10.1 Introduction

A. Management Agents that operate insured multifamily properties play a key role in providing quality housing. While it is the ultimate responsibility of the project owner/mortgagor to select and oversee the Management Agent of an insured property, the establishment of an effective relationship among HUD, the owner, and the Management Agent is critical to the success of the property over the life of the mortgage. The management agreement and related documents must be submitted with the Firm Commitment application or can be submitted at the pre-application stage if the Management Agent has been identified at that stage.

B. The Lender must review whether the proposed Management Agent demonstrates the qualifications, capability and experience to assure that the property will be managed in a prudent, efficient, and costeffective manner and in accordance with all HUD requirements. Documentation submitted by the Lender in support of the choice of Management Agent must demonstrate that the agent:

1. Is eligible for approval and is in good standing with HUD. HUD may condition its participation eligibility approval of the Management Agent upon the resolution of referrals with HUD’s Departmental Enforcement Center (DEC) that relate to the Management Agent, particularly as those referrals may relate to the project;

2. Demonstrates effective management experience and acceptable operating procedures commensurate with the type of project;

3. Has adequate fidelity bond coverage;

4. Is in compliance with all state and local laws, regulations and requirements; and

5. Is able to positively and effectively communicate and cooperate with legitimate resident associations.