2.5.3 Underwriting and Construction– HUD’s Role

A. HUD’s role during application underwriting is to:

1. Review the Lender’s mortgage credit analysis of the acceptability of the Sponsor, the Borrower and its principals, and of the contractor.

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2. Perform the Active Partner Performance System (APPS) Electronic form HUD-2530 Property Submission review or successor previous participation review process.

3. Confirm the maximum mortgage amount, loan conditions, loan settlement requirements and other key terms of the loan.

4. Confirm the project’s financial feasibility and the acceptability of the market and the valuation conclusions.

5. Review initial and final closing documents for compliance and acceptability.

6. Perform the environmental review.

7. Review and approve the Lender’s construction period analysis and construction costs.

• B. HUD’s role during the construction period (if applicable) is to:

1. Review and approve the Lender’s proposed initial distribution of mortgage proceeds.

2. Conduct construction inspections.

3. Require the Lender to ensure resolution of construction problems and disputes.

4. Approve construction change orders.

5. Review the Borrower’s cost certification based on HUD’s allowed costs.

6. Confirm the final maximum insurable mortgage.

7. Review and approve the final distribution of mortgage proceeds.