Agreement and Certification
you have a question related to this document, please submit it to MultifamilyDocumentReview@hud.gov.
1. Currently the Agreement and Certification provides that Paragraph 8 is applicable in the event of a 223f or 223a7 loan. Paragraph 8 contains requirements that must be adhered to with regard to the "construction contract" and "subcontracts". This paragraph appears to be applicable to a construction loan, where there will be a construction contract, but not a 223a7 or 223f loan where there will not be. Thus, I believe the form should be revised to delete Paragraph 8 from the list of applicable paragraphs in connection with 223f and 223a7 transactions.
Yes, The form will be changed to remove the reference to paragraph 8 from the option box for "Financing or refinancing." Only paragraphs 1, 2, and 6 are applicable to 223(f) and 223(a)(7) refinancings. Strikeouts of the construction provisions are allowed in a refinancing.
2. Does paragraph 8 apply to refinance projects? The option for refinance states that paragraph 8 is applicable, but that paragraph seems to relate to construction.
No, paragraph 8 does not apply and the form will be changed to remove paragraph 8 from the option box for "Financing or refinancing." Only paragraphs 1, 2, and 6 are applicable to 223(f) and 223(a)(7) refinancings. Strikeouts of the construction provisions are allowed in a refinancing.
3. For refinances (223(f)'s and (a)(7)'s), will strike outs of the construction provisions be allowed? That is, more particularly, strike outs of paragraphs 3, 4, 5, 7, 8, 9, 10, 11, 12, and 13, as well as removing the General Contractor as a party?
Yes. Strikeouts of the construction provisions are allowed in a refinancing. Only paragraphs 1, 2, and 6 are applicable to 223(f) and 223(a)(7) refinancings. The form was corrected to remove the reference to paragraph 8 from the option box for "Financing or refinancing." [NOTE: see also posting of 12/5/12 “How must changes to loan documents be shown?” in the General Questions Category for additional guidance.]
4. The Agreement and Certification states that for refinancings only paragraphs 1, 2, 6 and 8 apply. Based upon lender comments and mark ups, lenders seem to think that only paragraphs 1, 2, 3 and 6 apply for refinancings. Can you advise which of these paragraphs apply to refinancings?
Only paragraphs 1, 2, and 6 are applicable to 223(f) and 223(a)(7) refinancings. The form was corrected to remove the reference to paragraph 8 following the "Financing or Refinancing" checkbox. Strikeouts of the construction provisions are allowed in a refinancing. [NOTE: see also posting of 12/5/12 “How must changes to loan documents be shown?” in the General Questions Category for additional guidance.]
5. For a 223(f) transaction, Counsel submitted an Agreement and Certification with paragraph 1 on page 2 stricken. This provision does not seem to apply since this transaction is not new construction. I advised them that modifications to the form language were not permitted, but this provision does seem inapplicable to 223(f)s. Is this language permitted to be stricken or must it remain as is?
No, these paragraphs must not be stricken and must remain as is. The language of the paragraph limits the applicability of the language as required according to the terms of any particular deal, including 223(f) transactions.
6. Do all certifications required by a Firm Commitment need to be attached to the Agreement & Certification? While the plain language of paragraph 14 of HUD-93305M (06/14) suggests that ALL certifications should be listed, it's not clear why certifications unrelated to repairs, rehab, and/or construction need to be referenced (we have also been asked to physically attach copies of the certifications). Is it HUD's intent that ALL certifications should be referenced, or just those related to statements made in the form?
It is not HUD's intent that all certifications otherwise required for closing to be listed in section 14 and attached to the Agreement and Certification. The standard certifications required through the closing checklists need not be listed or attached. HUD only requires the listing and attachment of those certifications that have been included as special conditions to the Firm Commitment and that concern construction/rehab/repairs, and that further relate to matters covered in the Agreement and Certification, e.g., cost certifications, identity of interest, and excess/unused mortgage proceeds. When such additional project-specific certifications are required as documented in the Firm Commitment, they should be listed in section 14 and appended to the Agreement and Certification.
6. The Agreement and Certification, Form HUD-93305M (06/14), requires that for construction and substantial rehabilitation projects, all boxes (i.e., 1-14) should be checked. However, it appears that boxes 10 and 11 are mutually exclusive. Should paragraph 11 be completed in its entirety if the construction contract has Builder’s and Sponsor’s Profit and Risk Allowance (“BSPRA”)? Note, the parties have completed paragraph 10.
The instruction for new construction and substantial rehabilitation on Form HUD-93305M (06/14) is incorrect. Instead of requiring that all boxes be checked it should read: [for construction and substantial rehabilitation check boxes 1-9 and 12-14, if BSPRA also check box 10; if no BSPRA, also check box 11. Provide requested information for each box that is checked.] We will correct the instruction during the next PRA review of the documents.
7. The Agreement and Certification, Form HUD-93305M (06/14), requires that for construction and substantial rehabilitation projects, all boxes (i.e., 1-14) should be checked. However, it appears that boxes 10 and 11 are mutually exclusive. Should paragraph 11 be completed in its entirety if the construction contract has Builder’s and Sponsor’s Profit and Risk Allowance (“BSPRA”)? Note, the parties have completed paragraph 10.
The instruction for new construction and substantial rehabilitation on Form HUD-93305M (06/14) is incorrect. Instead of requiring that all boxes be checked it should read: [for construction and substantial rehabilitation check boxes 1-9 and 12-14, if BSPRA also check box 10; if no BSPRA, also check box 11. Provide requested information for each box that is checked.] We will correct the instruction during the next PRA review of the documents.
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