11.1 General

A. The MAP program delegates due diligence and underwriting responsibility to MAP approved Lenders and their Underwriters. The MAP approved Underwriter must be completely familiar with the contents of the MAP Guide, have demonstrated experience and mastery of commercial lending practices and real estate finance, and have a working knowledge of HUD regulatory and statutory authority.

B. HUD retains commitment authority and responsibility for final determination of acceptable risk to the insurance fund, as well as certain technical and compliance responsibilities. However, this in no way relieves the MAP Lender from responsibility for their underwriting and programmatic compliance.

C. The basic function of a MAP approved Underwriter is to objectively evaluate the following factors in making a credit approval recommendation:

1. Character, creditworthiness, competence, and capacity of the Borrower and development team members.

2. Cash flow sufficient to service the proposed loan.

3. Collateral quality, including valuation, physical condition, environmental factors and location.

4. Capital structure, including all proposed indebtedness and equity.

5. Cash available to close, given the total mortgageable and non-mortgageable costs of the transaction; and

6. Compliance with HUD program and processing requirements.

D. The Underwriter must identify all material risks and weaknesses, with appropriate mitigants including quantitative analysis and stress testing to identify the impact of “worst case” scenarios. If a transaction recommended by a Lender is properly underwritten and processed, and is complete and technically compliant, HUD’s role is to review the application and the Lender can assume a timely determination.

E. If the application fails to identify material underwriting risks and mitigants, or has material processing or compliance deficiencies, HUD has the option to reject the application, re-underwrite it and approve with conditions, or return the application to the Lender for modifications to address deficiencies.

F. The responsibilities of MAP Lender and HUD Underwriters are addressed in Chapter 4 (Processing) and in this chapter.