A.13.2 Agreement Authorizing Deferment of Principal Payments for Level Annuity Monthly Payment
Definition
HUD Multifamily Accelerated Processing (MAP) Guide, HUD Handbook 4430.G (2020 ed., rev. Mar. 19, 2021) · 2026 edition · updated 2026-10-05 · United States
503.1]. Examples include removing and replacing an existing flooring or wall finish, etc.
Level 2 Alterations Level 2 Alterations: “…include the reconfiguration of space, the addition or elimination of any [exterior] door or window, the reconfiguration or extension of any system, or the installation of any additional equipment.” [IEBC Section 504.1]
Examples include:
adding or demolishing interior walls (partition or loadbearing) to reconfigure dwelling unit layout;
adding another bathroom inside a unit;
relocating the kitchen within a unit;
adding a new air conditioning system that was not previously present to the existing buildings and/or units;
adding an elevator to the building, etc.
Level 3 Alterations
Level 3 Alterations: “…apply where the work area consisting of all reconfigured spaces exceeds 50% of the building area.” [IEBC Section 505.1]
level annuity monthly A monthly payment plan through which all HUD insured mortgages must payment plan (LAMP) fully amortize with equal monthly payments of principal and interest. Fully amortize means that the entire principal amount of the loan is repaid.
Liquidated damages Liquidated damages…[are] funds to pay for overruns in interest, taxes, MIP and insurance (soft costs) that are due to construction delays that are the General Contractor's fault. The funds are provided by the General Contractor, most often by means of a reduction in amounts otherwise due to the General Contractor consistent with the General Contract.
- Loan Consultant The term applies to an individual or firm actively engaged in the mortgage origination business and acting as an intermediary with or on behalf of the MAP Lender but who is not a MAP-approved Lender themselves and is not an employee of a MAP Lender or of an affiliate of the Lender. Under MAP, the consultant’s sole role is to refer new business to a MAP Lender including information supplied by the proposed borrower/sponsor. Aside from referring a Borrower/Sponsor for a MAP loan, a consultant may not have any additional role in underwriting the transaction.
Loan-to-Value Ratio See "Criterion 3".
Low-Income Housing A tax incentive intended to increase the availability of low-income housing. Tax Credit program The program provides an income tax credit to owners of newly constructed (LIHTC) or substantially rehabilitated low-income rental housing projects.
Lump Sum A lump sum contract is a construction agreement in which the contractor Construction Contract agrees to complete the project for a fixed price. This is one of only two options for construction contracts in HUD insured mortgage transactions. See also "Cost-Plus Contract".
MAP Guide, March 2021 Go to beginning of Glossary
Bookmarked Version Go to Acronym and Abbreviation List, Glossary, Index
To return to this page after clicking a link, press ALT + Back Arrow
Glossary
Go to Table of Contents
| Term | Definition |
|---|---|
| Management Entity | HUD form HUD-9832 Management Entity Profile for the Agent provides |
| Profile | detailed information regarding the organization, operation, and experience |
| of the proposed management agent. | |
| MAP Lender | Includes the Lender’s officers, directors, partners, principals, stockholders, |
| affiliates, affiliate’s officers, affiliate’s principals or any contract employees | |
| working on a particular affiliate’s or principal’s MAP application and, unless | |
| otherwise specified, includes the FHA-approved MAP Lender, its parent | |
| company, subsidiaries, affiliates and any other related entities, and any | |
| officers, directors, partners, members or employees of the MAP Lender, its | |
| affiliates and other related parties. | |
| Market Study | A market study assures that there is enough sustainable demand for |
| additional units without adversely impacting the existing supply, so as to | |
| maintain a balanced overall market. The focus of the market study is on the | |
| overall demand within a defined market area, and of the proposed project’s | |
| ability to capture and sustain a share of the total (incremental demand). | |
| Market studies estimate the number of renter households with sufficient | |
| incomes to afford the type of housing at the rents proposed at present, as | |
| well as any expected changes in rental housing demand in the foreseeable | |
| future (typically the next 3 to 5 years). | |
| Master Lease | Master leases are structured to permit a combination of investments by one |
| or more investors under one or more tax credit programs in a single | |
| development project. Generally, the Master Lease structure involves the | |
| following parties, which often have total or partial identities of interest and | |
| common ownership: | |
| 1. FHA Borrower – the Single Asset Entity (the Lessor for the Master | |
| Lease); | |
| 2. Master Tenant – the lessee; and |
- Master Lease Sub-lessees for Residential units, and for Commercial space.
