Docstoc

AHP DISBURSEMENT MANUAL - Federal Home Loan Bank of Cincinnati

Document Sample
AHP DISBURSEMENT MANUAL - Federal Home Loan Bank of Cincinnati Powered By Docstoc
					                         Page 1




     AHP
  HUD 202/811
   RENTAL
DISBURSEMENT
   MANUAL
Effective February 1, 2011
                                                                                                                                     Page 2



                                              TABLE OF CONTENTS

SUMMARY .................................................................................................................................... 3
DISBURSEMENT AVAILABILITY ............................................................................................ 3
DISBURSEMENT PROCESSING ................................................................................................ 3
DISBURSEMENT CRITERIA ...................................................................................................... 4
DISBURSEMENT FEASIBILITY ................................................................................................. 4
  Reasonableness of Project Development Costs .......................................................................... 5
  Feasibility guidelines .................................................................................................................. 5
DISBURSEMENT TIMELINE AND SUBSIDY ADJUSTMENTS ............................................. 7
  Timeline for Disbursement of Funds .......................................................................................... 7
  Transfer of Funds ........................................................................................................................ 7
  Subsidy Adjustments .................................................................................................................. 7
INITIAL MONITORING AND TENANT FILE INFORMATION .............................................. 8
DOCUMENTS AND FORMS ..................................................................................................... 10
  AHP HUD 202/811 Rental Disbursement Request Instructions .............................................. 10
  Required Documentation Descriptions ..................................................................................... 11
  HUD Rider to the Lender’s Deed of Trust of Mortgage for Tennessee Projects ..................... 27
  HUD Rider to the Lender’s Deed of Trust of Mortgage for Kentucky or Ohio Projects ......... 31
AHP HUD 202/811 Rental Disbursement Request – pdf version ................................................ 35
  Frequently Asked Questions ..................................................................................................... 40
  Common Mistakes .................................................................................................................... 42
STAFF LISTING .......................................................................................................................... 43
                                                                                             Page 3



SUMMARY

This HUD 202/811 Rental Disbursement Manual has been designed as a reference guide for
Sponsors and Members that have been awarded Affordable Housing Program (AHP) funds by the
FHLBank of Cincinnati for HUD 202/811 rental projects. Instructions for accessing funds,
checklists, feasibility guidelines, and retention language (Rider to the lender’s Deed of Trust (or
Mortgage)) are included in this manual.
Please review the manual prior to submitting a request for funding. The AHP HUD 202/811
Rental Disbursement Request must be completed by both the Sponsor and the Member. Use the
Disbursement Request form and this manual to identify acceptable documentation for drawing
funds.
You must complete the proper forms and submit the necessary documentation so that the request
may be processed as expeditiously as possible. Please allow at least 30 days for processing a
disbursement request.
For questions regarding funding, please contact the Housing Program Manager/Disbursements.



DISBURSEMENT AVAILABILITY
Disbursements will be processed by the FHLBank in accordance with the FHLBank’s procedures
and guidelines for funding of subsidies and all applicable monitoring policies, which are published
on the FHLBank’s website, www.fhlbcin.com.

Restricted Access to AHP Subsidy
The FHLBank reserves the right to deny or delay subsidy disbursement to a Member or Sponsor if:
   1. Either the Member or the Sponsor has failed to respond to a prior FHLBank request for
      information regarding this or other AHP projects, or
   2. If the Member or Sponsor has been asked by the FHLBank to cure a noncompliant situation
      and resolution is pending, or
   3. The Sponsor currently has other older, open, and incomplete AHP projects that must be
      closed or making adequate progress towards completion.



DISBURSEMENT PROCESSING
In processing disbursement requests, the FHLBank reviews the information submitted with the
disbursement request and other pertinent project information obtained from the Member and
Sponsor during the review process. The FHLBank verifies that the project continues to qualify for
the awarded subsidy based on the applicable threshold requirements and scoring criteria and that
the Member and Sponsor have complied with the obligations committed to in the approved
application. The FHLBank re-evaluates the financial and operational feasibility of the project and
                                                                                               Page 4


verifies the project’s continued need for subsidy. Members and Sponsors requesting AHP funds
from the FHLBank must have documents in place in a form satisfactory to the FHLBank to meet
the requirements of the AHP Regulation and may be required, upon the FHLBank’s request, to
provide copies of such documents to the FHLBank prior to the FHLBank’s disbursement of funds.
Below is a detailed list of documents required for disbursement processing. The FHLBank
reserves the right to request further documentation as necessary.
All AHP funds are subject to the FHLBank’s funding requirements. Receipt of a disbursement
does not guarantee compliance with the AHP guidelines. The FHLBank reserves the right to
reduce or recapture funds at any time, should the project be found out of compliance, costs
presented are not reasonable, or no longer demonstrate the need for subsidy.




DISBURSEMENT CRITERIA
HUD 202 or 811 rental projects can submit a disbursement request upon completion of the initial
closing with HUD.

To draw the remaining AHP grant monies and/or to close out the project, HUD 202 or 811 rental
projects must submit the project completion documents as evidenced on the Disbursement Request
form.

All disbursements will require certain documentation necessary for the FHLBank to process the
request. The documents required will be described in detail towards the end of this manual. Note,
check the FHLBank’s website for any changes to the definitions as indicated in the AHP
Implementation Plan which guides the administration of the AHP program.



DISBURSEMENT FEASIBILITY

The project must meet all feasibility requirements and guidelines outlined here or provide
explanations satisfactory to the FHLBank for any values outside the guidelines. Projects that
deviate from these parameters will undergo additional review and underwriting to determine the
reason for, and the reasonableness of, any deviation. Based on this review and underwriting,
staff may work with project Sponsors or owners to make adjustments to the financial information
submitted at application or at disbursement to ensure that the information accurately reflects the
nature and financial structure of the project.
The FHLBank may also allow reasonable deviations from the guidelines, based on the nature,
location, and type of the project and based on explanations provided by the Sponsor to justify
such deviations. However, the Sponsor or project owner is ultimately responsible for ensuring
that financial information is correct and consistent and that the project’s financial structure meets
the FHLBank’s guidelines, or that any deviations are adequately explained, justified, and
documented. The FHLBank assumes no obligation to reconcile conflicting information, accept
                                                                                              Page 5


incomplete information, or seek additional information or clarification that is not provided at
time of application or disbursement request.


Reasonableness of Project Development Costs
Project feasibility will be reviewed and assessed at time of application, at time of disbursement,
and at any project modification. The FHLBank will determine the reasonableness of proposed or
actual costs based on its experience with similar projects, similar locations, and similar
populations being served. The FHLBank’s determination will be final and any costs determined
not reasonable will be disallowed and will not be reimbursed with AHP funds.


Feasibility guidelines
 The following guidelines represent targets and parameters for use in determining feasibility
 of AHP projects. Projects that deviate from these parameters will undergo additional review
 and underwriting to determine the reason for, and the reasonableness of, the deviation.
 Projects which are outside any of the guidelines may be rejected.

                  Criterion                                    Ranges – Limits

 Rental Housing:

 Debt Coverage Ratio (Operating
 Income – Replacement Reserves) /              1.15-1.35 (for projects with permanent debt)
 Total Debt Service
                                         O
                                         R
 Expense to Income Ratio (Total
 Operating Expenses + Replacement              => 80% (for projects without permanent debt)
 Reserves) / Net Income)

 Vacancy Ratio                                     5% - 10% (except for “shelter” projects)

 Capitalized Reserves (Lease-up reserve, operating reserve, and replacement reserve): Must
 not exceed what is approved at time of approved application. If exceeds the approved
 amount, an explanation must be submitted.
   Special Needs (Non-Elderly) &               Maximum 15 months of Operating
   Historic Downtown Rehabilitation            Expenses, Replacement Reserves, and Debt
                                               Service

                                               Maximum 12 months of Operating Expenses,
   All other projects
                                               Replacement Reserves, and Debt Service

 Replacement/Operating Reserves                Must not exceed what is approved at time of
                                               approved application. If exceeds the approved
                                                                                             Page 6


                                            amount, an explanation must be submitted.
                                            Maximum $400 per unit per year

 Net Cash Flow                              Must be positive through year 15; and be
                                            between 10%-30% of annual operating
                                            expenses plus replacement reserves in year 1
                                            for projects with hard debt

 Operating Cost per unit (Total Operating   Maximum $4,500 (except for “shelter” and
 Expenses/# Unit                            group home projects for which the maximum is
                                            $3,500 per bed)

 Management Fee                             Maximum 10% of Net Income

 Sale price per dollar of tax credits       Minimum $.65

 Total Development Cost per Unit            Target $175,000 (except for “shelter” and group
                                            home projects for which the target is $40,000)

 Construction Hard Costs                    Minimum 75%
 (percent of total development cost)

 Total Rehab Costs per Unit (Owner-         Between $5,000 and $50,000
 occupied rehab)

