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Closings and Cost Certifications Closings and Cost Certifications

Closings and Cost Certifications - PowerPoint Presentation

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Closings and Cost Certifications - PPT Presentation

Handbook Chapters 9 amp 11 Spencer AshAmy Schwarz 1 In FY 2013 we had 766 closings compared to 706 in FY 2012 415 in FY 2011 and 309 in FY 2010 So far this fiscal year ORCFs Closing Team and OGC ID: 642540

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Slide1

Closings and Cost Certifications

Handbook Chapters 9 & 11Spencer Ash/Amy Schwarz

1Slide2

In FY 2013 we had

766 closings, compared to 706 in FY 2012, 415 in FY 2011, and 309 in FY 2010So far this fiscal year:

ORCF’s Closing Team and OGC

– keeping the

“conveyor belt” of closing moving!

2Slide3

BEFORE CLOSING –

COST

CERTIFICATION

!

Prior to final closing, the final eligible mortgage costs must be certified by both the Lender and the Borrower.

Purpose of a cost certification:

Establish the Borrower’s actual costs, including the contractor’s cost,

Establish the “maximum insurable loan” for Final Closing of the insured mortgage

3Slide4

Cost Certification (Continued)

Things to keep in mind for Cost Certification:

Know what is required and when

!

See Chapter 11 for specifics223(a)(7): Not required223(f

): Remember to use new form, “Borrower’s Certificate of Actual Cost, HUD-2205A-ORCF

4Slide5

Cost Certification (Continued)

New Construction –

Changes

under ORCF 232

Program: Cost Certification review is the responsibility of the Lender.ORCF Closing Coordinator will review Lender’s conclusion and final loan determination based on submitted documentation.

Section 232 Handbook, Chapter 11, Section 11.10 and Email

Blast of

January 6, 2012,

list required forms & documentation.The

Maximum Insurable Mortgage Letter has replaced Form HUD-2580, Maximum Insurable Mortgage. A sample letter is

attached

to the January 6,

2012 Email Blast,

or can be requested from the assigned ORCF Closing

Coordinator.

5Slide6

Closing Process & Players

Closing Process:

Section 232 Handbook, Chapter 9

Firm Commitment to Closing (§9.2-§9.4)

Players: ORCF Closer (§9.2) OGC AttorneyLender and Lender’s Attorney (§9.3)

6Slide7

Closing Nuances By Loan Type

Closing Section 232/223(a)(7) Loans (§9.6)

Closing Section 232/223(f) Loans (§9.6)

Closing New Construction Loans (§9.7) Initial Closing (§9.8) Final Closing (§9.11)

7Slide8

OGC – Part I Document Review

One part

review

replaces Part 1 & Part 2

processException – Upfront OGC review required for transactions involving:AR FinancingPortfoliosMaster LeasesOther complex legal issues (ORCF UW may request when a legal issue could impact a Loan Committee Decision)

8Slide9

ORCF Process & Review

Assignments

:

ORCF Closers assigned when closing packages are

complete and ready to submit to OGC Attorney When legal closing package is sent to the assigned OGC Attorney, email ORCFCloser@hud.gov  for a Closer assignment (9/26/13 Email Blast)New Documents:Required

for all closings with Firm Commitments on or after July 12, 2013 (9/26/13 Email Blast)

9Slide10

ORCF Process & Review

Signing of Closing

Documents

:Critical

– any and all communications regarding execution of closing documents must go through ONLY the assigned Closers/GTM Closers to prevent delays in the closing process (9/26/13 Email Blast)Transaccess (§ 9.4.F):

Notify assigned Closer by email and copy

Transaccess@hud.gov

when Transaccess

CD/document has been sent (5/7/14 Email Blast)

10Slide11

Tips for a Successful Closing

Complete draft closing documents (§9.2)

Get your attorney involved early

Use ORCF resources(Appendix 9.1

): Closer Closing ChecklistAttorney Closing ChecklistAttorney Punchlist

Special Condition Matrix

11Slide12

Tips (Continued)

Amendments and Extensions:§9.2.B and §9.3

B.1

Prior to ORCF Closer assignment, send any requests for extensions

to ORCFCloser@hud.gov12Slide13

Tips (Continued)

Lender’s

Attorney is responsible for closing documents and responses to HUD

comments.

