Question Answer 1 Will there be other "Lean Teams" besides Seattle, and if so, Yes, both existing staff and new hires will where and when? Then how do we know where to submit? be trained in Lean underwriting. Until further notice you will submit all applications to the HUD Workflow Manager, Roger Lewis, in the Seattle Hub. 2 Will these loans be subject to Quality Control Reviews similar Yes, a Quality Control Review similar to to what is required under MAP? what is required under MAP will be required. The Lean Punch Lists will be used to audit submissions. 3 Will the virtual HUD Underwriter contacts be sent to all Yes. The Lean Web site will be update Lenders so they may contact him/her to assess a potential with the appropriate contact information. loan? Initial contact however should flow through the HUD Workflow Manager. 4 During the transition period, will all applications need to be Contact the HUD Workflow Manager to submitted to the Seattle office? determine where applications will be submitted. 5 A MAP Lender currently not approved for 232's was able to Until new guidelines can be formulated, gain approval by processing & closing TAP transactions. If the MAP approval process for lenders and TAP is being eliminated, how will 232 approval be obtained? underwriters prevails. Can this be accomplished by hiring a 232 approved underwriter? LEAN 232/223f Program - Underwriting Training - June 30 - July 1, 2008 Question Answer UPDATE SEPTEMBER 26, 2008 to Qualification for If an approved MAP Lender sent approved MAP * Section 232 LEAN Underwriter Approval Section 232 lender underwriters to the July 2008 LEAN training in Seattle, a LEAN-trained underwriter may then review a LEAN-submitted Section 232 mortgage insurance application which was prepared by another underwriter in their firm who did not attend the training (or by an approved Section 232 underwriter in another firm who did not attend the LEAN training). After correctly preparing two Section 232 mortgage insurance applications, which are reviewed by a LEAN trained underwriter, the Section 232 underwriter who did not attend the training will be assumed to be trained. The LEAN- trained underwriter will only be certifying that the application has been submitted in accordance with the LEAN training, and he or she will not be assuming responsibility for the actual underwriting. That underwriting responsibility rests with the Section 232 underwriter who prepared the mortgage insurance application. 1 Can the MAP 232 Underwriter sign the Firm Application As of yet, there are no restriction on the Lender's Loan under Lean and also sit on the Lender's Loan Committee? Committee. 2 When will there be a separate Underwriter 232 Lean A separate list of approved underwriters is being Certification? generated. To be approved, an underwriter must work for an approved 232 lender; be an approved 232 underwriter as outlined in chapter 2 of the MAP Guide; and, have attended the Lean training. 3 Will Lender's Underwriter need to have attended this Yes session to be approved as Underwriter on an application? 4 Will Lender's Underwriter's still need to be certified? If so, Yes they will need to be certified. MAP certification is still will they still need to take the 3 courses or what are the applicable. requirements? LEAN 232/223f Program - Underwriting Training - June 30 - July 1, 2008 5 Lender's Certification can’t always be signed by the The Underwriter and a person authorized to sign for the underwriter as they may not be authorized to bind the Lender should both sign the certification. Lender. What do you do? 6 Does the Lender's Underwriter have to visit the site or can Any MAP-approved 232 Underwriter or Lean-approved an authorized representative of the Lender? 232 Underwriter employed by the Lender, can inspect the site on behalf of the Lender. If the inspecting underwriter is not the underwriter of record, it must be clearly stated in the Lender sub-section of the Lender's Narrative Underwriting Team section and the inspecting underwriter must also sign the Lender's Narrative indicating "This report was reviewed and the site was inspected by:" 7 Does Underwriter just certify that the Lender has gone to the The Lender's Certification has been modified to reflect site? (That's how the cert reads) that a MAP-approved 232 Underwriter or Lean-approved 232 Underwriter employed by the Lender has visited the site. 8 When the Lender has more than 1 Underwriter that is 232 Yes. Any MAP-approved 232 Underwriter or Lean- approved, could the Lender use another Underwriter to approved 232 Underwriter employed by the Lender, can inspect the property if the Underwriter of record is not inspect the site on behalf of the Lender. If the inspecting available? underwriter is not the underwriter of record, it must be clearly stated in the Lender sub-section of the Lender's Narrative Underwriting Team section and the inspecting underwriter must also sign the Lender's Narrative indicating "This report was reviewed and the site was inspected by:" 9 If a Lean application has both an Underwriter and an The Underwriter must make the site visit. It is highly Underwriter Trainee, is it sufficient that the Underwriter recommended that both the Underwriter and the Trainee make the site inspection or does the Underwriter Underwriter Trainee make the site visit together as part have to make it? of the training process. 