 Developer Fee as a percent of Total        Must not exceed what is approved at time of
 Development Cost, not including such       approved application. If exceeds the approved
 fees                                       amount, an explanation must be submitted.
                                            Maximum 15% for rental new construction and
                                            rehab and ownership new construction projects
                                            Up to 20% for certain tax credit projects (see
                                            descriptions above)
                                            Maximum of 5% for ownership projects
                                            involving only acquisition of properties by
                                            homebuyers
                                            Maximum of 10% for owner-occupied rehab
                                            projects (with other restrictions and limitations)

From the operating budget (Attachment C):
    Net Rent = (Gross Residential Rent + Operating Subsidy) – Vacancy Loss
    Gross Income = Net Rent + Other Income
    Operating Income = Gross Income – Total Operating Expenses
    Net Cash Flow = Operating Income – Replacement Reserves - Debt Service
                                                                                            Page 7


    Vacancy Ratio = Vacancy Loss / Net Rent
    Management Fee Percentage = Management Fee / Net Income
    Debt Coverage Ratio = (Operating Income – Replacement Reserves) / Total Debt Service
    Expenses to Income Ratio = (Total Operating Expenses + Replacement Reserves) / Gross
    Income


From the development budget (Attachment A):
    Developer Fee = Developer Fee and Overhead + Consultant Fee (+ Construction
    Management Fee for projects in which the Sponsor is the general contractor)
    Developer Fee Percentage = Developer Fee / Total Development Cost
    Total Hard Cost Percentage = Total Hard Costs / Total Development Costs




DISBURSEMENT TIMELINE AND SUBSIDY ADJUSTMENTS
Timeline for Disbursement of Funds
Once the Disbursement Request with all supporting documentation is received, the FHLBank will
begin analyzing the information and will contact the Sponsor and the Member via fax or email
should additional information or clarification be required. All disbursements will be processed in
the order in which they are received.
Please allow at least 30 days for the processing of all disbursement requests. However, should the
FHLBank receive incomplete or incorrect documentation, delays in the disbursement process
could occur. Upon a complete review, additional information is requested and the requested
information should be received by the FHLBank within 30 days. For a timely receipt of funds,
refer to the Frequently Asked Questions and Common Mistakes section of this Manual for tips on
how to avoid unnecessary delays.


Transfer of Funds
Once your request has been approved, the Member and Sponsor will receive a Confirmation of
AHP Funds Disbursement via fax or email confirming the amount disbursed for the project.
Within one business day, the FHLBank will electronically deposit the approved funds into the
Member’s Demand Deposit Account with the FHLBank. If the Member does not receive the
funds within this timeframe, please contact the Housing Program Manager/Disbursements for
assistance.


Subsidy Adjustments
The FHLBank reserves the right to make reasonable adjustments to all Disbursement Requests at
the FHLBank’s discretion, in accordance with the FHLBank’s procedures and guidelines for
                                                                                              Page 8


funding of subsidies and all applicable monitoring procedures. The majority of subsidy
adjustments occur if the project’s funding sources have changed and there is no longer a need for
subsidy, if the project no longer meets the applicable scoring criteria as outlined in the AHP
Agreement, if the project does not meet the income eligibility criteria or feasibility guidelines, if
AHP monies are being used for ineligible expenses, or if the costs presented are not reasonable. If
you have questions regarding an adjustment made to your Disbursement Request or the total
amount of your AHP award, please contact the Housing Program Manager/Disbursements for
more information.



INITIAL MONITORING AND TENANT FILE INFORMATION
This phase of Initial Monitoring on rental projects begins nine months after the latter of project
completion or final disbursement. At that time the FHLBank will request that the
Sponsor/Owner and Member submit a completed Initial Owner’s/Member’s Certificate of
Program Compliance and an occupancy. The information supplied by the occupancy report will
be used for the Initial Certification Audit. Reference the Implementation Plan – Monitoring
Policy for more information.

The purpose of this tenant file information list is to provide AHP rental project Owners with an
outline of information that should be obtained at a minimum prior to tenant/resident move-in and
maintained in the tenant/resident files for the duration of the retention period.

1. Housing Intake/Tenant Application Form should include:
    Date of Occupancy/Move-in Date
    Unit Number
    Unit Size (Bed, SRO, Efficiency, 1bdrm, 2bdrm, etc.)
    Tenant Name (Head of Household) or Tenant ID Number
    Household Size (Total number of Household Members)
    List of all Household Members and their ages
    Total Annual Household Income for all Household Members
    Source of Income for each adult Household Member
    Signed and dated by Tenant and project owner representative/management
      company/property manager
    Other: Unit transfer and transfer date (if applicable)

2. Verification of Income dated in the tenants/resident’s move-in year and prior to the move-in
   date. FHLBank uses HUD Handbook 4350.3, Appendix 3: Acceptable Forms of
   Verification, such as:
    Two consecutive pay stubs
    Verification of Employment form
    Social Security or Supplemental Income benefits letter or verification form
    Zero Income Certification (Required for all adults 18 years and older with no income.)

3. Lease or Rental Agreement, signed and dated by tenant/resident and project owner
   representative/management company/property manager. Lease should include:
                                                                                             Page 9


      Tenant Name (Head of Household)
      Property address,
      Unit number,
      Unit size (Bed, SRO, Efficiency, 1 bdrm, 2bdrm, etc.),
      Lease term,
      Amount of rent to be paid by tenant, and
      Total contract rent (Tenant paid rent plus any rental subsidy paid on behalf of the tenant.)

3. Verification of Homeless Household Status signed and dated in the tenants/resident’s move-
   in year and prior to the move-in date. (if applicable to the project)
    Third-party verification from an authorized provider such as shelter/transitional housing
       personnel or case manager which clearly states the condition that qualifies the household
       under the AHP Homeless Household definition.
    FHLBank sample form can be used, if submitted with stated support document.

4. Verification of Special Needs Household Status signed and dated in the tenants/resident’s
   move-in year and prior to the move-in date. (if applicable to the project)
    Third-party verification from an authorized provider such as a physician or licensed
      practitioner which clearly states the condition that qualifies the household under the AHP
      Special Needs definition.
    FHLBank sample form can be used, if submitted with stated support document.

5. Verification of compliance with Fair Housing Regulations
    Housing Intake forms, Tenant Applications and/or Lease/Rental Agreements should
      contain at a minimum a Fair Housing logo.
    A Fair Housing statement on any other document provided to and/or visible to residents.
                                                                                              Page 10




DOCUMENTS AND FORMS
AHP HUD 202/811 Rental Disbursement Request Instructions
Collaboration between the project Member and Sponsor is necessary to complete the request form
and provide the required documentation. Please follow the steps below to request funds. If you
need additional assistance, contact the Housing Program Manager/Disbursements.

Step 1: Complete the AHP HUD 202/811 Rental Disbursement Request

      All sections on the Disbursement Request form must be completed. Attach additional
       sheets if necessary to provide any explanations. An incomplete request form or missing
       documentation may delay the funding process.
      If there is no change or the question is not applicable, please check the “N/A” box.

Step 2: Provide Required Documents

For all funding disbursements:
      The Affordable Housing Program Agreement and Contingency letter must be signed by the
       project Member and Sponsor and returned to the FHLBank with original signatures.
      Additional documents are necessary. Please see the AHP HUD 202/811 Rental
       Disbursement Request checklist for required documentation and this manual for required
       formatting. Incomplete or missing documentation may delay the funding process.

Step 3: Obtain Required Signatures

      The AHP HUD 202/811 Rental Disbursement Request form must have signatures from both
       the project Member and Sponsor contacts.

Step 4: Submit the AHP HUD 202/811 Rental Disbursement Request with all required
supporting documentation
      By Mail:
         Housing and Community Investment
         Federal Home Loan Bank of Cincinnati
         221 E. 4th Street
         Cincinnati, OH 45202
Step 5: Submit additional information needed as requested, if applicable
    By Email: AHPDisbursement@fhlbcin.com
          o Subject line must indicate: [Project number] Disbursement
    By Fax: 513-852-7647
                                                                                         Page 11



Required Documentation Descriptions

REQUIRED DOCUMENTATION DESCRIPTIONS
     AHP HUD 202/811 Rental          Must be executed by the Sponsor and Member contacts
     Disbursement Request            and all sections of the request form must be completed.
                                     Check the box for “Already on File,” “Enclosed,” or
                                     “N/A.”
1a   Executed copies of the          Must be executed by two signers from the Member bank
     following documents with        authorized to draw funds from the FHLBank. Original
     original signatures             signatures are required. This document was mailed to
                                     the Member contact when the project was approved.
                                     This is only required one time.