Medium risk Medium risk transactions include, for example, 223(f) projects where transactions significant repairs may be required, RAD or Tax Credit projects as well as Substantial Rehabilitation projects where there is minimal tenant displacement.
Merchant builder Merchant builders, also referred to as merchant developers, are firms whose business practice is to build properties, lease them to a point of sustaining occupancy, sometimes holding them for a short additional period of seasoning, and then selling them.
Mezzanine financing Mezzanine financing is a loan usually secured by a pledge of ownership interests, rather than by a lien on the real estate or an obligation of the Single Asset Mortgagor Entity.
Monthly Requisition For an insured mortgage with insured advances, a contractor’s monthly requisition (request for payment), which must be made on form HUD-92448.
MAP Guide, March 2021 Go to beginning of Glossary
Bookmarked Version Go to Acronym and Abbreviation List, Glossary, Index
To return to this page after clicking a link, press ALT + Back Arrow
Glossary
Go to Table of Contents
| Term | Definition |
|---|---|
| Mortgage insurance | For each FHA-insured mortgage loan, FHA charges an initial mortgage |
| premium (MIP) | insurance premium at closing plus a monthly mortgage insurance premium. |
| Mortgageable costs | Mortgageable costs means the costs for acquisition of property, construction, |
| repairs, organizational costs, legal counsel, financing costs, due diligence | |
| costs, recording costs and other costs typical of commercial real estate | |
| transactions. But for insured mortgage practice the MAP Guide provides | |
| specific guidance on the eligibility and measurement of costs and this | |
| guidance appears throughout the MAP Guide consistent with subject matter | |
| considered. The best characterization of mortgageable costs are found in | |
| Chapter 8, Section 8.10through Section 8.15 summarizing how to determine | |
| mortgage amounts under the various sections of the act and possible | |
| circumstances. Additional detail on what is and is not an eligible cost may be | |
| found in Chapter 13, Section 13.14 and Section 13.15 describing review of | |
| the owner and contractor's certified costs. | |
| Named insured | Any person, firm, or organization, or any of its members specifically |
| designated by name as an insured(s) in an insurance policy, as distinguished | |
| from others that, although unnamed, fall within the policy definition of an | |
| "insured." | |
| National Housing Act | The National Housing Act, aka "the Act," is a law passed by Congress and |
| signed by the president in 1934 establishing the Federal Housing | |
| Administration (FHA) and authorizing it to operate certain mortgage | |
| insurance programs. Since 1934, Congress has repeatedly amended the Act | |
| adding and deleting Sections, establishing new or modifying existing | |
| authorizations and defining basic requirements. HUD mortgage insurance | |
| programs are typically known by the section of the Act in which the | |
| Congress authorized the particular insured mortgage activity, e.g., current | |
| programs, Sections 220, 221(d)(4), 223(f), 223(a)(7), 231, 241(a). | |
| Needs assessor | A professional with education, professional credentials, and field experience |
| appropriate to conduct a capital needs assessment of a property considering | |
| the age, size, type of building systems, construction methods, and location of | |
| the property. | |
| Net Demand | An estimate of future demand for the specified forecast period, typically 36 |
| months. The estimate of demand must be based on a calculation of | |
| incremental demand (i.e. demand for additional new units). | |
| Net Equity | The term “Net Equity” is used in reference to Low Income Housing Tax |
| Credit transactions and is defined in Chapter 14, Section 14.14. It is Total | |
| Equity less the initial 20% installment less “Delayed” Developer Fees for | |
| amounts due after the completion of repairs or construction and | |
| predetermined reserve amounts to be held by the investor for project uses | |
| after the time of the final pay-in. | |
| Net operating income | NOI is the income remaining after subtracting all operating expenses from |
| (NOI) | rents and other income collected for a property for a given period, but before |
| payment of debt service. |
MAP Guide, March 2021 Go to beginning of Glossary
Bookmarked Version
Go to Acronym and Abbreviation List, Glossary, Index
To return to this page after clicking a link, press ALT + Back Arrow
Glossary
Go to Table of Contents
| Term | Definition |
|---|---|
| Non-critical repair | Critical and Non-Critical repairs are identified by the needs assessor who |
| prepares a capital needs assessment for an existing property. SeeAppendix | |
| 5, Section A.5.7.2.2for discussion of critical and non-critical repairs. Non- | |
| critical repairs are repairs that are needed currently or within not more than | |
