8.8.6 Consultant Fees

A. Nonprofit Borrowers may include a consultant fee as part of the replacement cost to be paid from the Organizational line item. The selection of a housing consultant is the responsibility of the Sponsor/Owner who will execute a consultant contract or agreement that engages the consultant to assist the Sponsor/Owner in the development process. The MAP Lender will review and explain the terms of the housing consultant contract in the Underwriter’s Narrative but does not approve the contract nor determine compensation limits. The resume(s) are to be submitted with the FHA loan application. HUD will permit a consultant fee under the following conditions:

1. As currently permitted, a consultant fee may be part of the Developer Fee where one exists.

2. Where a Developer’s Fee is not permitted in the loan, a consultant fee may be paid from the Organizational line item in Section G on form HUD-92264.

3. Use of a consultant fee is limited to nonprofit sponsored projects that have retained a consultant to assist in the origination, development, financial services (non-tax credit deals) and/or loan processing of the project. The agreement between the Nonprofit Borrower and consultant shall outline the services to be provided and fee amount.

4. The fee amount shall be based upon complexity of the transaction but limited to the greater of $40,000 or 10 percent of the estimated total for all improvements, total carrying charges and total legal, organizational and audit fees; and

5. No more than 50% of the consultant fee shall be paid at initial endorsement, with the remainder to be paid during the construction period and final endorsement as described in the consultant contract.