1b   Affordable Housing Program      Must be executed by the Member and Sponsor contacts.
     Agreement                       This document was mailed to the Sponsor and Member
                                     contacts when the project was approved. Original
                                     signatures are required. This is only required one time.
1c   Contingency Letter              Must be executed by the Member and Sponsor contacts.
                                     This document was mailed to the Sponsor and Member
                                     contacts when the project was approved. Original
                                     signatures are required. This is only required one time.
2a   Executed Firm Commitment        Must be executed and the form contain the identification
     for Capital Advance Financing   number at the bottom right-hand corner of 92432.
     (92432)
2b   Executed Rental Housing         Must be executed and the form contain the identification
     Program Income Analysis &       number at the bottom right-hand corner of 92264 and
     Appraisal (92264) and           92264-A.
     Supplement to Analysis
     (92264-A)
2c   A schedule of rents and a 15    Must be the schedule of rents and operating budget that
     year operating budget –         matches the form 92264. Must also remain with positive
     statement of income and         or even cash flow for the 15 year compliance period. If
     expenses. It must tie back to   the project goes negative year 12 or after, an explanation
     the 92264                       is needed as to how the project will cover this lose. If the
                                     project goes negative year 11 or before, the project is not
                                     eligible for AHP monies.
2d   Executed Construction           Must be executed and the form contain the identification
     Contract (92442 or 92442A       number at the bottom right-hand corner of 92442 or
     and 2328, if applicable). The   92442A and 2328. The amounts on both forms must
     amounts on both forms must      match.
     match.
                                                                                       Page 12


2e   Request for Construction        Must be executed and the form contain the identification
     Changes on Project Mortgages    number at the bottom right-hand corner of 92437 if the
     (92437) (If applicable)         project has this form.
2f   Executed Project Rental         Must be executed and the form contain the identification
     Assistance Contract – Part I    number at the bottom right-hand corner of 90173-A.
     (90173-A).
2g   Specimen or executed copy of    Must be the specimen or executed copy and the form
     Agreement and Certification     contain the identification number at the bottom right-
     (93566-CA)                      hand corner of 93566-CA.
2h   HUD executed Requisition for    Must be executed and the form contain the identification
     Disbursement of Funds (All      number at the bottom right-hand corner of 92403. This
     available) (92403)              form must also contain the amount of money due from
                                     the project owner/developer at the of initial HUD
                                     closing.
3a   Completed and executed AHP Must be the completed and executed AHP Sponsor
     Sponsor Commitment         Commitment Verification Form that is located on the
     Verification form (on      FHLBank website.
     website)
                                Check which of the approved activities have been
                                completed and describe, if applicable.
                                     If the project was not approved with the Sponsor
                                     completing any of the activities listed on the form, the
                                     form is not required.
3b   Sponsor cash contribution       Must submit a copy of the cancelled check or a current,
     verification, if applicable     executed letter from the Sponsor indicating the amount
                                     given to the project.

                                   Must be shown on a final development budget
                                   evidencing at least $250 for 2007 and earlier projects and
                                   at least $500 for 2008 and forward projects.
4    If this is a rehabilitation   Maintenance costs are an ineligible use of AHP monies
     project, is there any         and must not be included in the development budget.
     maintenance costs included in Maintenance costs include the cost to maintain or upkeep
     the final development budget? a property. These costs may be minor or major in cost
     Maintenance costs are         and nature, and can apply to either the interior or exterior
     ineligible costs.             of the property. The costs also may include; specifically,
                                   getting the unit ready for the next tenant once the
                                   previous tenant vacates.
                                                                                           Page 13


5     Do the developer fee and          All of the following cannot exceed the amounts (or
      capitalized reserves in the       percentage, whichever is greater) in the approved AHP
      development budget and            application:
      replacement reserves in the            Developer fee (includes developer fee, developer
      operating budget exceed what              overhead, consultant, and construction
      the project was approved for              management if the Sponsor is the general
      at original AHP application?              contractor) on the development budget
      If “Yes”, an explanation must          Capitalized reserves (includes operating reserve,
      be provided.                              lease-up reserve, and replacement reserve) on the
                                                development budget
                                             Replacement reserves on the operating budget.

                                        If these amounts exceed what was in the approved AHP
                                        application, a detailed explanation must be submitted. If
                                        the explanation is not accepted by the FHLBank, the
                                        AHP monies will be reduced by the difference.

                                        If an additional developer fee is given as a part of the
                                        contingency not used in the construction costs, the AHP
                                        grant will be reduced by this amount as this is an
                                        ineligible use of AHP subsidy.
6abc Verification of land cost paid     Must be documented with one of the following to verify
     by Sponsor                         the price of the land paid by or donated to the Sponsor:
      Verification that the price             HUD-1 Settlement Statement executed by both
      paid by the Sponsor is at least          buyer and seller or settlement agent
      50% below-market                        Warranty deed evidencing the amount
      Verification that land was              Purchase contract
      donated to the Sponsor                  Letter from the grantor
                                        The development budget must contain amount paid for
                                        the land if it is part of the project costs.

                                        If the land is donated, the market value of the land can be
                                        shown as a source and an expense on the development
                                        budget, but it does not have to appear on the budget.
6d    Appraisal or Property Value       Must verify the market value of the land with an
      Assessment dated within one       appraisal or Property Value Assessment (PVA) from the
      year of the acquisition date by   county recorder’s office (some have websites) dated
      Sponsor to document the           within one year of the acquisition date.
      market land value
                                        Related-party transactions require an appraisal.
                                        “Related party” means any party related by family,
                                        business, or personal interest to a Sponsor, Member, or
                                        other party directly involved in an AHP project.
                                                                                           Page 14


                                     Developer, tax credit syndicator, consultant, property
                                     manager, service provider, and contractor are all
                                     considered parties directly involved in an AHP project.
                                     Related parties would include any persons related by
                                     family, business, or personal interest to any member of
                                     the Sponsor’s board of directors or staff, the Member’s
                                     board of directors or staff, or the board of directors or
                                     staff of any other party directly involved in an AHP
                                     project.
                                     If the land price paid is greater than the market value, the
                                     grant amount will be reduced by the difference unless:
                                           The project was reduced for this reason at the
                                            time of approval as the AHP subsidy is being
                                            used to acquire the property, or
                                           Submit a current, executed letter from a funding
                                            source shown on the final development budget for
                                            the homebuyer indicating their funds are paying
                                            for the land cost that exceeds the market value.
                                            Acceptable sources to cover this can be the
                                            permanent mortgage, Sponsor fundraising, or
                                            other grants. The development budget must
                                            support the amount indicated in the letter.
7   Evidence of ALL funding
                                     If the project was approved for SHOP, NSP, HOME
    sources shown on the             funds, etc., the executed grant agreements must be
    development budget. Include      submitted.
    copies of all executed funding
    grant agreements, equity         If the project was approved for a cash contribution from
    letters, Notes and Mortgages     the Member, see #15e for information on how to verify
    (Deeds of Trust), etc.           this.
                                     If the project was approved for a cash contribution from
                                     the Sponsor, see #3b for information on how to verify
                                     this.
                                     If the project was approved for a cash contribution from
                                     any other source, a current executed letter verifying the
                                     cash contribution or cancelled check must be submitted.
                                     For other permanent loans, the executed Note and
                                     Mortgage (Deed of Trust) must be submitted and must tie
                                     to the debt service on Attachment C (operating budget).
                                     If approved sources were not used for the project,
                                     indicate the reasoning for this in the disbursement
                                     package submitted.
                                                                                           Page 15


8     If there are Social Service      If the project was approved with Social Service Fees and
      Fees and Income on the           Income as part of the project as indicated in the approved
      operating budget submit a        Attachment C (operating budget), must submit a current
      current cost breakout of the     cost breakout of the Social Service fees and what income
      fees and income                  sources are used to cover these fees. The total amounts
                                       for Social Service fees and income must match the
                                       amounts on the Final Attachment C submitted.
9     If the operating budget          If the project was approved with operating subsidies and
      contains operating subsidies,    the amount must be indicated on the final Attachment C
      a current operating subsidy      submitted, must submit the current executed operating
      agreement is required. If the    agreement. If the amounts on the agreement and
      amount in the agreement does     Attachment C do not match one another, a breakdown
      not match operating subsidy      indicating how the amount on Attachment C was
      amount on the operating          calculated from the amount on the Agreement must be
      budget, an explanation must      submitted.
      be submitted.
10    If the project was approved      Must submit an explanation of how the tenants will pay
      with over 50% of the units       their rent if the project was approved with more than 50
      targeted to homeless units and   percent of homeless units and is not receiving project-
      is not receiving rental          based rental subsidy.
      subsidy, an explanation of
      how the tenants will pay their   If the Sponsor is covering the rents with fundraising
      rent must be submitted. If       dollars, the following must be submitted:
      fundraising is being used to           Two previous years audited statements which are
      cover rents, two previous                required to verify that the Sponsor has enough
      years’ audited statements                equity to operate the project.
      from the Sponsor and a                 A resolution adopted by the Board of Directors
      Sponsor Board Resolution                 acknowledging the amount of fundraising
      must be submitted.                       committed to support operations of the project
                                               over the 15-year life of the project. The amount
                                               committed should match any fundraising or cash
                                               contributions identified for operations in
                                               Attachment C.
11a   Tenant on the Sponsor’s          Must submit a certification from the non-profit Primary
      Board of Directors               Sponsor's board of directors demonstrating the following:
                                            1. That a tenant of the project, selected by the
                                               tenants, will be given a position on the non-profit
                                               organization's board of directors (with all rights
                                               and responsibilities);
                                            2. Outline procedures which describe the selection
                                               process including eligibility and filling vacancies;
                                            3. Signed by the Board Chair or Secretary.
                                                                                         Page 16