Please ensure Lender’s Attorney is coordinating with Borrower/Operator Attorneys and reviews the documents they prepare before submitting to HUD.Revisions to standard OMB approved documents should be rare.If revisions proposed for closing, or waiver needed after Firm is issued, they should be submitted early in closing review (as part of the first submission of draft documents.)

Signing of documents can take some time!

Factor

in # of days needed for pre-recording. Take this into consideration when proposing closing date.

13Slide14

Partnership & Collaboration

Remember:Complete, clean, & accurate

closing packages

get reviewed and closed quicker

All special conditions must be met and properly documented prior to closingUse the Special Conditions Matrix!Responsiveness to ORCF Closer and OGC Attorney and fast turnaround is KEYORCFCloser@hud.gov

Closing Docs

Closing Table

14Slide15

Hot Topics & Updates

Requests

to make changes to HUD

documents:

Requests for revisions – use Form “Deal-Specific Change Request Protocol”Request for Endorsement, Section I(D)(1)Closing Statements – Sources & Uses for 223(f) and 223(a)(7)Implemented to provide greater consistency, can use Sources & Uses as the loan closing

statement for 223(f) or 223 (a)7 closings (2/24/14 Email Blast)

Provides

greater consistency in Lenders’

submissionsExpedites the ORCF Closers’ review of closing statements and finalization of closing

documentsAmounts used for the Sources & Uses/closing

statement must be exact,

carried

out

2 decimal places

Checks

for MIP and inspection fee delivered at closing must be for the

exact

amounts due

HUD (June 27, 2014, Email Blast and Section

9.3.F

)

15Slide16

Litigation/Docket

Searches

February

27, 2014 Email

BlastORCF no longer collects litigation searches (except where required by the Attorney’s Opinion as an Exhibit)As required by the attorney’s opinions, litigation searches must be run within 30 days of endorsement16Slide17

Litigation/Docket Searches

“Newly

” discovered litigation (not previously disclosed to ORCF in the application process),

Lender must immediately address for each newly discovered lawsuit:Name and discussion of each, including estimated potential liability;Whether each suit is covered by insurance or is for a claim not covered by insurance; 

Amount of liability insurance available to cover each lawsuit, other pending claims and judgments,

and

estimated

potential liability for other lawsuits/judgments; and

Identify who bears the cost of defense of each new lawsuit and whether insurance company is participating in the

defense.

17Slide18

Firm Commitment –

Material Adverse Change

Para. 22

This Commitment is conditioned upon and shall not be enforceable against HUD until and unless all conditions to Endorsement stated herein have been satisfied or waived by HUD. HUD reserves the right to suspend processing or terminate this Commitment in the event that any of the factors (a)-(d) listed in paragraph 23 below occur prior to Endorsement.Para 23.

Prior to Endorsement, the Borrower and Operator must certify that between issuance of Firm Commitment and closing, none of the following have occurred: (a) federal, state, municipal and or other regulatory authority action against the project that demonstrates or alleges substantial deficiencies in the operation of the project which may be evidenced by an administrative or judicial proceeding or final audit finding; (b) filing of a bankruptcy petition of mortgagor, or operator; (c) filing of a lawsuit or criminal charges against the operator or mortgagor entity or any principal thereof; or (d) placement of a Special Focus Designation or ban on new admissions on the project

.

18Slide19

Hot Topics & Updates (Continued)

Difference

between Owner and an Identity of Interest

Owner/Operator

Regulatory Agreement, Section 38Survey and pre-existing survey certification

Revised documents

19Slide20

Questions

20