| two years following endorsement or repairs intended by the owner to | |
| upgrade or modernize a property. The completion of non-critical repairs | |
| may be deferred until after endorsement but should not require more than | |
| one year to complete. | |
| Non-profit Principal | The term "Nonprofit Principal" is understood to mean “the Single Asset |
| Entity (SAE) Borrower and its Board of Directors”. SeeChapter 8, Section | |
| 8.3.4. | |
| Office of Lender | The HUD Office that determines whether a lender is an FHA-approved |
| Activities and | mortgagee pursuant to 24 CFR Part 202. |
| Compliance | |
| Offsite (off-site) | Offsite work is work adjacent to project boundaries including utilities, walks, |
| Construction | curbs, gutters, streets, drainage structures, landscaping, etc., that extend |
| away from the project site. These improvements are not included in the | |
| construction contract. See Chapter 5, Section 5.12.2.B.2. | |
| Operation and | An operation and maintenance plan (O&M) may be a written general plan for |
| Maintenance Plan (O | physical operation and maintenance of a property with schedules for routine |
| & M) | maintenance tasks, etc. But in HUD insured mortgage practice an O&M plan |
| means a plan for addressing ongoing hazards, physical risks, essential | |
| equipment, and testing and record-keeping to assure that an identified | |
| hazard is managed safely. HUD requires an O&M plan to address hazardous | |
| materials or environmental conditions which may continue in place safely as | |
| long as correct procedures are timely observed. The O&M plan describes the | |
| procedures. SeeChapter 9, Section 9.6.21. | |
| Opportunity Zone | An economically distressed community where new investments, under |
| certain conditions, may be eligible for preferential tax treatment. Localities | |
| qualify as Qualified Opportunity Zones if they have been nominated for that | |
| designation by a state, the District of Columbia, or a U.S. territory and that | |
| nomination has been certified by the Secretary of the U.S. Treasury via his | |
| delegation of authority to the Internal Revenue Service (IRS). | |
| Owner's | The owner's representative must be a member of the Borrower entity, |
| Representative | usually a general partner or managing member with authority to make |
| decisions to fulfill owner's responsibilities during construction. Non-profit | |
| organizations may be represented by an executive officer or member of the | |
| Board of Directors. | |
| Partial Occupancy | Refers to allowing some units to be occupied in a property before the |
| property as a whole obtains a Certificate of Occupancy. | |
| Participants | In the context of the MAP Guide, participants are those involved in the |
| preparation, processing, and submission of applications for FHA multifamily |
MAP Guide, March 2021 Go to beginning of Glossary
Bookmarked Version Go to Acronym and Abbreviation List, Glossary, Index
To return to this page after clicking a link, press ALT + Back Arrow
Glossary
Go to Table of Contents
| Term | Definition |
|---|---|
| mortgage insurance, including HUD staff, Lenders, third party consultants, | |
| Borrowers, and others. | |
| Passive Principal | “Passive Principals” are persons or entities who singly or with others have |
| limited or no decision-making power or control over the Borrower but who | |
| have an ownership interest of 25% or more (10% for corporations) in the | |
| Borrower. | |
| Penetration Rate | Penetration Rate is defined as the percentage of Qualified Renter Households |
| in the PMA that the property and similar existing and proposed competing | |
| properties must capture to fill all units and achieve stabilized occupancy. | |
| The Penetration Rate is calculated by dividing the total number of units in | |
| the competitive inventory (including the subject property, current | |
| competitive properties, and proposed relevant competitive properties) by | |
| the total number of renter households that meet the applicable age and | |
| income eligibility band requirements. | |
| Performance and | A performance bond is a surety bond that is issued by a bonding company or |
| Payment Bond | bank to guarantee satisfactory completion of a project by a contractor. It |
| protects the owner in case the contractor fails to complete the contractual | |
| obligations. Payment bonds are a guarantee that the contractor will pay all | |
| laborers, material suppliers, and contractors per contractual obligations. | |
| Performance Based | The PBCA is an agency hired to assist HUD/ |
| Contract | Section 8 HAP contracts. |
| Administrator (PBCA) | |
| Permission to Occupy | Permission to rent or occupy specific living units, commercial, or other space |
| in a building. Units and spaces should not be occupied prior to approval by | |
| HUD. | |
| Phase I | The Phase I Environmental Site Assessment (ESA) is required for most HUD |
| Environmental Site | mortgage insurance applications for new construction and substantial |