10 Would you please place a statement as part of the Lean Yes. See above FAQs on site inspections. requirements that the MAP 232 approved underwriter sign and inspect the property? The underwriters responsibilities are far more important under this new program. LEAN 232/223f Program - Underwriting Training - June 30 - July 1, 2008 11 During the Risk Analysis section of the underwriting HUD's Risk Analysis will fluctuate as the underwriting process, what are the risks that are evaluated and at what experience and process develops over time with the point are weights assigned per each risk level? Lean model. The Risk Analysis is not an indicator of good or bad underwriting or the quality of an appraisal. It identifies stress points that may require closer examination by the HUD underwriter or a technician depending on the leverage and debt coverage of the transaction. In general, the lower the LTV and the higher the DSC, the less the likelihood that an appraisal review will be required. 12 If Lender's are supposed to evaluate risks, they should be The Lender's Narrative template identifies all the evaluating the same valuation risks, correct? information that HUD will be evaluating. The Appraisal Statement of Work provides HUD's appraisal requirements and addresses the pertinent risk concerns. In essence, the same risk is evaluated under this loan program as with any loan program - Is the value conclusion supported by the comparable data and the subject history? Is the comparable data supported and applicable? (see answer 10 above for additional guidance) 13 The HUD "Lean" team underwriters have come from several The HUD Lean team is made up of all these discipline so discipline backgrounds, i.e. valuation, architectural, they can assist each other. The lender is free to use their mortgage credit, etc. It appears that HUD is willing to own support people as required by the lender accept that these individuals can be underwriters without underwriter. having the same stringent requirements that the Lender has to have for their 232 underwriters. Why the differences? When some Lender's are not generating the 232 loans that larger Lender's generate in their pipelines, it is almost impossible to get another 232 underwriter approved. 14 Will HUD Lean team change underwriting HUD will review the Lenders application and conclusions/mortgage amounts as part of their underwriting underwriting. If HUD determines that modifications to process? the underwriting are required, they will communicate with the Lender and discuss the modification necessary to obtain HUD approval. The Lender will be responsible for making any modifications to the HUD forms. HUD will make modifications to the proposed special conditions as appropriate. LEAN 232/223f Program - Underwriting Training - June 30 - July 1, 2008 15 If there is no parent entity of the Operator but multiple If the principals are individuals, no investigation beyond entities, i.e. a different legal entity is established for each the subject Operator is necessary. If multiple facility, should we underwrite each of the facilities or if there organizations own the Operator and also participate in are common principals should we underwrite the principals the Operation of other facilities through different entities, instead? those entities should be treated as Parents of the Operator. The Lender's Underwriter should particularly focus on any facilities that are covered by the same PLI policy as the subject. Question Answer 1 Monthly Accounting Reports: Under what circumstances would Submission of the monthly accounting these be required? reports is required for the first 12 months after closing. 2 Will HUD take GAP Insurance from the title company? under consideration 3 Can the mortgagee be written into the obligation by the mortgagor under consideration and/or operator to provide financial statements (borrower/operator financial statements after closing)? 4 Does this process effectively eliminate any chance for pre- HUD is willing to discuss unique or difficult application meetings with lenders and their customers? This pre- underwriting issues with a Section 232 scoping type of meeting has long been used to help "sell" Lean Approved Underwriter. Any borrowers on HUD. meetings with borrowers will be held on a case-by-case basis after the Lender's approved underwriter has screened the transaction and determined that has merit. 5 Is the definition of a principal the same as the MAP Guide and/or Yes. The definition of a "principal" has not 2530? changed as a part of the Lean revisions. 6 Will there be notifications when the checklists get updated? Not at this time. It is the Lender's responsibility to check to website each time to make sure that they are using the most current list. 7 Will the Website be available to everyone? Yes. 8 Please identify the correct website the Lender should refer to. http://portal.hud.gov/portal/page?