HUD’s Post-Closing Portfolio Management (“PCPM”) Contract for Mark-to-Market (“M2M”) Mortgage Restructured Loans

As the PCPM Contractor for HUD since 2007, MBI is responsible for analyzing multi-family loans that have been created and held by HUD under its M2M Program or its pilot program-the Portfolio Re-Engineering Demonstration Program. The contract’s purpose is to provide an accounting oversight to verify and ensure HUD’s field offices and project managers are provided sufficient information to compare actual property performance outlined in the M2M Restructuring Plan contract for debt restructuring that is negotiated between the property owner and HUD and to assist the HUD Property Managers in drawing accurate conclusions regarding the financial performance of a property and to help establish payment amounts due to HUD on these loans.

MBI’s analysts review approximately 1,300 properties’ financial statements for each and every fiscal period. The combined unpaid principal balance of these loans exceeded $2 billion. These reviews consisted of ensuring proper entries of all expenses, ensuring that there were no outstanding unresolved HUD audits or management findings and that there were no defaults in HUD’s Regulatory Agreement which would entitle property owners to receive Capital Recovery Payments and Incentive Management Fees. These fees are due to owners who have efficiently managed these properties and producing profits. MBI also reviewed these allowable fees for accuracy.

At the beginning of this contract HUD reviewed MBI’s analysis; however, that has not been the case for many years as they are more the satisfied with MBI’s analysis of these properties financial statements. In fact, HUD replaced a previous contractor in 2007 and had to re-review their work on over 1,200 properties to ensure that any adjustment amounts were indeed accurate. MBI’s talented staff includes CPAs, MBAs and advanced degrees in accounting and the re-reviews were completed while still meeting other contractual milestones. MBI’s accurate analysis leading to, in some cases, substantial adjustments to monies due, HUD has to date received over $1.2 billion dollars in collections from principal and interest payments with that amount growing by approximately $100 million per year.