19.3.2.1 Request for Final Endorsement

• A. Lender must prepare the Request for Final Endorsement of Credit Instrument (form HUD-92023M):

1. The RC Director will compare the Request for Final Endorsement to each Application for Insurance of Advance of Mortgage Proceeds (form HUD-92403), and determine whether the amount of each advance is correctly stated in the Request for Final Endorsement , and to confirm that the total sum of advances on the Request for Final Endorsement equals the sum of all advances from each form HUD92403. The RC Director will also review the title evidence already submitted with the statement of outstanding indebtedness in the Request for Final Endorsement, to confirm consistency between the two. If the RC Director identifies any error or issue with the Request for Final Endorsement, the RC Director will return it to Lender, together with a written explanation of deficiencies.

2. The Request for Final Endorsement should not include any advance of escrowed funds required for completion of the Project (e.g . , Escrow Agreement for Incomplete Construction (form HUD-92456M)).

3. The Request for Final Endorsement requires full disclosure and certification by Borrower and General Contractor concerning payments, project completion, and unpaid obligations.

   • The Request for Final Endorsement Certificate of Borrower requires Borrower’s disclosure of all unpaid obligations, including, as applicable, land acquisition, property acquisition, construction, and soft costs. The unpaid obligations listed by Borrower in the Request for Final Endorsement should not exceed the amount of the final advance. If the amount of unpaid obligations exceeds the final advance, Borrower must cover the difference between the unpaid obligations and the final advance either by (a) depositing sufficient funds in escrow, or (b) providing cash or other assurance of payment acceptable to the RC Director, in consultation with the HUD Closing Attorney. In either case, the RC Director will approve the amount and form of payment assurance before the RC Director approves the Request for Final Endorsement.

• The Request for Final Endorsement Certificate of General Contractor requires General Contractor’s disclosure of all unpaid obligations of the General Contractor under the Construction

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Chapter 19 Closing Guide 19.3 Final Loan Closing Procedures for New Construction and Substantial Rehabilitation

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Contract (form HUD-92442M), including amounts due to any sub-contractors. If the amount of unpaid obligations listed in the Request for Final Endorsement Certificate of General Contractor exceeds the amount certified by Borrower as owed to the General Contractor, the RC Director will urge the Lender to promptly resolve the dispute prior to Final Endorsement, and to obtain agreement between Borrower and General Contractor as to the amount owed to the General Contractor. If prompt resolution is unattainable, see Section 19.3.2.A.3, and Section 19.3.4. (for Final Closing procedures when Borrower and General Contractor are in dispute). Additionally, for Projects with an identity of interest between Borrower and General Contractor, the RC Director will not approve a Request for Final Endorsement and HUD will not proceed to Final Closing, until and unless Lender provides HUD with documentary evidence demonstrating that cash is available to cover the difference between the stated obligations.

4. The RC Director must obtain receipt of payments for unpaid obligations. The Request for Final Endorsement Certificates of Borrower and of General Contractor require payment of all listed unpaid obligations within prescribed time limits, and Lender must provide documentary evidence of such payment to the RC Director. Future compliance is certified by Borrower and General Contractor, subject to civil or criminal penalty for false claims or statements.

   • If Lender does not provide the required receipt and supporting evidence of Borrower’s payment of listed unpaid obligations by the deadline prescribed in the Request for Final Endorsement , the RC Director will immediately make a written inquiry to the Lender to determine the status of payment(s).

• If the RC Director does not receive the receipt for the payment of reported unpaid obligation(s) within fourteen (14) days from the date of the RC Director’s inquiry, the RC Director will determine appropriate next steps.