_pageid= 73,3915250&_dad=portal&_schema=POR TAL 9 How can the Lender get the templates and checklists? http://portal.hud.gov/portal/page?_pageid= 73,3915250&_dad=portal&_schema=POR TAL 10 How are waivers determined and by whom? Are they only Until such time as a Lean Guide can be Regulatory Waivers? Are handbook and policy waivers no longer formulated, the MAP program necessary? Clarify waiver policy. requirements are still in place unless otherwise amended by the Lean documents. If Lean has not already amended an item, the waiver is of the MAP Guide, Notices and Handbooks, as applicable. 11 When waivers are requested, given that the MAP Guide is no Until such time as a Lean Guide can be longer applicable, what authority is being waived? formulated, the MAP program requirements are still in place unless otherwise amended by the Lean documents. If Lean has not already amended an item, the waiver is of the MAP Guide, Notices and Handbooks, as applicable. 12 Do all the MAP FAQ's become null and void for 232's? Only as amended by Lean. 13 Does the prepayment approval requirement mean that we need HUD's approval of the prepayment of any the HUD issued approval or the package to request HUD currently insured or HUD-held loans must approval? be obtained prior to submission of the firm application. An approval with conditions is acceptable. 14 Do Supercerts, etc. need Fed Reg. or OMB Clearance as new No. The Super Certifications are simply a docs? consolidation of existing certifications and forms. The other documents and forms under Lean are suggested formats that identify the exact information HUD requires for the application exhibit. 15 When will a manual be generated on the Lean process? Eventually 16 In the test case for the Lean program, can you give some details, No Comment i.e. $ amounts, # units, etc. 17 Page 13 of Narrative: What does subject turnover for each unit Subject Turnover rent is the current rent type mean? Over what period? the project charges new tenants for that unit type, or in other words, the current asking rent. 18 Can language be added so that a fax copy of the Mortgagor and under consideration Principal Certs shall also count as authorization. 19 How will the Lean Program handle a single ownership of multiple Yes. It remains as it is currently handled. facilities that are presented to a Lender for refinance (including audited financial statements)? Does it remain as it is currently handled? 20 Lender Narrative: Independent units; Confuses Board & Care The intent of the template is to "Independent Units" which are licensed & limited to 25% of units demonstrate that each type unit should be with unlicensed Independent Living Units which are not licensed addressed separately. Board & Care units and not eligible. should be discussed separately of unlicensed independent units. 21 Smaller companies may not have a loan committee structure due All Lenders are required to have a loan to their size. Will a loan committee be required by Lean or will it committee. For smaller Lenders, it may be optional for smaller Lender's? consist of qualified people outside of their organization. 22 Are there changes to program requirements such as the percent Stay Tuned of independent units? 23 If the 80% LTV or above is a Risk Factor, then does HUD consider From a loan-to-value standpoint, a all Purchase Transactions to be inherently more risky than a purchase transaction has the same refinance of less than 80% LTV? inherent risk as a refinance transaction of the same leverage. 24 3-year Rule: Presently, an addition smaller in square feet and beds The 3-year rule as defined under MAP has than the original building would not disqualify the project. Has that not changed as a part of the Lean changed? revisions. Question Answer 1 APPS System does not work. This will cause a APPS should be attempted in every case. If tremendous problem with being able to submit the problems with submitting in APPS persist for a application if a paper 2530 is not allowed. Can particular principal, a paper form HUD-2530 can one be submitted? be submitted; however, this may slow processing time and prevent HUD from meeting the established Lean time frames. Question Answer 1 Do Lenders still need to obtain the No. HUD no longer requires the Lender to borrowers equity investment in the demonstrate the Borrower's financial capacity to property? close the loan. It is the Lender's responsibility to ensure that a Borrower can close. Question Answer 1 What are the login and password requirements? To be determined. 2 Will vendors, i.e. appraisers, legal counsel, etc. be able to use and To be determined. would they have to have their own login and passwords? 3 Once the Lender has obtained their FHA "key" will the Lender be Previous Participation clearance will still able to process the 2530 for the borrower? utilize APPS. Currently, some Lenders successfully navigate APPS on behalf of their clients. 4 When the Lender is assigned a Master Code and creates To be determined. secondary codes for access to the Oracle database, is it a per project code for access or global for that Lender's projects? i.e. Lender's counsel would have 1 code to access all Lender's deals? Question Answer 1 What about all the NEPA requirements? HUD's Environmental requirements remain unchanged. 