19.4.3.1 General Requirements

A. As set forth in the Security Instrument, Borrower must grant Lender a first lien security interest in the Mortgaged Property, including the personality associated with the project (except for 241(a) supplemental loans – see Section 19.6.3). FHA Lender must take any and all measures available under the Uniform Commercial Code (UCC) of the Project’s and Borrower’s jurisdictions and locations, including the filing of UCC financing statements, to ensure that it has and maintains an enforceable first-lien security interest in the Mortgaged Property for the entire duration of the FHA-insured mortgage Loan. See 24 CFR 207.258(b)(4). FHA Lender must also certify that these requirements have been met in Lender’s Certificate (form HUD-92434M) for new construction/substantial rehabilitation, or Request for Endorsement of Credit Instrument & Certificate of Lender, Borrower & General Contractor (form HUD92455M) for refinances.

B. Additional UCC-1 Financing Statements and a separate legal opinion may be required if the construction advances include offsite storage of building components. See Section 19.5.7.

C. Real property and any non-realty equipment, furnishings, and all other collateral covered by the Security Instrument, must be free and clear of all liens other than the FHA-insured Loan, liens for taxes and assessments that are not yet due and payable, and any other inferior liens that the RC Director approves in writing.

D. The legal description of the real property must be identical to the legal description in the Regulatory Agreement and in all other closing documents, including the Building Loan Agreement (form HUD92441M) (the Building Loan Agreement), Security Instrument, title insurance policy, and survey. Minor differences, such as abbreviations or other non-substantive stylistic differences, are allowed.

E. The Secretary of Housing and Urban Development must be listed as an additional secured party, using the notice address for the Office of Housing in the Regulatory Agreement.

F. The name of the Project and FHA project number should be listed on the UCC-1 Financing statements for reference.