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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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