2 Is SHPO letter required if property is not eligible for When no substantial renovations or changes to the National Historic Register? project's design are proposed, the refinance is not considered an undertaking and there is no potential effect on historic properties per 36 CFR 800.3(a)(1), and SHPO consultation is not required. 3 As a 3rd party provider, do I still need to complete the It is not required; however, the Lender can include it in 4128 anymore? their statement of work and request that you provide it. 4 It seems that a 4128 will still need to be performed to It is not required; however, including it may assist HUD in assure that the Lender is aware of anything that may completing the analysis in a timely manner. come up. Is one required or should it be required? 5 On the 223f punchlist, item B-11, does this mean that Yes, that is the timeframe. With existing properties, where HUD has 7 business days to do either or both the 4128 no changes are proposed, this process is usually fairly and appraisal review? quick. If environmental concerns are present, this process may take longer. Question Answer 30 Punchlist item D-2 refers to 3-years No. If the Mortgagor has less than 3-years experience for the operator. Prior guidance experience, the HUD Underwriter will consult has allowed for minimal experience of with asset management staff to determine if owner/operator if development team has the experience is acceptable or if acceptable experienced management agent. Is this a mitigation has been recommended by the change to the Notice? Lender. Question Answer 1 Checklist: What about situations where the operator hires a At present, information on a Management separate management agent? Agent is only required if (1) the facility is not leased; (2) the management agent is named on the license for the facility; or, (3) the management agent directly controls the operation of the facility. Question Answer 1 Can you provide an example or demonstration that Accounts There are no plans to provide an example Receivable financing is feasible? or demonstration. 2 Regarding Accounts Receivable Intercreditor Agreements, will Transfer language should be permited with there be an ability to assign these agreements on sale of the loan the approval of the AR lender and HUD. to another Lender prior to closing, or will these be executed solely at closing? Question Answer 1 Will appraiser utilize market replacement reserves The appraiser will determine the replacement (i.e. $250-$350 per bed) or replacement reserves reserve based on an assessment of the market data. inline with lender's recommended reserves? The Lender's underwriting will reflect their own conclusion based on an analysis of the replacement reserve schedule in the PCNA. 2 Does the appraiser now use an average of 15 years The appraiser will determine the replacement repair needs or still use 10 in RR expenses to reserve based on an assessment of the market data. determine NOI? The Lender's underwriting will reflect their conclusion based on an analysis of the15-year replacement reserve schedule in the PCNA. 3 Will appraiser's "going concern" value set the upper If the Lender's Underwriter concludes to a different limit of value constraint, or will lender's underwritten value than the appraiser, the underwritten value value (if different) set the upper limit? should be used for mortgage sizing. It is permissible, with appropriate justification, to conclude to different net operating incomes for value and debt service coverage; however, this may require a more detailed review of the appraisal by a HUD appraiser. 4 Will appraiser's utilize actual management fee The Appraisal Statement of Work states: "A expense or standard market management fee which management fee must be included in the expenses is typically 5.0% of revenues? for determining overall market value. It should be supported by expense comparables with arms length management agreements." 5 Will upward or downward adjustments to market If justified and supported, the Lender's Underwriter management fee be allowed by lender's underwriter? can modify the management fee as they feel is appropriate. 6 For the appraisal, can we assume that the reviewer Yes, so long as the Appraisal meets USPAP will be healthcare educated so that we can eliminate requirements for a self-contained report. the "fluff" describing what a SNF, ALF, etc. is? 7 Many Not-for-Profits have real estate exemptions Real estate tax exemptions continue to be based on their 501c (3) status. Does underwriting for underwritten as they have been under the MAP such a borrower require the inclusion of property tax? Guide and MAP FAQs. 8 Is there still a higher LTV (90%) and DSC (90% of The maximums as stated are still in place, however; NOI) allowed for non-profit loans? see items 18, 19 and 20 below regarding lender justification and HUD review. 9 Are there any restrictions on the payor mix or For existing properties, there is no change to how a vacancy rates? facilities payor mix or vacancy rate is underwritten. Both conclusions must be supported by market data and the subject's operating history. The program still requires a minimum 5% vacancy and collection loss factor. Further guidance on payor mix thresholds for new construction projects will be forthcoming. 