19.5.6.3 Letters of Credit

A. Letters of credit may be used instead of cash for all assurances of completion and escrows required at Initial and Final Endorsement, or during construction, except for up-front cash escrows and the estimated costs of deferred Section 223(f) repairs that are required to be withheld in cash from mortgage Loan proceeds and placed in escrow. Acceptance of a letter of credit is at the Lender's option, but when used, copies of the letters of credit must be attached to the escrows and assurance agreements they collateralize. Lenders are responsible for ensuring that letters of credit are current. Enforceability and acceptability of letters of credit are the responsibility of the Lender, and HUD will neither review the letter of credit nor render an opinion on its sufficiency. See 24 CFR 200.63. Additional requirements for letters of credit are detailed in Chapter 8, Section 8.4.4.