Getting Your HUD Deal Closed (On Time!) Moderator: Mary Walsh, HUD Panelists: Christie Newhouse, HUD Michelle Snedden, Shackelford, Bowen, McKinley & Norton LLP Brian Surratt, HUD Leslie Winston, HUD Dan Worrall, CohnReznick LLP

Hand-off to Asset Management Production Process Concept meetings scheduled within 10 business days of your request for a meeting Close within 60 days Concept Meeting Application Stage Initial Closing Construction Final Closing Hand-off to Asset Management Pre-Application: Optional for market rate 221(d)(4)s. Not required for 223(f)s or 223(a)(7)s Firm App Review: 30 – 60 days depending on SOA Close within 30-90 days

Sections 220, 221(d)(4), 231 and 241(a) Chapter 3.2 MAP Guide HUD can insure both the construction and permanent loan periods (Insurance of Advances) or just the permanent loan period (Insurance Upon Completion). Davis-Bacon wage requirements apply to new construction and substantial rehabilitation transactions for both Insurance of Advances and Insurance Upon Completion. New Construction transactions finance improvements where no construction work has been done to the site prior to Initial Endorsement Substantial Rehabilitation transactions finance repairs and rehabilitation of existing properties that are or have been previously occupied. Projects in which construction of above ground improvements was started but not completed or inhabited are not eligible. *For more information regarding Section 220, please see Chapter 3.4 of the MAP guide; for Section 231, please see Chapter 3.5; for Section 241(a), please see Chapter 3.6

Refinancing of Existing Insured Mortgages Sections of the Act 221(d)(4) Mortgage Insurance for Rental and Cooperative Housing – New Construction and Substantial Rehabilitation 223(f) Mortgage Insurance for Purchase or Refinancing of Existing Multifamily Rental Housing 223(a)(7) Refinancing of Existing Insured Mortgages Section 207/223(f) insures mortgages for the purchase or refinancing of existing rental housing which may have been financed originally with conventional mortgages or equity. Properties requiring substantial rehabilitation are not eligible for this program. HUD requires completion of critical repairs before endorsement of the mortgage, and permits the completion of non-critical repairs after endorsement. *Chapter 3.7, Chapter 17 Section 223(a)(7) provides for streamlined refinancing of currently insured FHA loans. ONLY currently FHA insured loans are eligible. *Risk Share loans are not eligible *Properties in need of substantial repairs or propose new construction are not eligible. *Chapter 3.8, Chapter 18 Section 221(d)(4) insures mortgages for the new construction or substantial rehabilitation of rental housing. Chapter 3.3

Closings by the Numbers Month FY 2016 Number of Closings FY 2017 Number of Closings FY 2016 Number of Units FY 2017 Number of Units FY 2016 Closings in Dollars FY 2017 Closings in Dollars 1st Quarter 68 62 11,654 9,884 $ 819,840,300 $ 682,807,900 2nd Quarter 48 57 7,826 8,312 $ 679,034,600 $ 710,511,100 3rd Quarter 56 86 8,282 15,702 $ 744,030,312 $1,423,037,600 4th Quarter - 10,344 $ 876,557,400 Total 229 205 38,106 38,540 $3,119,462,612 $2,816,356,600

Closings by SOA

Closings by State

Closings by MIP Rate in Texas

Closing the Deal – Key Drivers in the Event Lender Lender’s Counsel HUD Closing Attorney Closing Coordinator

http://portal. hud. gov/hudportal/HUD http://portal.hud.gov/hudportal/HUD?src=/OGC_Multifamily_Closing_Documents_Checklist:

http://portal. hud. gov/hudportal/HUD http://portal.hud.gov/hudportal/HUD?src=/OGC_Multifamily_Closing_Documents_Checklist:

http://portal. hud. gov/hudportal/HUD http://portal.hud.gov/hudportal/HUD?src=/OGC_Multifamily_Closing_Documents_Checklist:

http://portal. hud. gov/hudportal/HUD http://portal.hud.gov/hudportal/HUD?src=/OGC_Multifamily_Closing_Documents_Checklist:

HUD Closing Attorney Common problems that will delay review and closing #1 tip – stay in frequent communication with the Closing Coordinator and HUD attorney. Let us know your desired closing date with an explanation of time constraints. Respond to our comments in a timely manner. Packages must be complete HUD attorneys have 10 business days from the reception of a complete package to finish the legal review. The ten day clock doesn’t start until we receive a complete packet. Don’t send in packets in piecemeal!

Packages must be in hardcopy Reviewing hardcopy docs is much easier than reviewing electronic documents (Comparing title and survey, tabbing docs, making notations, flipping back and forth through the packet for comparison) I will accept and use digital docs, but they aren’t necessary. Dropbox works best, then CDs/DVDs, then email attachments. Redline comparison copies of HUD forms help expedite the review. Required for the Opinion(s) but not other documents. I find them particularly helpful for the HUD Construction Contract form, which contains multiple optional sections.

Title and survey problems The survey must list all title exceptions and show them on the survey itself. (“Subject to – shown on survey”; “Subject to – blanket”; “Subject to – not plottable”) If the survey says the property is not subject to an exception, it must be removed as a title exception. The title pro forma must be based on the survey’s legal description, and all of the loan docs must use the same legal description. Survey must be dated within 120 days of closing. Give your team lots of lead time to prepare the final survey and ensure the title and survey are consistent. We follow the title and survey standards from the Closing Guide sec. 3.2.

Special requirements for LIHTC and secondary financing LIHTC Rider for Security Instrument HUD Riders for Restrictive Covenants Subordination Agreements for Secondary Financing These are just examples, check the requirements for your project. Building permits must be issued prior to closing. All special conditions must be satisfied. Get waivers cleared in the application stage or quickly after firm issuance!

Project-specific/unique issues still have to satisfy our statutory, regulatory, and program requirements! In other words, please do your due diligence and explain to us why your request is allowed under the applicable program. Find a justification in the regulations, MAP, or Closing Guide!

Hand-off to Asset Management Production Process Concept meetings scheduled within 10 business days of your request for a meeting Close within 60 days Concept Meeting Application Stage Initial Closing Construction Final Closing Hand-off to Asset Management Pre-Application: Optional for market rate 221(d)(4)s. Not required for 223(f)s or 223(a)(7)s Firm App Review: 30 – 60 days depending on SOA Close within 30-90 days

Strive for a Smooth Closing to Easily Cross the Finish Line!