10 Will HUD economists continue to review the market The current nationwide policy does not call for review section of the appraisal? by the HUD economist for refinances of existing facilities. This will remain the same. The review requirements for new construction/substantial rehab is still being developed. 11 Does the MAP Market Study guidelines/requirements No. The appraisal must incorporate a market still apply? analysis that complies with the 232/223f Lean Appraisal Statement of Work and USPAP. 12 Is DSC calculated on in place NOI or cash flow Unless otherwise specified, debt service coverage generated by the appraisal? (DSC) is to be calculated based on the underwritten net operating income (NOI) used to calculate the debt service mortgage criterion on the form HUD- 92264-A. There may be instances in the Lender's analysis or sensitivity analysis were demonstrating historical debt coverage is appropriate and/or requested. 13 Is there anything that prevents the Lender from No. The Lender can have the appraiser provide having the appraiser complete forms that are not additional forms or documentation; however, the required? Lender's Underwriter will sign and be responsible for the content of any required HUD underwriting forms in the application submission. 14 Without the use of the HUD Form 92273, how do we The new 232/223f Lean Appraisal Statement of keep consistency among appraisers in how rents are Work and USPAP will create more consistency. A derived? Lender can require an appraiser to provide the forms HUD-92273 as part of their scope of work, but it is not a required submission. 15 There is no uniform system of accounts for For skilled nursing facilities, Medicaid and Medicare healthcare. What major categories and what format have reporting requirements that provided do you want expenses to be compared to and consistency. For assisted living and other care analyzed? Consistency could be jeopardized. types, most trade groups and healthcare appraisal standards set out general categories. For appraisal and underwriting purposes, the key is consistency between the operating history and the comparable data. 16 It sounds as if HUD is trying to default to national There is no change under Lean as to how sources for expense comps and not localized data. comparable data should be derived. Local market Will local market derived information still be of derived information is of first importance. The importance or over-ridden by national stats? appraiser can expand the area as appropriate and justified. 17 Market Cap Rates? Yes. Capitalization rates are to be derived as outlined in the 232/223f Lean Appraisal Statement of Work, which requires an analysis of sales comparables. No adjustment for proprietary earnings is made. 18 Will LTV's change? No, however, if the loan exceeds 80% of the underwritten value conclusion, the Lender must provide sufficient justification/mitigation to support the additional risk associated with the loan. 19 Will DSC change: No, however, if the debt service coverage of the loan is less than (a) 1.45 for skilled nursing; (b) 1.30 for assisted living; or, (c) 1.25 for independent or board and care facilities, the Lender must provide sufficient justification/mitigation to support the additional risk associated with the loan. 20 If we are looking at a 1.45 DSC we are probably At this time, the program loan terms for loan-to-value looking at a 70%-80% LTV at best on a SNF. If we and debt service coverage remain unchanged. As can justify a 1.25 coverage then we are probably identified in the Lender Narrative template, an LTV in looking at an 80% LTV or lower. That's where the excess of 80% or a debt coverage below the stated Capital Market's criteria is so how does that amount for the type of housing, require additional differentiate HUD's "Lean" program from the Capital explanation and will warrant additional examination Markets? by the HUD Underwriter and other technicians as needed. 21 What if any role will EMAS (HUD Economist) have? EMAS will be involved as an advisory resource and be requested by the HUD Underwriter when warranted. 22 I presume that management fees will now be For underwriting, per the 232/223f Lean Appraisal included as expenses. Will HUD have a guideline as Statement of Work, "A management fee must be to what amount (% of gross revenue) that can be? included in the expenses for determining overall market value. It should be supported by expense comparables with arms length management agreements." In cases were a management agent review is required, the management fee approved by the Lender should be consistent with and supported by the market for similar types and sizes of facilities. In these cases, the underwritten net operating income should reflect the higher of market and the contracted fee. 23 On your census mix risk analysis, does your program Yes. incorporate the reduced expenses associated with a change, i.e. lower Medicare should reduce rehab labor and costs? 