11.2 Lender Underwriting

A. The Lender is responsible for assigning a MAP approved Underwriter for the Pre-application or Firm Commitment submission. The MAP approved Underwriter is responsible for the selection and

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performance of the third-party professionals (both the firms and individuals). The Construction Loan Administrator must be approved prior to the Firm Commitment stage if the closing and servicing Lender has been identified, or as soon as identified.

B. The MAP Lender is responsible for underwriting the loan. This responsibility necessarily requires the Lender’s oversight, acceptance and recommendation to HUD for approval of the conclusions and recommendations of the third-party reports, except as modified by the Lender, and as explained, and justified in the Lender’s underwriting. The Lender’s MAP approved Underwriter is responsible for oversight and performance of the following tasks:

1. Due diligence, including selection and management of their third-party consultants;

2. Loan Processing;

3. Mortgage Credit review;

4. Underwriting;

5. Obtaining internal loan approval (from the Lender’s loan committee or other process);

6. Submission of the loan application to the appropriate Regional Center or Satellite Office and payment of the application fee;

7. Responding to HUD deficiency letters and requests for information;

8. Coordinating with the Borrower and their counsel, and follow-up to get the loan to closing; and

9. Coordination with construction loan administration, cost certification, and servicing.

C. The MAP Underwriter should perform the site visit for new construction properties and for existing properties an on-site lease audit and physical inspection representing a sample of each unit type. Alternatively, an analyst, Underwriter trainee, or different MAP approved Underwriter of the Lender acting under the direction of the MAP Underwriter (i.e., one that does not report to the originator) may perform the site visit and physical inspection of the units. The Underwriter or trainee who conducts the inspection must be identified in the narrative. Typically, the leases that are audited will be the same as the units that are inspected, as follows:

1. For projects 50 units or less, inspect at least 1 of each unit type, to include a representative sample of 10% of the units.

2. For projects between 51 and 250 units, inspect at least 1 of each unit type, to include a representative sample of 10 units plus 5% of the total number of units greater than 50.

3. For projects greater than 250 units, inspect at least 1 of each unit type, to include a representative sample of 15 units, plus 2% of the total number of units greater than 250, for a maximum of 50 units.

4. The terms of the leases must be compared to the rent roll, verifying the unit number, resident name, lease commencement date, expiration date, concessions, if any, and monthly rent. The Underwriter must confirm that this data is consistent with the assumptions used in the underwriting analysis.

5. Any inconsistencies or conflicts between the leases, rent roll and the underwritten revenue assumptions must be fully investigated and explained. The scope and results of the lease audit review must be discussed in the Underwriter’s Narrative. The Underwriter is required to retain a copy of the individual leases reviewed in the Underwriter’s working papers, which may be subject to audit but

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should not be included in the Firm Commitment application submission. Some lease files, especially for long-term residents, may be extensive. Only the most recent leases from the audit review should be retained. However, if irregularities exist in the leasing history (such as missing lease pages, unexplained modifications to lease terms or parties to the lease, for example), the entire leasing history for the applicable unit should be retained by the Lender, and any irregularities must be explained in the Lender’s Underwriters Narrative that is submitted with the loan application.