19.4.9.1 — HUD Multifamily Accelerated Processing (MAP)

A. Secondary financing must comply with the requirements in Section 8.9 (Secondary Financing), the NHA first-lien requirement, and 24 CFR Part 200, particularly 200.71 and 200.85). Approval of secondary financing is a Housing business decision, including whether it may be secured with a subordinate lien against the Project. Sections 8.9 and 14.12 discuss when the RC Director may approve secured, secondary financing.

B. The RC Director must ensure any approved secondary financing is consistent with Program Obligations and memorialized in the Firm Commitment, including: the name of source, whether it is private or public, amount*, interest rate, whether it will be secured or unsecured, repayment terms, maturity date, financing instrument(s), and the name of maker on the Note.

C. To the extent the RC Director approves secondary financing for a transaction, Lender’s Counsel must ensure, and HUD Closing Attorney will confirm, that the appropriate forms discussed below are used.

D. Any liens created by secondary financing must be shown on the Title Policy in Schedule B, Part II or otherwise shown as subordinate to the lien of the FHA-insured Security Instrument in conformance with state-specific practice and approved by the HUD Closing Attorney.

E. The Request for Endorsement of Credit Instrument (form HUD-92455M) and the Request for Final Endorsement of Credit Instrument (form HUD-92023M) require copies of all HUD-approved promissory notes be attached. The RC Director is responsible for confirming that only the promissory notes approved by HUD are attached.

F. Subordinate secondary financing may be secured by a collateral assignment of the Project’s HAP contract, provided the proper documentation is used and approved by the RC Director and HUD Closing Attorney. See applicable Consent to Assignment of HAP Contract as Security for Financing, (e.g., form HUD-9649 and form HUD-9649a). If the HAP Contract, by its terms, already includes HUD’s consent for collateral assignment of the contract as security for financing, HUD will not require additional documentation.

G. Additional secondary financing-related guidance may apply to the transaction, depending on the circumstances. See, e.g.:

Chapter 2, Section 2.6.4.1. Identity of interest requirements for various secondary financing and tax credit scenarios
Chapter 3, Section 3.1.16. Bridge or Gap Financing
Chapter 3, Section 3.1.19. Tax Increment Financing
Chapter 7, Section 7.16. Tax Abatement and Deferrals
Chapter 8, Section 8.12. Firm Commitment Processing with Grants/Loans
Chapter 8, Section 8.14. Determining the Estimated Cash Requirements for Completing the Project
Chapter 8, Section 8.15. Bond Financed Projects and Tax-Exempt Agency Loans

MAP Guide, March 2021 Go to beginning of Chapter 19

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Chapter 19 Closing Guide 19.4 Document and Diligence Requirements

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Chapter 14. LIHTC and Other Tax Credit Programs, particularly:

Section 14.11. Structuring of Secondary Debt in Tax Credit Transactions

Section 14.12. Developer Fees
Section 14.13. Tax Credit Equity Pay-In Schedule

Section 14.15. Equity Bridge Loans (EBLs) in Tax Credit Projects

Appendix 12, Section A.12.1. Approval of Advances