E. Early partial release of retainage.

1. After 90% contract completion, the Regional Production Director may release part of the General Contractor's retainage and suspend further withholding of retainage from payments due, where:

   • The contractor has no identity of interest or the contractor's only identity of interest in the project ownership is less than 5%;

• The contractor, mortgagor and mortgagee request the early release of the holdback and attach the request to form HUD-92403, Application for Insurance of Advance of Mortgage Proceeds; and Prior written consent from the surety, if any, for the early release of holdback is provided with the request.

2. 2. The Regional Production Director must determine that:
   • The contractor's general performance warrants partial release of the holdback without conditions; or

• A partial release of the holdback is appropriate with conditions, e.g., measures to assure immediate distributions to subcontractors or others, would be in the mutual interest of all participants; and

The undisbursed holdback amount must equal or exceed 2.5% of the contract amount.

F. Projects in difficulty. Release of part of the contractor's holdback before 90% contract completion may be granted only to prevent a default of the construction loan and only if it would solve the project's problems and enable it to reach construction completion.

MAP Guide, March 2021 Go to beginning of Chapter 12

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Chapter 12 Construction Period 12.16 Insurance Upon Completion (IUC)

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1. The contractor's performance meet the following conditions,:

   • The completed work must be satisfactory;

• The percentage of completed contract work must be sufficient to ensure project completion within the specified contract time; and

The holdback may not be released if there are unresolved questions concerning:

• 1. Quality of work,
  • a) Compliance with the contract, including outstanding change orders, or
• 2. Work that is progressing behind the contractor's construction schedule, as amended by approved change orders.

2. Written consent for the early release of holdback must be obtained from the surety, if any, the mortgagor and the mortgagee.