24 HUD-92264: Do we ignore the parts on page 3 and 6 Yes. Assume proprietary earnings of 0%. related to Proprietary Earnings? 25 The example on page 42 of the narrative shows an The example tests the lease payment against the NOI plus reserves, taxes and insurance are less than mortgage obligations to ensure that there is sufficient 1.176 How can that be? What is the significance of debt coverage to make the monthly mortgage the "operators" adjusted coverage? payment and the monthly impound and reserve deposits. The second test is to ensure that the Lessee has a sufficient return after making the lease payment. 26 Narrative, page 42: Must the operating lease The Lease payment must cover all obligation payments now be at least 1.176 times the total of required in the Mortgage documents, including taxes debt service, impounds and MIP? What if operator and insurance - regardless of who pays them. pays taxes and insurance? 27 Do you still have to prepare a Business Value and an The 232/223f Lean Appraisal Statement of Work Ongoing Concern? outlines the required value determinations. Proprietary earnings is no longer included in the analysis. Question Answer Is there any grace period for those that have done Yes, the 2 year requirement will be phased in and will * transaction with the MAP 1 year rule in mind? apply to debt that has been funded or put into place after September 1, 2008. Note that under the 2 year requirement 100 percent of the debt incurred for project specific upgrades and improvements perfected prior to 2 years may be included if 90 percent of costs can be verified by the lender. HUD assumes that 10 percent of the project specific costs are allocated as incidental costs, overhead and minimal developer fee. Retracted 9-15-2008. 1 In the Lender Narrative Template section "Existing No, as long as there is no identity of interest between the Indebtedness Question 2", is it the intent that a bridge Mortgagor/borrower and the underwriting HUD lender loan made by the underwriting HUD lender or one its and/or its affiliated bridge lender, the refinance transaction related entities would have to wait for a 5 year period may be treated under the Two-Year Rule. to refinance a bridge? 2 In the Lender Narrative Template section "Existing Yes, in item 1 the phrase, "or purchase, should be added indebtedness Definition of Eligible Debt 1 only after construction. indicated that debt incurred in construction can be included. Can debt incurred in a purchase also be included? 3 Is there any grace period for those that have done Yes, the 2 year requirement will be phased in and will transaction with the MAP 1 year rule in mind? apply to debt that has been funded or put into place after September 1, 2008. Note that under the 2 year requirement 100 percent of the debt incurred for project specific upgrades and improvements perfected prior to 2 years may be included if 90 percent of costs can be verified by the lender. HUD assumes that 10 percent of the project specific costs are allocated as incidental costs, overhead and minimal developer fee. Retracted 9-15- 2008. 4 Does the Lender still obtain "Residential Mortgage Yes, Residential Mortgage Credit Reports are still Credit Reports"? required on individuals. 5 If Dun & Bradstreet does not have a report on an The punchlist is being rewritten to allow other sources entity, can you go to Experian or another credit besides Dunn & Bradstreet, consisting of reviews of: reporting agency that provides the 3 bureau merge? 1) Public filings that includes suits, liens, judgments, bankruptcies and federal debt. 2) UCC filings 3) Credit payment history 4) An Overall credit score of 400 or above 5) Industry standards showing how the facility compares in the areas of financial stress and payment trends 6 Under Lean, do the Lender's still process the LDP and Yes. The Lender's Certification includes an affirmative EPLS? statement that the LDP and EPLS lists have been searched. 7 Our Dun & Bradstreet credit reports on the Mortgagor Dun & Bradstreet's Comprehensive Insight Plus credit and Operators, have Financial Risk Scores of 1-5 and report will meet HUD's requirements. Credit Scores of 1-5. Is there a different D & B report with scores of 100-500? 8 The Mortgage Credit Supplemental sheet identifies a The forms definition of a Principal will be modified to Principal as a 10% LLC Member. In yesterdays reflect Members of an LLC with 25% or more ownership. conversation, Principals were defined as 20% LLC Members. Which is correct? 9 Do we still have to provide the Format for Computing Yes. Fees? 10 Does every page of the Financial Statement need the No. A financial statement certification applies the signed certification? statement(s) identified in the certification and applies to all statements for the specified period or date. Audited financial statements do not require certification. 11 The sole activity of many mortgagor entities is to own See 4 Above the real estate. Therefore, they have no activities that are captured by Dun & Bradstreet and the D & B response is of no value and may not even have a score. We stopped using D & B about 10 years ago because of unsatisfactory information. Will there be some credit verification alternative? 