11b   Property vacant due to
                                      Must be documented with one of the following:
      foreclosure, deed in lieu, or
      short sale at purchase                 Foreclosure sale document
                                             Evidence that the borrower conveyed property
                                              back to lender
                                             Letter from the lender
                                             Some other comparable document.
                                      AND evidence that the property was vacant at the time it
                                      was acquired by the Sponsor through one of the
                                      following:
                                             Photos dated within one year of the acquisition
                                             Appraisal dated within one year of the
                                              acquisition
                                             Other FHLBank approved documentation

                                      Units qualifying for these points must have been
                                      acquired by the AHP Sponsor (or household AHP
                                      recipient) directly from the foreclosure or sheriff’s sale,
                                      auction, or lender involved in the foreclosure. Properties
                                      that use the county or city as the intermediary between
                                      the lender and the Sponsor also qualify under this scoring
                                      criterion. Units that passed through the ownership of
                                      other entities except for the city or county subsequent to
                                      the foreclosure process but prior to acquisition by the
                                      AHP Sponsor (or the household AHP recipient) DO
                                      NOT qualify for points under the AHP program.

                                      Projects were approved with at least 20% and up to
                                      greater than 50% of the units meeting this criterion at
                                      application.

                                      May have been submitted at time of approved AHP
                                      application.
11c   Property being rehabbed was
                                      Must be documented with one of the following to
      vacant due to foreclosure or    evidence that the property was vacant at the time it was
      other at purchase               acquired by the Sponsor:
                                             Photos dated within one year of the acquisition
                                             Appraisal dated within one year of the
                                              acquisition
                                             Other FHLBank approved documentation
                                      Projects were approved with at least 20% of the units
                                                                                        Page 17


                                     meeting this criterion.

                                     May have been submitted at time of approved AHP
                                     application.
11d   8 hours of landscaping         Must be documented with one of the following:
      detailing the activities
      performed                            Current, executed letter from a community
                                            organization indicating that the 8 hours of
                                            landscaping labor has been provided and what
                                            activities were completed.
                                           Email that contains the contact name and
                                            information, and the organization’s name that
                                            indicates that the 8 hours of landscaping labor has
                                            been provided and what activities were
                                            completed.
                                     For 2007 projects, this commitment must be from the
                                     Member bank.
11e   40 hours of construction labor Must be documented with one of the following:
      detailing the activities
      performed                         Current, executed letter from a community
                                           organization indicating that the 40 hours of
                                           construction labor has been provided and what
                                           activities were completed.
                                           Email that contains the contact name and
                                            information, and the organization’s name that
                                            indicates that the 40 hours of construction labor
                                            has been provided and what activities were
                                            completed.
                                     For 2007 projects, this commitment must be from the
                                     Member bank.
11f   Donation of at least $500 in   Must be documented with one of the following:
      goods/services
                                           Current, executed letter from an organization
                                            indicating that they have provided the service or
                                            good and that it is worth at least $500.
                                           Email that contains the contact name and
                                            information, and the organization’s name that
                                            indicates that they have provided the service or
                                            good and that it is worth at least $500
                                     The donation must be for an eligible cost as indicated on
                                     the development budget.
                                                                                         Page 18


11g   Fee waiver from the local       Must be a current, executed letter from a government
      government or at least $500     organization indicating that they have provided the fee
                                      waiver for the project and the value of the savings to the
                                      project.
12a   Executed forgivable             Must be a forgivable Note between the Member and the
      Promissory Note for the         Sponsor/Owner for the amount of the AHP grant and the
      amount of the AHP grant from    document must be executed.
      the Member to the
      Sponsor/Owner
12b   Executed Deed of Trust (or      Must submit an executed Deed of Trust (or Mortgage)
      Mortgage) and Rider (found in   and FHLBank Rider attached to the document for the
      the Manual) for the amount of   amount of the AHP grant from the Member to the
      the AHP grant from the          Sponsor/Owner.
      Member to the
      Sponsor/Owner.                  There is a separate Rider that needs to be attached for
                                      Tennessee projects and Kentucky or Ohio projects –
                                      make sure the correct one is being used. The Rider must
                                      contain the loan number on it of the Mortgage or Deed of
                                      Trust.

                                      If the deed states an ending date of the retention
                                      language, this date must correspond to 15 years after the
                                      completion date.

                                      “Retention period” means: Fifteen (15) years from the
                                          date of project completion for a rental project or in
                                          the case of rehabilitation of units currently occupied
                                          where there is no closing, fifteen (15) years from the
                                          date that such rehabilitation is complete as evidenced
                                          with the Certificate of Occupancy or other
                                          documentation as requested in #2.
13a   Does the Housing                The Housing Intake/Tenant Application Form must
      Intake/Tenant Application       include all of the following below at a minimum. If the
      Form include all of the         form does not, all of the criteria below must be added
      following below?                and submit the updated form.
                                             Date of Occupancy/Move-in Date
                                             Unit Number
                                             Unit Size (Bed, SRO, Efficiency, 1bdrm,
                                                2bdrm, etc.)
                                             Tenant Name (Head of Household) or Tenant
                                                ID Number
                                             Household Size (Total number of Household
                                                Members)
                                             List of all Household Members and their ages
                                             Total Annual Household Income for all
                                                Household Members
                                                                                             Page 19


                                                 Source of Income for each adult Household
                                                  Member
                                               Signed and dated by Tenant and project owner
                                                  representative/management company/property
                                                  manager
                                       Other: Unit transfer and transfer date (if applicable)
13b   Does the Lease or Rental         The Lease or Rental Agreement, signed and dated by
      Agreement, signed and dated      tenant/resident and project owner representative/
      by tenant/resident and project   management company/property manager must include all
      owner representative/            of following below at a minimum. If the form does not,
      management company/              all of the criteria below must be added and submit the
      property manager, and            updated form.
      include all of the following           Tenant Name (Head of Household)
      below?                                 Property address,
                                             Unit number,
                                             Unit size (Bed, SRO, Efficiency, 1 bdrm, 2bdrm,
                                                  etc.),
                                             Lease term,
                                             Amount of rent to be paid by tenant, and
                                       Total contract rent (Tenant paid rent plus any rental
                                       subsidy paid on behalf of the tenant.)
14    Supportive Services Plan         Must submit a Supportive Services Plan for the project.
15a   Permanent loan from the          Must be documented with executed copies of Note(s) and
      Member                           Mortgage(s) (Deed(s) of Trust) showing the Member as
                                       lender.
15b   Bridge or construction loan      Must be documented with executed copies of Note(s) and
      from the Member                  Mortgage(s) (Deed(s) of Trust).
15c   Below-market rate on the         Must be documented with one of the following:
      permanent, construction, or
      bridge loan from the Member                Executed Note and a copy of the standard rate
                                                  sheet for loans of this type offered by the
                                                  Member and published for the general public
                                                 Current, executed letter from the Member bank
                                                  indicating the below-market interest rate for the
                                                  project and how the interest rate is below-market.
15d   Reduced/waived fee on the
                                       Must be documented with one of the following:
      permanent, construction, or
      bridge loan from the Member                Settlement Statements which indicates the actual
                                                  costs and fees charged for the loan and general
                                                  lending program documents which indicate the
                                                  normal fees and costs associated with that type of
                                                  loan.
                                                 Current, executed letter from the Member bank
                                                  explaining the reduced costs/fee waivers for the
                                                  project.
                                                                                        Page 20


