5.6.4 Requirements for Issuing a Firm Commitment

A. HUD requires that the following are completed prior to issuing a Firm Commitment:

1. An assessment that the estimated project cost based on the Borrower’s or General Contractor’s estimate of costs and the Lender’s cost estimate and the Lender’s comparison of these estimates is reasonable and in line with comparable HUD project data and is likely accurate within a deviation of plus or minus 5%.

2. An assessment that the Borrower’s and General Contractor’s financial capacity to complete the proposed construction is not materially diminished by an increase in cost of up to 5%.

3. An assessment that the proposed General Contractor is acceptable pursuant to existing requirements (sufficient working capital, experience, etc.).

4. An assessment that the plans and specifications are in compliance with all applicable requirements on a preliminary basis, with appropriately qualified certifications executed.

5. The Phase I (ASTM Practice E 1527-13 or most current) environmental site assessment and the HEROS Environmental Report must contain no significant unresolved environmental issues (see Chapter 9).