What This Means for Owners, Lenders, and Non-Origination PCNAs
On February 20, 2026, HUD issued Notice H 2026-02, announcing a major change to the Capital Needs Assessment (CNA) submission process for Asset Management. For owners and lenders — especially those involved in non-origination transactions — this update significantly streamlines compliance requirements.
At US Housing Consultants, where we regularly complete PCNAs and CNAs for non-origination purposes, this change removes a substantial administrative layer from the process.
What Changed?
HUD has officially:
- Suspended the requirement to use the CNA eTool for Asset Management CNAs
- Suspended HUD’s review of 10-year updated CNAs by Asset Management staff
- Maintained the requirement to complete and submit 10-year CNAs — but no longer through the eTool (except in limited cases)
This suspension remains in effect until further notice.
Where the eTool Is No Longer Required
The suspension applies specifically to Asset Management submission requirements, including:
- 10-year updated CNAs for FHA-insured projects
- Partial Payment of Claims (PPC) and Loan Modifications
- Section 202/811 properties with PRAC assistance (without FHA insurance or RAD)
- Transfer of Physical Assets (TPAs)
- Housing Assistance Payment (HAP) contract assignments (recommended but not required)
For these transactions, the CNA can now be prepared and delivered in traditional report format without uploading to or formatting within the CNA eTool system. For firms like US Housing Consultants that perform non-origination, asset management PCNAs, this eliminates a significant formatting and data-entry burden.
Where the eTool Is Still Required
The eTool requirement remains in place for new FHA insurance applications through Multifamily Production and RAD conversions processed through the Office of Recapitalization. If you are closing a new FHA loan, the CNA eTool is still mandatory.
What Is Still Required?
HUD did not eliminate the 10-year CNA requirement itself.
Lenders must still:
- Direct owners to complete a 10-year CNA within nine months of the 10th anniversary of closing (and every 10 years thereafter)
- Review the CNA
- Confirm to HUD whether reserves are adequate
- Submit required documentation via email (including the CNA and lender certification letter)
In other words — the analysis still matters. The eTool upload does not.
Updated Reserve Guidance
HUD also updated its recommended minimum Reserve for Replacement (RfR) threshold. The recommended target is now the greater of 36 months (3 years) of the initial established monthly deposit or $1,500 per unit. While this remains a recommendation rather than a mandate, it provides a clear benchmark lenders can use when evaluating reserve adequacy.
What This Means for Non-Origination PCNAs
For transactions outside of new loan originations, this is a meaningful procedural shift:
- No more CNA eTool formatting for applicable Asset Management CNAs
- Faster report delivery
- Reduced administrative overhead
- More flexibility in presentation format
- Streamlined communication between lender and HUD
At US Housing Consultants, we specialize in PCNAs and CNAs for non-origination purposes —including 10-year updates, TPAs, HAP assignments, and loan modifications. This update allows us to focus entirely on the quality of analysis and capital planning strategy without the constraints of the eTool submission system.
Bottom Line
HUD’s Notice H 2026-02 represents a significant efficiency move for Asset Management CNAs. The CNA requirement remains, but the eTool requirement is suspended for most non-origination uses. New FHA loans and RAD conversions will still require the eTool. For owners and lenders navigating 10-year updates and other Asset Management transactions, this change reduces administrative friction while maintaining oversight of long-term capital needs.
If you have questions about how this update impacts your next Capital Needs Assessment, the team at US Housing Consultants is ready to help.
