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8.8.4 Credit Review of a Nonprofit Sponsor and Borrower

HUD Multifamily Accelerated Processing (MAP) Guide, HUD Handbook 4430.G (2020 ed., rev. Mar. 19, 2021) · 2026 edition · updated 2026-10-05 · United States

A. The Lender’s Underwriter narrative should describe how the nonprofit Sponsor/Borrower is qualified to start, complete, and operate a project under the insured loan programs. The Lender must determine that the nonprofit Sponsor/Borrower is acting on its own behalf, or if either knowingly or unwittingly acting under the influence, control or direction of any outside party seeking to derive a profit or gain from the proposed project—such as a landowner, real estate broker, contractor, Architect, attorney or consultant.

  • B. Credit investigation analysis:

  1. As with for-profit Sponsors, the Lender’s Underwriter must make a determination of the individuals and entities with decision-making and operational authority over the project. The Underwriter will provide an in-depth written analysis on the aspects of the mortgage credit review in the Underwriter’s narrative.

  2. Check that the Borrower/Sponsor has no unresolved issues related to payment history and check credit references.

  • C. Financial data analysis:

  1. Determine the amount of cash and liquid assets available for investment in the project and overall financial condition of the sponsoring group, and in particular whether the financial statements indicate that income will be sufficient to meet the expenses incurred by the group.

  2. Financial statements of many large nonprofit organizations show various fund accounts, such as general and building fund, etc.

Identify any inter-fund receivables and payables that cancel each other.

  • Do not consider restricted-use funds in the analysis.

  • Review the Public Records section of the credit report to eliminate any assets that were used as collateral in secured borrowing.

  1. The project size and complexity should be consistent with the abilities of the sponsoring organization.

MAP Guide, March 2021 Go to beginning of Chapter 8

Bookmarked Version Go to Acronym and Abbreviation List, Glossary, Index

Chapter 8 Page 8-33

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Chapter 8 Mortgage Credit 8.8 Application Exhibits and Responsibilities

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▸Contents — HUD Multifamily Accelerated Processing (MAP) Guide, HUD Handbook 4430.G (2020 ed., rev. Mar. 19, 2021)
HUD Multifamily Accelerated Processing (MAP) Guide, HUD Handbook 4430.G (2020 ed., rev. Mar. 19, 2021)

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