15e   Cash contribution from the     Must be a copy of the cancelled check. This contribution
      Member                         must be listed as a source on the final development
                                     budget for the project.
16    Executed Project Owner &       Must submit an executed 9839-b form, Management
      Management Agent’s             Contract, and Management Agreement, even if the
      Certification (9839-b),        Sponsor is the manager of the project, which must
      Management Contract, and       contain at a minimum the following points.
      Management Agreement which
      contains at a minimum:
16a   Fair housing policies      Must indicate the fair housing policies used in the
                                 project.
16b   Tenant intake procedures       Must outline the tenant intake procedures for the project.
16c   State that the rents charged   Must indicate that the rents charged for income-targeted
      for income-targeted units do   units do not exceed 30 percent of monthly area median
      not exceed 30 percent of       income (AMI).
      monthly area median income
      (AMI)
16d   Management fee stated if       Must indicate the management fee given to the
      project NOT managed by the     management company if not self-managed. This amount
      Sponsor                        must match the amount on the final Attachment C
                                     (operating budget) submitted.
16e   Income targeting matching      Must indicate the income targeting (number of units and
      the approved AHP application   percentage of area median income) matching the
      – number of units and          approved AHP application and either final Attachment B
      percentage of area median      (rental project worksheet) or Final Tax Credit Proforma
      income                         submitted.
16f   Number of homeless units       Must indicate the number of homeless units matching the
      matching the approved AHP      approved AHP application.
      application
                                     The units that qualify as homeless must meet the
                                     following FHLBank definition:
                                     “Homeless household” means a household made up of
                                     one or more individuals, who:
                                         1) Reside in overcrowded housing; “overcrowded
                                            housing” means a housing unit occupied by
                                            more than one household or any housing unit
                                            with an average of more than two persons per
                                            sleeping area (including a living room as a
                                            sleeping area); or
                                         2) Are facing imminent loss of their home due to
                                            condemnation or eviction; or
                                         3) Lacks a fixed, regular, and adequate nighttime
                                            residence; or
                                                                                 Page 21


                                 4) Has a primary nighttime residence that is:
                                      a)   A supervised publicly or privately operated
                                           shelter designed to provide temporary
                                           living accommodations (including welfare
                                           hotels, congregate shelters, and transitional
                                           housing for the mentally ill);
                                      b) An institution that provides a temporary
                                         residence for individuals intended to be
                                         institutionalized;
                                      c)   A public or private place not designed for,
                                           or ordinarily used as, a regular sleeping
                                           accommodation for human beings;
                                     d) A “mobile home” that does not meet the
                                          requirements of the National Manufactured
                                          Housing Construction and Safety Standards
                                          Act, Title VI, Public Law 93-383; 42
                                          U.S.C. 5401, appearing at 24 CFR 3280, et
                                          seq., generally referred to as “pre-1976
                                          mobile homes.”
Number of special needs or   Must indicate the number of special needs or elderly
elderly units matching the   units matching the approved AHP application.
approved AHP application
                             The units that qualify as elderly must meet the following
                             FHLBank definition:

                             “Elderly” means any person aged 55 or older; or for Tax
                             Credit projects, any person defined as "elderly" by the
                             applicable Tax Credit Qualified Allocation Plan

                             The units that qualify as special needs must meet the
                             following FHLBank definition:

                             “Special Needs” means any person meeting the definition
                                 of “elderly” or any person or household meeting one
                                 of the following additional definitions:
                                 1) “Physically disabled” means any person: a)
                                    With a physical impairment which results in
                                    substantial functional limitations and who is
                                    receiving disability benefits from federal or state
                                    government; or b) Who is deemed physically
                                    disabled by a licensed physician who attests that
                                    by reason of this impairment is unable to
                                    perform life roles in at least one of the major
                                    domains of living, working, learning, or
                                             Page 22


    socializing.
2) “Mentally disabled” means any person: a) Who
   is diagnosed with a psychiatric disorder and
   who is receiving disability benefits from federal
   or state government; or b) Who is deemed to
   have a comparable long-term mentally disabling
   condition by a qualified professional, such as a
   licensed psychiatrist, psychologist, or clinical
   social worker, who attests that by reason of this
   impairment is unable to perform life roles in at
   least one of the major domains of living,
   working, learning, or socializing.
3) “Developmentally disabled” means any person:
   a) With a severe chronic developmental
   disability who has been diagnosed with mental
   retardation and who is receiving disability
   benefits from federal or state government; or b)
   Who is deemed developmentally disabled by a
   licensed physician who attests that by reason of
   this impairment is unable to perform life roles in
   at least one of the major domains of living,
   working, learning, or socializing.
4) “Co-occurring disabled” means any person: a)
   Diagnosed as having both a psychiatric disorder
   as well as a substance abuse/dependency (co-
   occurring) and who is receiving disability
   benefits from federal or state government; or b)
   Who is deemed to have a comparable long-term
   co-occurring condition by a licensed
   psychiatrist, psychologist, or clinical social
   worker, who attests that by reason of this
   impairment is unable to perform life roles in at
   least one of the major domains of living,
   working, learning, or socializing.
5) “Physically or emotionally abused” means any
   person who is or will be residing in a place
   protecting such person from such physical or
   emotional abuse;
6) “Chemically dependent” means any person with
   a history of substance abuse/dependency who is
   receiving treatment for the abuse/dependency
   from a licensed physician, psychiatrist,
   psychologist, or clinical social worker; or who is
   receiving treatment in a recognized therapeutic
                                                                                           Page 23


                                                 program;
                                            7) “Persons with AIDS” means any person with a
                                               medical diagnosis of Auto Immune Deficiency
                                               Syndrome or who is medically diagnosed as
                                               HIV positive and who is receiving medical care
                                               for the condition diagnosed;
                                             8) The FHLBank will also consider other limiting
                                                factors and conditions in defining “special
                                                needs” to ensure that no person or household will
                                                be unnecessarily or inadvertently excluded under
                                                the definition above.
16h   Management will assist            If approved in the AHP application, must indicate that
      tenants in the formation of a     management will assist the tenants of the project in the
      tenants association, if           formation of a tenants association. The association can
      applicable                        only contain tenants of this project and the tenants cannot
                                        join an existing tenant association of another project.
16i   Management will make              If approved in the AHP application, must indicate that
      empowerment services              management will make available the empowerment
      available as committed to in      services such as credit counseling/ budgeting, case
      the approved AHP                  management, transportation, employment training, etc. to
      application, such as credit       the tenants of the project.
      counseling/budgeting,
      transportation, employment
      training, etc.
17.   Documents must be submitted       All of the following documents must be submitted at
      after closing or completion:      time of closing or completion. The FHLBank must have
                                        all of the following documents to close the project.
17a   Evidence of Completion (i.e.      The FHLBank requires evidence of completion for all
      Certificate of Occupancy, etc.)   rental projects as evidenced by one of the following:
                                        Rental new construction, rehabilitation or conversion:
                                            For rental projects involving construction,
                                            rehabilitation of units or conversion of space to
                                            rental units of new units, “project completion”
                                            means that the construction or rehabilitation work
                                            has been completed, as evidenced by the following:
                                            1) If a certificate of occupancy is required for such
                                               work in the jurisdiction, the date of project
                                               completion will be the date the certificate of
                                               occupancy is issued.
                                            2) If a certificate of occupancy is not required for
                                               such work, the date of project completion shall
                                               be the date certified by the project architect that
                                               the work was substantially complete (for
                                                                                           Page 24


                                              example, through AIA document G704
                                              Certificate of Substantial Completion).
                                         3) If there is no project architect, the date of
                                            project completion shall be the date certified by
                                            the general contractor that the work was
                                            substantially complete.
                                         4) If there is no general contractor, the date of
                                            project completion shall be the date certified by
                                            the Sponsor that the work was substantially
                                            complete.
17b   Mortgage Note (93432) and      Must be executed and the form contain the identification
      Executed Mortgage or Deed of   number at the bottom right-hand corner of 93432 and
      Trust (90165)                  90165.
17c   Capital Advance Agreement      Must be executed and the form contain the identification
      (90167) and Regulatory         number at the bottom right-hand corner of 90167 and
      Agreement (92466). The         92466.
      Capital Advance Agreement         Form 90167 must contain the wording “, and where
      must reflect the language          subordinate financing was provided, for the purposes
      changes as required by HUD         for which such financing was provided” in the third
      Notice 99-7                        paragraph of Section 4(d) at the end of the sentence
                                         and “capital advance” after the word “any” in the
                                         second sentence of paragraph 9.
                                        Form 92466 must contain the wording “, or a default
                                         in a subordinate mortgage as approved by HUD” in
                                         paragraph 17(a) at the end of the sentence.

17d   Executed Amended Use           Must be executed and the form contain the identification
      Agreement (90163)              number at the bottom right-hand corner of 90163.
17e   Final Financial Record of      Must be executed and the form contain the identification
      Mortgage Loan Transaction      number at the bottom right-hand corner of 92451.
      (92451)
17f   Copy of the executed Owner’s   Must be executed and dated, and must also contain all of
      Audit provided to HUD          the projects' finals costs and sources (development
                                     budget) and be completed by an independent auditor. If
                                     HUD did not require an Audit to be completed, a letter
                                     from HUD indicating this is needed, along with all of the
                                     executed construction contracts and change orders,
                                     invoices, and receipts to verify all of the final costs in the
                                     project.

