2.6.4.9 Prohibited Practices - Charitable Donations

A. Occasionally, MAP Lenders will make charitable donations to causes that may create a potential Conflict of Interest. HUD does not prohibit charitable contributions by MAP Lenders or Borrowers,

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Chapter 2 Lender Qualifications and Practices 2.6 Identity of Interest, Conflicts of Interest

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although they can result in a Conflict of Interest for MAP purposes. Any donation given by any party in a MAP transaction conditioned upon an agreement or obligation related to a MAP loan creates a prohibited IOI whether or not such condition is in writing. In situations where HUD becomes aware of such contributions that may constitute a Conflict of Interest, enforcement will be pursued if HUD determines the gifts were intended for the purpose of competing for a potential MAP loan.

B. The six primary factors to be considered by HUD in determining whether charitable donations may represent a prohibited IOI are:

1. Whether the donor disclosed such charitable donations to HUD in advance of submitting the MAP application. The donor may provide documentation of monetary value, history of donations to a particular charity, history of donations to a variety of similar charities or other information it deems relevant to show that the donation is not based on, and would not influence, the origination or underwriting of the MAP loan;

2. The timing of the donation;

3. The monetary value or amount of the donation;

4. Any implicit or explicit understanding that the contribution is a condition of engagement of the Lender to process the MAP loan;

5. The Lender’s history of philanthropic contributions; and

6. The specific roles and relationships between the parties involved.