| Assessment (ESA) | rehabilitation. See Chapter 9, Section 9.1.3.C.5.A Phase I ESA is a broad fact |
| finding and analytical report as characterized in Chapter 9, Section 9.4.1and | |
| Section 9.6.20, identifying environmental impacts of a proposed project, | |
| hazards that may exist, environmental features or significant artifacts the | |
| may require protection. The American Society for Testing and Materials | |
| (ASTM) has published standards for preparation of Phase I ESAs. | |
| Phase II | A Phase II Environmental Site Assessment (ESA) is a follow-on study to a |
| Environmental Site | Phase I ESA and is intended to address conditions observed or identified in a |
| Assessment (ESA) | Phase I EIS. For detailed discussion see Chapter 9, Section 9.4.2. ASTM |
| publishes standards for Phase II ESAs. | |
| Pre-Construction | A pre-construction conference conducted by the HUD Inspector or HUD CA is |
| Conference | required for every new construction and substantial rehabilitation project |
| and must precede the initial start of construction, including early start of | |
| construction. |
MAP Guide, March 2021 Go to beginning of Glossary
Bookmarked Version Go to Acronym and Abbreviation List, Glossary, Index
To return to this page after clicking a link, press ALT + Back Arrow
Glossary
Go to Table of Contents
| Term | Definition |
|---|---|
| Pre-Cost Certification | A meeting that should be held before the project is 90% complete at which |
| Conference | HUD staff will explain: substantial completion, administrative completion, |
| and cut-off dates; documentation required for cost certification; | |
| responsibility of the borrower and accountant for computing the liquidated | |
| damages/ actual damages and incentive portions, if applicable, of the | |
| construction contract; necessity for a careful review and completeness of the | |
| documentation; and any problems with prevailing wage certifications or | |
| other labor issues. | |
| Prevailing wage rates | All contractors engaged at job sites covered by the Davis-Bacon (i.e. all |
| (David-Bacon Wage | insured mortgage construction loans) must pay their laborers and |
| Determination) | mechanics the locally prevailing wages and fringe benefits for corresponding |
| work on similar projects in the area. The Davis-Bacon Act directs the | |
| Department of Labor to determine such locally prevailing wage rates which | |
| determination is made for each project and is called a "wage decision." See | |
| "Davis-Bacon Act." | |
| Previous participation | Individuals and entities in control of a project are subject to a previous |
| review | participation review as set forth in 24 C.F.R. Part 200, as the same may be |
| amended from time to time, and must submit information | |
| regarding previous participation in governmental housing transactions | |
| either via the electronic Active Partner Participation System (APPS) or on | |
| form HUD-2530, or any successor system or form, for approval for | |
| participation in any mortgage insurance program. | |
| Primary Market Area | The Primary Market Area (PMA) is the geographic area in which units with |
| (PMA) | similar characteristics (e.g., number of bedrooms and rents) are in equal |
| competition. | |
| Prior Credit Approval | Prior credit approval of a principal is a specialized review of a person or |
| entity who is a repeat customer of HUD insured mortgage programs and | |
| whose aggregate unpaid insured loan balances exceed $500 million. This | |
| scale of HUD activity is a risk exposure for HUD that requires analysis of | |
| existing and proposed additional exposure before HUD will allow the person | |
| or entity to pursue additional insured multifamily debt. See also | |
| "Concentrated Risk" and Chapter 8, Section 8.6 and Appendix 8, Section | |
| A.8.3. | |
| Privacy Act | The Privacy Act of 1974, as amended, 5 U.S.C. § 552a, establishes a code of |
| fair information practices that governs the collection, maintenance, use, and | |
| dissemination of information about individuals that is maintained in systems | |
| of records by federal agencies. A system of records is a group of records | |
| under the control of an agency from which information is retrieved by the | |
| name of the individual or by some identifier assigned to the individual. | |
| Processing | Refers to the processing of mortgage insurance applications by HUD. |
| Program Obligation | All applicable statutes and any regulations issued by the HUD Secretary that |
| (Loan obligation) | apply to the Project, including all amendments to such statutes and |
| regulations, as they become effective. Also, all current requirements in HUD |
MAP Guide, March 2021 Go to beginning of Glossary
Bookmarked Version Go to Acronym and Abbreviation List, Glossary, Index
To return to this page after clicking a link, press ALT + Back Arrow
Glossary
Go to Table of Contents
Get a plain-English answer with a citation back to this text.
Ask AI about this code