                                     If the project includes non-residential space as approved
                                     in the AHP application, a completed Attachment A
                                     (development budget) from the FHLBank's website must
                                     be submitted indicating the costs for the residential and
                                                   Page 25


non-residential aspects of the project. A breakdown of
the total square footage of the project and non-residential
space or other comparable documentation must be
submitted and the percentage of non-residential space in
the project must tie back to the non-residential costs on
the development budget. Any non-residential space must
be covered by another source aside from AHP monies.

If the final budget contains ineligible development costs
and Sponsor equity was a source in the development,
these ineligible items will be removed from the budget
and the Sponsor equity reduced.

Eligible furnishings/appliances include the following
below. Any operating expenses are considered ineligible
development expenses. Any additional furnishings/
appliances not listed below will have to be covered by
another source. A letter from that source will have to be
submitted indicating they will be covering the specified
dollar amount.
    For bedrooms in a shelter or SRO units:
      o Bed frame
      o Mattress/ Box Spring
      o Chest of drawers
      o Chair
      o Nightstand or bedside table
    For one or more bedrooms:
      o No items covered
    Appliances:
      o Stove
      o Dishwasher
      o Refrigerator
      o Microwave
    Residential and Common areas:
      o Blinds
      o Security Cameras and equipment
      o Normal signs
    Laundry Room
      o Washer
      o Dryer
    Living Room
      o Couch
      o Chairs
      o Tables
      o Television
    Kitchen
                                                                                         Page 26


                                             o Table
                                             o Chairs
                                           One management office
                                             o Desk
                                             o Credenza
                                             o Chair
                                             o Computer
                                             o Multi-function printer
17g   Executed copy of the              Must be executed and the form contain the identification
      Agreement and Certification       number at the bottom right-hand corner of 93566-CA.
      (93566-CA)
17h   Project Rental Assistance         Must the form contain the identification number at the
      Contract – Part II (90173-B) –    bottom right-hand corner of 90173-B and the form may
      will not be executed              not be executed.
17i   Invoices/receipts for any costs   Must submit the construction contracts and change
      outside the HUD contract for      orders, invoices, or receipts for any costs outside the
      which reimbursement is being      HUD contract for which reimbursement of AHP monies
      requested                         is being requested.
                                                                                              Page 27



HUD Rider to the Lender’s Deed of Trust of Mortgage for Tennessee Projects

Loan No.       ______________


RIDER TO LENDER'S DEED OF TRUST

   For value received, the undersigned all agree that the following provisions shall be
incorporated into that certain deed of trust ("Deed of Trust") of even date executed by
______________________ ("Borrower"), in favor of ________________________ ("Lender"
or "Beneficiary"), as Beneficiary, to which Deed of Trust this Rider is attached, as well as the
promissory note which said Deed of Trust secures (the "Note"). In addition, and to the extent
that this Rider, and, consequently the Deed of Trust, affect the rights and responsibilities of the
United States Department of Housing and Urban Development ("HUD") under the HUD Section
202 Supportive Housing for the Elderly program (12 U.S.C. § 1701q) ("Section 202 program"),
or the HUD Section 811 Supportive Housing for Persons with Disabilities program (42 U.S.C. §
8013 ) ("Section 811 program"), HUD agrees to have a duly authorized official approve this
document by execution on the signature line set forth below. To the extent that the provisions of
this Rider are inconsistent with the provisions of the Note, Deed of Trust, or any other HUD
capital advance documentation, including but not limited to Paragraph 21 of the HUD Capital
Advance Program Regulatory Agreement ("HUD Regulatory Agreement"), required to be
executed pursuant to the HUD Section 202 or Section 811 programs, the provisions of this Rider
shall prevail and shall supersede any such inconsistent provisions of the Note, Deed of Trust, or
HUD capital advance documentation.

1. Transfer of the Property or a Beneficial Interest in Borrower. With respect to [insert:
   number of Paragraph in this Deed of Trust pertaining to the acceleration of payment in the
   event of the sale or transfer of all or any part of the Property, or any interest therein] of this
   Deed of Trust, such Paragraph is amended as follows:

a.      Excluded from the provisions of this Paragraph shall be a transfer to HUD or to a
transferee of HUD, provided that in the event of such transfer by Borrower (other than in the
event of foreclosure), HUD or such transferee notifies Lender of its intent to acquire Borrower's
interest in the subject Property, and HUD or such transferee expressly agrees to assume
Borrower's obligations under the Loan documents, including compliance with the Affordable
Housing Program ("AHP") Covenants.

   b. This Deed of Trust is subordinate to a first Deed of Trust made by Trustor in favor of the
      Secretary of HUD ("Secretary") to be recorded securing a Capital Advance made by the
      Secretary pursuant to [Insert: the Section 202 program, or Insert: the Section 811
      program, as applicable,] ("HUD Deed of Trust"), and to a HUD Regulatory Agreement
      and HUD Capital Advance Program Use Agreement ("HUD Use Agreement") between
      Trustor and the Secretary, and to a Federal Home Loan Bank of Cincinnati Affordable
      Housing Program Agreement for a Rental Project, and to [Insert any other agreements
                                                                                        Page 28


   applicable to, or required by, other priority lienholders] with respect to the Property
   referred to herein.

c. During the period the HUD Deed of Trust, HUD Regulatory Agreement and HUD Use
   Agreement are in effect, except as otherwise provided in this Rider, no default under this
   Deed of Trust may be declared without prior written approval of the Secretary, as
   applicable including, but not limited to, Lender's rights in the event of Borrower's default
   set forth in [Insert number(s) of Paragraph(s) in this Deed of Trust pertaining to
   acceleration of payment in the event of Borrower's default] of this Deed of Trust (which
   approval shall not be unreasonably withheld).

d. In the event that during the period the HUD Deed of Trust, HUD Regulatory Agreement
   and HUD Use Agreement are in effect, the Secretary acquires title to the Property by
   foreclosure, the lien of this Deed of Trust shall automatically terminate.

e. In the event Borrower defaults under the HUD Deed of Trust, HUD Regulatory
   Agreement or HUD Use Agreement, HUD shall give written notice thereof to Lender at
   the following address: [Insert Lender's address]. The notice shall specify the nature of
   the violation and the agreement violated.

f. This Deed of Trust shall not be modified during the period the HUD Deed of Trust, HUD
   Regulatory Agreement, HUD Use Agreement, Federal Home Loan Bank of Cincinnati
   Affordable Housing Program Agreement for a Rental Project, or [Insert applicable
   agreements of other subordinate financing sources] are in effect without the prior written
   approval of the Secretary, and the [Insert any other subordinate sources other than the
   Federal Home Loan Bank of Cincinnati] or the Federal Home Loan Bank of Cincinnati,
   as applicable.

g. During the period the HUD Deed of Trust, HUD Regulatory Agreement and HUD Use
   Agreement are in effect, in the event of any conflict between any provisions of this Deed
   of Trust and [Insert: 12 U.S.C. § 170lq (if a Section 202 program); or Insert: 42 U.S.C. §
   8013 (if a Section 811 program)], HUD regulations, or the HUD Regulatory Agreement,
   this Deed of Trust shall be deemed amended to comply with said statute, HUD
   regulations and HUD Regulatory Agreement, except as follows:

   (i) Notwithstanding any term or condition to the contrary in this Rider, neither Lender
       nor Trustee shall declare a default hereunder, or foreclose this Deed of Trust, either
       by judicial action or under the power of sale herein granted, without the prior written
       approval of the Secretary (which approval shall not be unreasonably withheld) for so
       long as the HUD Capital Advance evidenced by a first deed of trust remains
       outstanding; provided, however, that in the event the Loan secured hereby is not
       used in compliance with the AHP Application or the AHP Covenants, due to an
       action or omission of Borrower, which Borrower has failed to cure, then Lender may,
       after ten (10) days prior written notice to HUD and Borrower, declare all amounts due
       hereunder due and payable. In such event, and pursuant to Paragraph 5(c) of the
       HUD Regulatory Agreement by and between HUD and Borrower, dated
                                                                                              Page 29


                             , HUD shall approve payments to be made by Borrower to Lender
          from Residual Receipts (as such term is defined in Paragraph 17(g) of the HUD
          Regulatory Agreement) of the Project, if and to the extent Residual Receipts are
          available as determined by the HUD Multifamily Hub or Multifamily Program Center
          Director. As used in Paragraph 17(g)(1)(ii) of the HUD Regulatory Agreement, the
          term "obligations" shall not include any non-HUD sources of financing.

