1.  In completing the Security Instrument (HUD-94000-ORCF), lender's counsel must select the appropriate second paragraph.  However, the the optional text appears above the heading “Alternative A…”  The heading (Alternative A: Deed of Trust…) should be above the paragraph (Borrower, in consideration of the Indebtedness…).  (10/21/13)

 

2.  Scrivener's Errors in Security Instrument and Note Corrected (4/22/14)

 

3.  Should paragraph 7(a)(1)(ii) of the Security Instrument be revised in conformity with the MF instructions on this topic?  (6/19/14)

 

4.  In Section 8 of the Note and Section 6 of the Security Instrument would it be acceptable to reference Section 38 of the Borrower’s Regulatory Agreement to identify the individuals/entities listed therein?  This change was made in the last revision to Multifamily documents and is helpful in when it is necessary to change the principals due to a TPA.  (1/9/15) 

 

 

 

 

 

We Agree.

 

 

 

 

The Department is making the following corrections to the Note and Security Instrument provisions governing Acceleration:

 

In Section 6 of the Note, in the first sentence, insert “for a period of thirty (30) days” immediately after “continuing”.
 
In Section 43 of the Security Instrument, in the first sentence, insert “for a period of thirty (30) days” immediately after “continuing.”
 
The revised Security Instrument will be posted to HUDclips.  The revised Note has already been posted to HUDclips.

 

Security Instrument:

 

43.       ACCELERATION; REMEDIES.  If a Monetary Event of Default occurs and is continuing for a period of thirty (30) days, Lender, at Lender's option, may declare the Indebtedness to be immediately due and payable without further demand, and may invoke the power of sale and any other remedies permitted by applicable law or provided in this Security Instrument or in the Note.  Following a Covenant Event of Default, Lender, at Lender's option, but so long as the Loan is insured or held by HUD, only after receipt of the prior written approval of HUD, may declare the Indebtedness to be immediately due and payable without further demand, and may invoke the power of sale and any other remedies permitted by applicable law or provided in this Security Instrument or in the Note.  Borrower acknowledges that the power of sale granted in this Security Instrument may be exercised by Lender without prior judicial hearing.  Lender shall be entitled to collect all costs and expenses incurred in pursuing such remedies, including reasonable attorneys' fees (including but not limited to appellate litigation), costs of documentary evidence, abstracts and title reports.

 

 

3.  Should paragraph 7(a)(1)(ii) of the Security Instrument be revised in conformity with the MF instructions on this topic?  (6/19/14)

Yes, the language in the 2013 published form is erroneous and should be corrected.  We have identified this error internally and are correcting it through the PRA process.  In the meanwhile, to the extent outside counsel are also identifying this error and suggesting a correction, field counsel may accept corrected language without going through the document change request protocol.  This committee suggests the following language that has been submitted to OMB for this provision:  “If and so long as the Note and this Security Instrument are held by HUD, a monthly service charge in an amount equal to the lesser of the amount permitted by law or the amount set forth in Program Obligations computed for each successive year beginning with the first day of the month following the date of this Security Instrument, or the first day of the month following assignment, if the Note and this Security Instrument are assigned to HUD without taking into account delinquencies or prepayment.”

 

4.  In Section 8 of the Note and Section 6 of the Security Instrument would it be acceptable to reference Section 38 of the Borrower’s Regulatory Agreement to identify the individuals/entities listed therein?  This change was made in the last revision to Multifamily documents and is helpful in when it is necessary to change the principals due to a TPA.  (1/9/15) 

In keeping with Multifamily and in order to eliminate the need to change the Note and Security Instrument when the principals change, ORCF will permit the following changes to the Note and Security Instrument.  These changes are permitted on both the 03/13 and 06/2014 versions of the Note (HUD-94001-ORCF) and Security Instrument (HUD-94000-ORCF).   The allowable changes are shown below:
 
Note:
 
8.    Exculpation; Remedies.
 
(a)           Except for personal liability expressly provided for in this Note or in the Borrower’s Security Instrument or in the Borrower’s Regulatory Agreement, the execution of this Note shall impose no personal liability upon Borrower and [LIST THE INDIVIDUALS/ENTITIES OF BORROWER AS LISTED IN THE BORROWER’S REGULATORY AGREEMENT]  and those parties listed in Section 38 of the Borrower’s Regulatory Agreement for payment of the Indebtedness evidenced thereby and in the Event of Default, the holder of this Note shall look solely to the Mortgaged Property in satisfaction of the Indebtedness and will not seek or obtain any deficiency or personal judgment against Borrower and [LIST THE INDIVIDUALS/ENTITIES OF BORROWER AS LISTED IN THE BORROWER’S REGULATORY AGREEMENT] and those parties listed in Section 38 of the Borrower’s Regulatory Agreement except such judgment or decree as may be necessary to foreclose or bar its interest in the Mortgaged Property and all other property mortgaged, pledged, conveyed or assigned to secure payment of the Indebtedness; provided, that nothing in this Section 8 and no action so taken shall operate to impair any obligation of Borrower under the Borrower’s Regulatory Agreement.
 
 
 
Security Instrument:
 
6.     EXCULPATION.  Except for personal liability expressly provided for in this Security Instrument or in the Note or in the Borrower’s Regulatory Agreement, the execution of the Note shall impose no personal liability upon Borrower and [LIST THE INDIVIDUALS/ENTITIES LISTED IN SECTION 38 OF THE BORROWER’S REGULATORY AGREEMENT] and those parties listed in Section 38 of the Borrower’s Regulatory Agreement for payment of the Indebtedness evidenced thereby and in the Event of Default, the holder of the Note shall look solely to the Mortgaged Property in satisfaction of the Indebtedness and will not seek or obtain any deficiency or personal judgment against Borrower and [LIST THE INDIVIDUALS/ENTITIES LISTED IN SECTION 38 OF THE BORROWER’S REGULATORY AGREEMENT] and those parties listed in Section 38 of the Borrower’s Regulatory Agreement, except such judgment or decree as may be necessary to foreclose or bar its interest in the Mortgaged Property and all other property mortgaged, pledged, conveyed or assigned to secure payment of the Indebtedness; provided, that nothing in this Section 6 of this Security Instrument and no action so taken shall operate to impair any obligation of Borrower under the Borrower’s Regulatory Agreement.