4.4.1 General Requirements

A. Under the direction of the MF Regional Director, the HUD Underwriter or third-party contract Underwriter for HUD is responsible for management of the application processing, review, underwriting, loan approval and closing processes, as well as coordination of turn over to Asset Management at closing.

B. HUD review is a risk-based, underwriting approach. Technical compliance and processing must be correct and documented, but the primary purpose of HUD’s review is to determine if the loan application is an acceptable risk to the FHA insurance fund.

C. The HUD Underwriter will review all application exhibits and determine what technical reviews are necessary, if any, given the level of complexity and risk of the transaction and program type, and perform or arrange for the underwriting and mortgage credit analysis.

D. Risk-based processing and the single Underwriter model will allow qualified Underwriters to review architectural/cost exhibits, appraisals, and market analyses and solicit the assistance of appropriate HUD technical specialists to perform additional reviews as necessary depending on the level of risk and complexity of each individual transaction. A Construction Analyst may be called upon to advise the Underwriter in his or her review, or to perform a limited review or full review, as determined by the Production team. The level of review by the HUD Construction Analyst may vary but the work required from the Lender’s third-party provider has not changed. The MAP Lender and third-party provider are responsible for determining the acceptability of the physical improvements, providing conclusions essential for underwriting determinations to minimize mortgage risk, and ensuring compliance with MAP Guide instructions and guidance. Similarly, the HUD Appraiser may be called upon to act in an advisory role or perform limited or full reviews as deemed appropriate by the HUD Production team.

E. HUD has certain responsibilities which it does not assign to the Lender, including responsibility for the environmental clearance, approval of the owner’s Affirmative Fair Housing Marketing Plan, Previous Participation review, and issuing the commitment for mortgage insurance.

F. HUD staff must perform a site visit for all applications in which an Environmental Report is required. Environmental approval is documented by HUD in the HUD Environmental Review Online System (HEROS). The Lender must submit an environmental report to HUD using the HEROS system for all projects submitted under MAP. The environmental review in HEROS must also be certified by the Production Division Director as part of the Firm Commitment approval. The site visit is typically performed by a HUD Appraiser, Construction Loan Analyst, Senior Underwriter, or other experienced HUD staff or managers with training and experience in environmental review requirements after review of the third party and Lender’s environmental analysis. HUD Regional and Headquarters Environmental Officers may be called on to assist if and as questions arise.

G. Applications that the Regional Center or Satellite Office determine to be unacceptable will be returned to the Lender and HUD will retain the application fee if the transaction completed screening and entered underwriting and technical review. If it is clear at the screening stage the transaction is not approvable,

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Chapter 4 Application Processing 4.4 HUD Processing

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it will be rejected at that stage. Lenders repeatedly submitting premature, materially deficient, or otherwise unacceptable applications should be referred to the Multifamily Asset Counterparty Oversight Division.

H. Review of MAP Lender Team Members. HUD must check the Limited Denial of Participation List and the Consolidated List of Suspended and Debarred Contractors for all proposed Lender team members, and review the proposed MAP Lender and Underwriter, and third-party resumes. If there is a concern with past performance, the Regional Director will consult with the Multifamily Asset Counterparty Oversight Division for guidance on how to proceed. If appropriate, adverse findings or conclusions should be communicated to the Lender within 10 business days.