      (ii) Borrower shall comply with the AHP Covenants and all other requirements of the
           Federal Home Loan Bank of Cincinnati and the Federal Housing Finance Board
           relating to the AHP, and shall also comply with the requirements of HUD with
           respect to the development and operation of the Project. Notwithstanding Borrower's
           compliance with the requirements of HUD, in the event that Borrower's acts or
           omissions result in noncompliance with the AHP Application or the AHP Covenants,
           then Borrower shall, to the extent possible, eliminate the circumstances of
           noncompliance by requesting a modification of the terms of the AHP Application
           pursuant to 12 C.F.R. §§ 1291.8, as applicable. If the circumstances of any
           noncompliance by Borrower with the AHP Application or the AHP Covenants cannot
           be, or are not, eliminated by a modification or cured within a reasonable period of
           time, then the provisions hereof, including notice of noncompliance and repayment of
           the Loan secured by this Deed of Trust, shall apply. All capitalized terms used in this
           Paragraph and not defined in this Rider or the Note shall be as defined in the Federal
           Home Loan Bank of Cincinnati Affordable Housing Program Agreement for a Rental
           Project by and among the Federal Home Loan Bank of Cincinnati, Lender and
           Borrower, dated _______________.

   h. Approval by the Secretary of a Transfer of Physical Assets ("TPA") of the Project
      referred to in the Note secured by this Deed of Trust shall constitute approval of the TPA
      by Lender, provided that prior written notice of the TPA is given to Lender and the
      transferee expressly assumes all of Borrower's obligations under the Loan documents and
      AHP Covenants.

2. Retention Agreement. Borrower agrees as follows:

   (i) The Property's rental units, or applicable portion thereof, must remain occupied by and
       affordable for households with incomes at or below the levels committed to be served in
       the AHP Application for the duration of the retention period (as defined in the AHP
       Covenants).

  (ii) The Federal Home Loan Bank of Cincinnati, whose mailing address is P.O. Box 598;
       Cincinnati, OH 45201-0598, will be given notice of any transfer or refinancing of the
       Property occurring prior to the end of the retention period.

   (iii)In the case of a transfer or refinancing of the Property prior to the end of the retention
        period, an amount equal to the Loan Amount shall be repaid to the Federal Home Loan
        Bank of Cincinnati, unless the Property continues to be subject to a deed restriction or
        other legally enforceable retention agreement or mechanism incorporating the income-
                                                                                             Page 30


      eligibility and affordability restrictions committed to in the AHP Application for the
      duration of the retention period.

   (iv) The income-eligibility and affordability restrictions applicable to the Property pursuant to
        the AHP Covenants terminate after any foreclosure.

IN WITNESS WHEREOF, Borrower and Lender (and HUD by indicating its approval) have
executed this Rider as follows:


      [Insert: NAME OF BORROWER]
      By:

      Its:


      Date:


      [Insert: NAME OF LENDER]
      By:

      Its:


      Date:


      Approved:  UNITED STATES DEPARTMENT OF                         HOUSING AND URBAN
            DEVELOPMENT


      By:

      Its:


      Date:
                                                                                          Page 31



HUD Rider to the Lender’s Deed of Trust of Mortgage for Kentucky or Ohio
Projects

Loan No.      _________________


RIDER TO LENDER'S MORTGAGE

   For value received, the undersigned all agree that the following provisions shall be
incorporated into that certain mortgage ("Mortgage") of even date executed by
______________________ ("Borrower"), in favor of ________________________ ("Lender"
or "Beneficiary"), as Beneficiary, to which Mortgage this Rider is attached, as well as the
promissory note which said Mortgage secures (the "Note"). In addition, and to the extent that
this Rider, and, consequently the Mortgage, affect the rights and responsibilities of the United
States Department of Housing and Urban Development ("HUD") under the HUD Section 202
Supportive Housing for the Elderly program (12 U.S.C. § 1701q) ("Section 202 program"), or
the HUD Section 811 Supportive Housing for Persons with Disabilities program (42 U.S.C. §
8013 ) ("Section 811 program"), HUD agrees to have a duly authorized official approve this
document by execution on the signature line set forth below. To the extent that the provisions of
this Rider are inconsistent with the provisions of the Note, Mortgage, or any other HUD capital
advance documentation, including but not limited to Paragraph 21 of the HUD Capital Advance
Program Regulatory Agreement ("HUD Regulatory Agreement"), required to be executed
pursuant to the HUD Section 202 or Section 811 programs, the provisions of this Rider shall
prevail and shall supersede any such inconsistent provisions of the Note, Mortgage, or HUD
capital advance documentation.

1. Transfer of the Property or a Beneficial Interest in Borrower. With respect to [insert:
   number of Paragraph in this Mortgage pertaining to the acceleration of payment in the event
   of the sale or transfer of all or any part of the Property, or any interest therein] of this
   Mortgage, such Paragraph is amended as follows:

   a. Excluded from the provisions of this Paragraph shall be a transfer to HUD or to a
      transferee of HUD, provided that in the event of such transfer by Borrower (other than in
      the event of foreclosure), HUD or such transferee notifies Lender of its intent to acquire
      Borrower's interest in the subject Property, and HUD or such transferee expressly agrees
      to assume Borrower's obligations under the Loan documents, including compliance with
      the Affordable Housing Program ("AHP") Covenants.

   b. This Mortgage is subordinate to a first Deed of Trust made by Trustor in favor of the
      Secretary of HUD ("Secretary") to be recorded securing a Capital Advance made by the
      Secretary pursuant to [Insert: the Section 202 program, or Insert: the Section 811
      program, as applicable,] ("HUD Deed of Trust"), and to a HUD Regulatory Agreement
      and HUD Capital Advance Program Use Agreement ("HUD Use Agreement") between
      Trustor and the Secretary, and to a Federal Home Loan Bank of Cincinnati Affordable
      Housing Program Agreement for a Rental Project, and to [Insert any other agreements
                                                                                          Page 32


   applicable to, or required by, other priority lienholders] with respect to the Property
   referred to herein.

c. During the period the HUD Deed of Trust, HUD Regulatory Agreement and HUD Use
   Agreement are in effect, except as otherwise provided in this Rider, no default under this
   Mortgage may be declared without prior written approval of the Secretary, as applicable
   including, but not limited to, Lender's rights in the event of Borrower's default set forth in
   [Insert number(s) of Paragraph(s) in this Mortgage pertaining to acceleration of
   payment in the event of Borrower's default] of this Mortgage (which approval shall not be
   unreasonably withheld).

d. In the event that during the period the HUD Deed of Trust, HUD Regulatory Agreement
   and HUD Use Agreement are in effect, the Secretary acquires title to the Property by
   foreclosure, the lien of this Mortgage shall automatically terminate.

e. In the event Borrower defaults under the HUD Deed of Trust, HUD Regulatory
   Agreement or HUD Use Agreement, HUD shall give written notice thereof to Lender at
   the following address: [Insert Lender's address]. The notice shall specify the nature of
   the violation and the agreement violated.

f. This Mortgage shall not be modified during the period the HUD Deed of Trust, HUD
   Regulatory Agreement, HUD Use Agreement, Affordable Housing Program Agreement
   for a Rental Project, or [Insert applicable agreements of other subordinate financing
   sources] are in effect without the prior written approval of the Secretary, and the [Insert
   any other subordinate sources other than the Federal Home Loan Bank of Cincinnati] or
   the Federal Home Loan Bank of Cincinnati, as applicable.

g. During the period the HUD Deed of Trust, HUD Regulatory Agreement and HUD Use
   Agreement are in effect, in the event of any conflict between any provisions of this
   Mortgage and [Insert: 12 U.S.C. § 170lq (if a Section 202 program); or Insert: 42 U.S.C.
   § 8013 (if a Section 811 program)], HUD regulations, or the HUD Regulatory
   Agreement, this Mortgage shall be deemed amended to comply with said statute, HUD
   regulations and HUD Regulatory Agreement, except as follows:

   (i) Notwithstanding any term or condition to the contrary in this Rider, neither Lender
       nor Trustee shall declare a default hereunder, or foreclose this Mortgage, either by
       judicial action or under the power of sale herein granted, without the prior written
       approval of the Secretary (which approval shall not be unreasonably withheld) for so
       long as the HUD Capital Advance evidenced by a first deed of trust remains
       outstanding; provided, however, that in the event the Loan secured hereby is not
       used in compliance with the AHP Application or the AHP Covenants, due to an
       action or omission of Borrower, which Borrower has failed to cure, then Lender may,
       after ten (10) days prior written notice to HUD and Borrower, declare all amounts due
       hereunder due and payable. In such event, and pursuant to Paragraph 5(c) of the
       HUD Regulatory Agreement by and between HUD and Borrower, dated
                           , HUD shall approve payments to be made by Borrower to Lender
                                                                                              Page 33


          from Residual Receipts (as such term is defined in Paragraph 17(g) of the HUD
          Regulatory Agreement) of the Project, if and to the extent Residual Receipts are
          available as determined by the HUD Multifamily Hub or Multifamily Program Center
          Director. As used in Paragraph 17(g)(1)(ii) of the HUD Regulatory Agreement, the
          term "obligations" shall not include any non-HUD sources of financing.