12 $2,500 in accounts payable and accounts receivable No Change that are delinquent over 60 days is too low of a threshold to trigger a discussion with the lender. 13 Do the Project Liability Insurance HUD Notices still Yes, please see lender narrative template. apply under LEAN processing? Question Answer 1 Can an existing survey be provided with the A current ALTA survey that has been reviewed by counsel is application or must it be an updated survey? to be submitted as part of the firm application to HUD. 2 Do the immediate repairs, both critical and non- Yes. critical, need to be broken out to General and Specific? 3 Are non-realty reserves (MME) 15 years as well? Yes. Major movable equipment is considered by the needs assessor and incorporated in the 15-year replacement reserve analysis. 4 Is the 1-10 year period the only years that need to No. The Lender's analysis must demonstrate that the be positive in the reserve schedule? estimated year-end balance for each year through year 15 is positive. 5 Does the Replacement Reserve balance need to The Lender's analysis must demonstrate that the estimated be positive and equal to 2 years of the annual year-end balance for each year through year 15 is positive. deposits? At this time, there is no required minimum balance, but the lender must insure that adequate funds are available, expecially for aging facilities. 6 Is the concept of "Near Term" replacement still No. The needs assessor is to provide a 15-year valid? replacement reserve needs analysis as outlined in the Lean PCNA Statement of Work. There is no need to identify "near term", "long term" or "remainder" components. 7 Is it still okay to verify outstanding Fire, Building, No. Verification must be in writing and submitted with the Zoning Code violations by telephone with the application. If a locale or authority will not issue a letter, local official? contact the HUD Workflow Manager and discuss a waiver or acceptable mitigation. Be prepared to provide evidence from or contact information for the authority that will not provide the confirmation in writing. 8 Is there anything that prevents the Lender from No. The Lender can have the needs assessor provide having the inspector complete forms that are not additional forms or documentation; however, the Lender's required? Underwriter will sign and be responsible for the content of any required HUD underwriting forms in the application submission. 9 What happens when an existing building is not Section 504/UFAS Compliance only applies to the following: 100% UFAS compliant? All housing receiving Federal financial assistance, plus all existing HUD Section 232 New Construction, and existing HUD Section 232 Substantial Rehabilitation (but only those building elements that underwent alteration), built after 1973. When there are violations, the work must be considered Critical Repairs, and be completed prior to closing. 10 Does the PCNA inspector have to show each The PCNA needs assessor needs to include each borrower optional borrower repair by A & E handbook proposed repair that is to be funded by loan funds and/or is Section 5-5.4. considered to be complete by the Appraiser. The needs assessor must determine the acceptability of any proposed repair and their cost in those cases. The repair description must be sufficiently detailed so that an inspection of the completed repair can be done. 11 For UFAS for existing buildings: 1) Do they have Any repairs required for UFAS compliance are critical to be done if they are infeasible? 2) Are they repairs. Elective compliance with UFAS for marketability or always critical or can they be non-critical? other reasons, can be classified as non-critical repairs. Section 504/UFAS Compliance only applies to the following: All housing receiving Federal financial assistance, plus all existing HUD Section 232 New Construction, and existing HUD Section 232 Substantial Rehabilitation (but only those building elements that underwent alteration), built after 1973. 12 UFAS: Will "cost to cure" still be required in any Any repairs required for UFAS compliance are critical cases? repairs. Elective compliance with UFAS for marketability or other reasons, can be classified as non-critical repairs. Section 504/UFAS Compliance only applies to the following: All housing receiving Federal financial assistance, plus all existing HUD Section 232 New Construction, and existing HUD Section 232 Substantial Rehabilitation (but only those building elements that underwent alteration), built after 1973. 13 How do you recommend specific detailed repair A sufficient number of units must be inspected to create lists locations when only a portion of the rooms are of Critical and Non-Critical Repairs that are detailed and generally inspected? i.e. Replace 50% of the AC inspectable. Repair requirements, for example, that state, units - show where? "Replace 50%..." are not acceptable per the Lean PCNA Statement of Work. Participant Question Answer 1 Can we get the Power Point presentation e-mailed to The presentation is available at us? http://portal.hud.gov/portal/page?_pag eid=73,3915250&_dad=portal&_schem a=PORTAL
"Staff Appraisal Template"