19.1.2.4 HUD Review of Closing Packages

A. Preliminary Review by RC Director. The RC Director will conduct a cursory review at the time of submission to determine whether the submission appears generally ready for substantive closing review. If the RC Director determines the submission is adequate to begin closing review, the RC Director will initiate the closing package review process outlined in this subsection.

B. The RC Director will notify the Lender when a package is determined to be inadequate to begin closing review, together with a list of deficiencies. Lender must resolve threshold deficiencies identified by the RC Director, and update the draft closing package accordingly, before the RC Director will route the closing package for OGC and MHP closing review.

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C. Tentative Closing Dates are subject to change at the RC Director’s discretion for any Project where the draft package submission is determined by the RC Director to be inadequate to start closing review.

D. Notice of Closing Review and Communication. The RC Director will communicate with all relevant parties after the RC Director initiates the closing package review. If not yet assigned, OGC will promptly make a HUD Closing Attorney assignment once the RC Director initiates the closing package review.

E. The HUD Closing Attorney will contact Lender’s Counsel within 2 business days following the RC Director’s approval to start review. The HUD Closing Attorney will be available to participate in calls at the request of the RC Director, including when specific legal issues have been identified that require input from the HUD Closing Attorney (e.g., title issues that may require negotiation).

F. Substantive Closing Review. Assigned MHP staff and the HUD Closing Attorney will substantively evaluate each package routed for closing review by the RC Director and will endeavor to meet previously set Tentative Closing Dates subject to the limitations set forth in this section. The RC Director and HUD Closing Attorney will work collaboratively to review draft closing packages and maintain set Tentative Closing Dates.

G. The RC Director is primarily responsible for reviewing the substantive business terms of each document submitted, including without limitation, the review and consideration of requested closing document changes that relate to business and policy concerns, business implications of litigation, satisfaction of Firm Commitment conditions, insurance coverage, UCC filings, site plans, survey matters, title encumbrances, agreements related to construction, architectural work, and disbursement of funds. The RC Director may only accept changes to the HUD forms or deviations from the requirements of this Chapter that have been made in accordance with the procedures set forth in Section 19.4.1.

H. The HUD Closing Attorney is primarily responsible for determining that the draft submission is legally sufficient, meaning:

1. The documents submitted do not reflect discernable violations of statute or regulation;

2. All standard form documents are accurate and complete (including duly approved changes);

3. Riders and boilerplate provisions required by Program Obligations are accurate and complete;

4. Evidence to satisfy Firm Commitment special conditions has been reviewed and approved by the RC Director, and is included in the submission; and

5. Documents are consistent with deal-specific requirements of the Firm Commitment, the applicable closing checklists, and determinations of the RC Director.

I. HUD Comments and Lender Response/Resubmission. After completing the initial substantive review, assigned MHP staff and the HUD Closing Attorney will provide the RC Director with comments identifying deficiencies in the package. The RC Director and/or the HUD Closing Attorney will electronically distribute HUD’s comments to Lender and/or Lender’s Counsel via email for consideration and response.

1. To maintain a Tentative Closing Date, Lender and Lender’s Counsel must respond to HUD comments within 5 business days after the date comments were distributed.

2. Lender’s response to HUD’s comments must resolve identified deficiencies in a manner consistent with this Chapter and Program Obligations. Lender’s Counsel must substantively address all HUD

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Closing Attorney comments and include corrected documents. Changes to previously submitted documentation must be presented in redline form whenever possible. Lender’s Counsel may include a written narrative or imbed written responses in the HUD Closing Attorney’s comment document to assist the HUD Closing Attorney in their review.

J. Substantial Completeness. Closing dates, including previously set Tentative Closing Dates, will not be confirmed until the RC Director and HUD Closing Attorney determine that the package is substantially complete, and any outstanding issues elevated to HUD HQ pursuant to this Chapter have been resolved. A substantially complete closing package means:

1. In accordance with Program Obligations, and except for the items addressed immediately below (in Section 19.1.2.4.J.2.): all documents required by the applicable Closing Checklist and the Firm Commitment are included; blanks, bracketed language, and other deal specific information in form documents are accurately completed; non-form documentation is accurately prepared in substantially final form for closing the transaction in accordance with this Chapter; and HUD’s review comments are resolved in a manner consistent with this Chapter. This includes, but is not limited to, surveys (where applicable), documentation evidencing compliance with Firm Commitment conditions, a pro forma title policy and legible copies of all exception documents, rate-lock terms for the Note, and secondary financing loan documents. See Section 19.4.1 for further guidance on the compilation and completion of closing documents.

2. A substantially complete closing package need not include completion of items specifically identified in this Chapter as appropriate for submission at or near the confirmed closing date, including timesensitive form information ( i.e ., dates and recording information), Certificates of Good Standing, Foreign Status Certificates, UCC searches, fully issued building permits, cost-certification, closing statements, and LIHTC equity pay-in schedule. See Part II of this Chapter for document specific guidance.

K. The RC Director will confer with assigned MHP staff to determine when the package is substantially complete as to programmatic requirements. The HUD Closing Attorney will provide prompt written notice to the RC Director when the HUD Closing Attorney determines that the closing package is substantially complete as to legal requirements.

L. Confirmation of Closing Date. Once HUD determines the closing package is substantially complete, the RC Director will consult with assigned MHP staff, the HUD Closing Attorney, Lender, and Lender’s Counsel to determine a closing date, which the RC Director will then confirm in writing. Until Lender receives the RC Director’s confirmation of a closing date, any previously requested closing date, including a set Tentative Closing Date, remains tentative.

M. Conditions for Maintaining a Confirmed Closing Date. In addition to the threshold review criteria outlined above, a confirmed closing date is subject to the following conditions:

1. Completion of Closing Package. Pursuant to Section 19.1.2.4.J.2. above, Lender’s Counsel must submit all remaining documents not yet reviewed or approved by HUD, at least four (4) business days prior to the confirmed closing date for closings-by-mail and three (3) business days for in-person closings (unless later delivery is expressly permitted by this Chapter or elsewhere in this Guide). Any additional changes may result in a change to the confirmed closing date, at the RC Director’s discretion and in consultation with the HUD Closing Attorney.

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2. Final Approval. Lender and Lender’s Counsel must resolve any additional deficiencies identified by HUD at least 1 business day prior to Lender’s submission of the Closing Docket (defined in Section 19.1.3.5). Any resulting changes to closing documents must be submitted to and approved by the HUD Closing Attorney and RC Director prior to Lender’s submission of the Closing Docket to HUD, except as permitted by the HUD Closing Attorney.