP) funding framework while it reviews a challenge to the agency’s proposed restructuring. HUD maintains that its updated approach is lawful and says it will continue strengthening fair housing enforcement nationwide.

• The order applies to $56 million in fiscal 2025 FHIP funding and keeps the previous grant distribution structure in place for the current funding round.
• Community-based fair housing organizations handle approximately three out of every four housing discrimination complaints filed nationally.
• Disability-related matters represented nearly 55% of complaints reported in 2024, keeping reasonable-accommodation policies and accessibility requirements central to day-to-day property operations.

“When someone is wrongfully turned away from a housing opportunity … they don’t call Washington. They call the fair housing organization in their community. This ruling means the people who answer that call are still going to be there.”
– Lisa Rice, President and CEO of the National Fair Housing Alliance, said in a statement

The follow-up: The temporary order does not resolve the broader lawsuit brought by fair housing groups, and HUD is reviewing its legal options. Unless the court changes its order, HUD will use the previous framework to distribute the fiscal 2025 funding.

The bottom line: For multifamily owners, the ruling does not change existing Fair Housing Act obligations or day-to-day responsibilities around reasonable accommodations and accessibility. It does, however, preserve access to local fair housing education and complaint-resolution resources that can help owners and residents navigate these requirements.

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