8.5.1.7 LIHTC, Historic Tax Credit or New Market Tax Credit Transactions

A. In the case of LIHTC, Historic Tax Credit or New Market Tax Credit transactions, the application must include a Letter of Commitment/Letter of Intent to fund the required equity from a syndicator or investor.

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Chapter 8 Mortgage Credit 8.5 Evaluating Financial Capacity

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This Letter of Commitment/Letter of Intent must specify the total equity amount, pay-in schedule, and conditional equity pay-in benchmarks so the Lender can verify the availability of equity. The Lender must identify the funding and use of any syndicator or investor-required reserves in comparison to HUD’s reserve and escrow requirements and reconcile any differences in the Lender’s Narrative.

B. The Lender must also review additional documentation (e.g. financial statements, syndication track record/history, etc.) to determine the syndicator or investor’s ability to make all future equity installments. The Lender should focus on and evaluate the syndicator’s or the investor’s financial strength, experience, and reputation. The Lender should also identify whether they syndicator or investor has a majority ownership interest or identity of interest in the Borrower entity, as addressed in Section 8.3. See Chapter 14 for further guidance on underwriting an application with tax credits.