A.12.1.6 MAP Lender Duties for Processing Form HUD-92403

A. The Lender must review and approve form HUD-92403 conducting the following major responsibilities:

1. Reconcile any discrepancies between the cumulative total for all advances, including the advance under consideration, and conclusions reached in the processing before recommending the advance for approval.

   • Enter any required adjustments in Column B and note, “No Adjustment Necessary, Except as Indicated,” or “No Adjustment Necessary,” as appropriate.

   • Enter the approved amount in the “Certificate of Mortgage Insurance” on the face of the form, and where the request is reduced; explain the disallowance on the form’s reverse side.

2. Determine monthly that advances are proportionate to construction progress.

   • Require the MAP Lender’s Underwriter to advise you where advances for “soft costs”, i.e., financing and carrying charges, are in excess of work progress as shown by the most current Progress Schedule accepted by the HUD and the percentage of project completion reflected on form HUD-92448.

Take action where the mortgage is not in balance due to the fault of the contractor.

3. The amount advanced for construction retainage items must be adjusted for a 10 percent holdback of the construction contact amount from each advance. The standard 10% retainage will be required until 50% completion. After the project is 50% complete, the retainage will be reduced to 5% until 75% completion, and further reduced to 2.5% until the loan reaches the Final Endorsement. The following conditions must be met to permit these reductions in retainage:

   • The Contractor has no identity-of-interest with the owner greater than a 5 percent equity interest;

• If applicable, prior written consent from the surety company must be attached to the request for release; and

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Appendix 12 Construction Period A.12.2 Contractor’s Monthly Requisition

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• There are no questions regarding the contractor’s performance concerning the quality of work, compliance with the contract, and any change orders or work in progress.

4. Secure approval from HUD for any advance requesting release of any portion of the contractor’s 10 percent holdback.

5. Maintain a record of approved disbursements on form HUD-92451, Financial Record of Mortgage Loan Transaction (or similar format in an Excel worksheet).