      (ii) Borrower shall comply with the AHP Covenants and all other requirements of the
           Federal Home Loan Bank of Cincinnati and the Federal Housing Finance Board
           relating to the AHP, and shall also comply with the requirements of HUD with
           respect to the development and operation of the Project. Notwithstanding Borrower's
           compliance with the requirements of HUD, in the event that Borrower's acts or
           omissions result in noncompliance with the AHP Application or the AHP Covenants,
           then Borrower shall, to the extent possible, eliminate the circumstances of
           noncompliance by requesting a modification of the terms of the AHP Application
           pursuant to 12 C.F.R. §§ 1291.8, as applicable. If the circumstances of any
           noncompliance by Borrower with the AHP Application or the AHP Covenants cannot
           be, or are not, eliminated by a modification or cured within a reasonable period of
           time, then the provisions hereof, including notice of noncompliance and repayment of
           the Loan secured by this Mortgage, shall apply. All capitalized terms used in this
           Paragraph and not defined in this Rider or the Note shall be as defined in the Federal
           Home Loan Bank of Cincinnati Affordable Housing Program Agreement for a Rental
           Project by and among the Federal Home Loan Bank of Cincinnati, Lender and
           Borrower, dated _______________.

   h. Approval by the Secretary of a Transfer of Physical Assets ("TPA") of the Project
      referred to in the Note secured by this Mortgage shall constitute approval of the TPA by
      Lender, provided that prior written notice of the TPA is given to Lender and the
      transferee expressly assumes all of Borrower's obligations under the Loan documents and
      AHP Covenants.

2. Retention Agreement. Borrower agrees as follows:

   (i) The Property's rental units, or applicable portion thereof, must remain occupied by and
       affordable for households with incomes at or below the levels committed to be served in
       the AHP Application for the duration of the retention period (as defined in the AHP
       Covenants).

  (ii) The Federal Home Loan Bank of Cincinnati, whose mailing address is P.O. Box 598;
       Cincinnati, OH 45201-0598, will be given notice of any transfer or refinancing of the
       Property occurring prior to the end of the retention period.

   (iii)In the case of a transfer or refinancing of the Property prior to the end of the retention
        period, an amount equal to the Loan Amount shall be repaid to the Federal Home Loan
        Bank of Cincinnati, unless the Property continues to be subject to a deed restriction or
        other legally enforceable retention agreement or mechanism incorporating the income-
                                                                                             Page 34


      eligibility and affordability restrictions committed to in the AHP Application for the
      duration of the retention period.

   (iv) The income-eligibility and affordability restrictions applicable to the Property pursuant to
        the AHP Covenants terminate after any foreclosure.

IN WITNESS WHEREOF, Borrower and Lender (and HUD by indicating its approval) have
executed this Rider as follows:


      [Insert: NAME OF BORROWER]


      By:

      Its:


      Date:


      [Insert: NAME OF LENDER]


      By:

      Its:


      Date:


      Approved: UNITED STATES DEPARTMENT OF
      HOUSING AND URBAN         DEVELOPMENT


      By:

      Its:


      Date:
                                                            Page 35



AHP HUD 202/811 Rental Disbursement Request – pdf version
Page 36
Page 37
Page 38
Page 39
                                                                                           Page 40


FREQUENTLY ASKED QUESTIONS AND
COMMON MISTAKES
Below are a list of Frequently Asked Questions and Common Mistakes that often occur when
requesting a disbursement of funds. They are being provided in an attempt to assist Members and
Sponsors in expediting the disbursement process.


Frequently Asked Questions
   Q. Why does the FHLBank require documentation before releasing funds?
   A. In order to determine that grant or Advance recipients are eligible for AHP funds and to
      reduce the potential for recapture of funds from our Members, we require documentation
      of pass-through of AHP funds, evidence of acceptable long-term retention documentation,
      verification of final development and operating costs, and other documentation as
      indicated in the Request form.

   Q. Is it possible to obtain funds prior to completion of the project?
   A. See the Early Disbursement information on our website at www.fhlbcin.com. This is only
      available to projects approved for an AHP grant and have not drawn any funds. The
      Sponsor and project must also go through a risk-based assessment. Also, HUD 202 or 811
      project are eligible for disbursement after the initial closing with HUD.

   Q. Does the FHLBank have a standard retention document for HUD 202 or 811 projects?
   A. Yes. The retention language is in this document. The retention mechanism must be
      attached as a Rider to the lender’s forgivable Deed of Trust (or Mortgage).

   Q. One of my proposed funding sources was not approved. Will my project be cancelled?
   A. If other financing or additional fundraising/cash contributions can be obtained within a
      reasonable timeframe, the project will not be cancelled.

   Q. How will I know if a submitted request is approved?
   A. A Confirmation of AHP Funds Disbursement will be emailed or faxed to the Member and
      Sponsor.

   Q. How long does it take to receive funding once the FHLBank has received a completed
      Disbursement Request and all supporting documentation?
   A. Typically, the FHLBank will require up to 30 days for reviewing the Disbursement Request
      and providing the funds, but if additional information is required, it may take longer.

   Q. How will the Member institution receive funding after a request for funds has been
      approved?
                                                                                       Page 41


A. We will credit the Member’s Demand Deposit Account with the FHLBank for the amount
   approved.

Q. We have had significant turnover within the organization since our application for AHP
   funds were approved. Are there any resources to improve our familiarity with the program
   and the approval process?
A. Review this manual. You may also contact a member of our staff for questions. Also be
   sure to notify the FHLBank of staffing changes so that we may update our records.

Q. If I received approval for an AHP grant, why do I need to send updated financial
   information when I request a disbursement of AHP funds?
A. The approval of AHP funds for your project is a commitment to fill the financial gap that
   you have identified. The FHLBank is required to analyze a project’s final financial
   structure for AHP funds in order to determine that AHP subsidy is needed and that costs
   are reasonable. In most cases, our analysis process should not be cause for undue
   concern, since the great majority of projects continue to demonstrate the need for the full
   amount of the AHP commitment.

Q. My project involves the renovation of an occupied building. Do the residents have to
   comply with the income restrictions outlined in my application, or are the income
   restrictions only applicable to new tenants?
A. The AHP regulations require that all tenants meet the income qualifications at the time
   the application for AHP funds is submitted. Tenants who occupy the facility at the time
   the renovations are complete must meet the targeting levels outlined in your AHP
   application. The Initial Certification of Program Compliance sent out 12 months after
   project completion will request a rent roll so that the FHLBank can determine your
   project is in compliance with the targeting levels outlined in your approved AHP
   application.

Q. Can AHP funds be loaned to the project?
A. Yes, but if the loan is repayable, payments must be made directly to the FHLBank.
                                                                                           Page 42



Common Mistakes
In order to assist our Members and Sponsors in receiving funds in a timely manner, we have
included a list of common mistakes that can potentially delay the processing of your Disbursement
Request.
   1. The AHP HUD 202/811 Rental Disbursement Request is incomplete or unsigned by one or
      both parties. All questions should be answered. If a question is not applicable, please
      check the “N/A” box in the space provided.
   2. All of the funding sources approved at application or used were not documented with
      executed grant agreements, Notes/Mortgages (Deeds of Trust), or equity letters.
   3. The Management Agreement does not contain all of the information required at a minimum
      or does not match the approved application for income targeting, special needs or elderly
      units, homeless units, etc.
   4. Verification of land/acquisition cost and/or market value was not submitted and/or does
      not tie to the amount on the final development budget or Cost Certification.
   5. The budgets have not been updated and are not the final budgets.
   6. There is an unexplained significant change in the development. Please attach budget
      narratives to explain any substantial or unanticipated changes to the project’s financing.
   7. The development budget submitted does not tie back to the receipts, invoices,
      construction contracts, change orders, grant agreements, etc. received.
                                                                                   Page 43



STAFF LISTING

                                         Phone Number      E-mail Address

W. Jeff Reynolds                         (513) 852-7614    reynoldswj@fhlbcin.com
Senior Vice President

Damon v. Allen                           (513) 852-7518    allendv@fhlbcin.com
Vice President

Brenda A. Pierre                         (513) 852-7505    pierreba@fhlbcin.com
Housing Quality Assurance Officer

Mary L. Hernandez                      (513) 852-7604      hernandezml@fhlbcin.com
Housing Program Manager/Reporting & Monitoring

Jessica H. Wells **                      (513) 852-7617    wellsjh@fhlbcin.com
Housing Development/Finance Specialist

Julie M. Doerger **                     (513) 852-7609     doergerjm@fhlbcin.com
Housing Program Manager/Disbursements & Modifications

Jill A. Cravens                      (513) 852-7550        cravensja@fhlbcin.com
Housing Program Manager/Welcome Home

Laura K. Overton                         (513) 852-7603    overtonlk@fhlbcin.com
Housing Program Analyst




                                       1-888-345-2246
                                    Fax: (513) 852-7647
                          Visit us on the web at www.fhlbcin.com


** HUD 202/811 Rental Disbursement Reviewers

				
DOCUMENT INFO