Exclude:

• 1. Construction loan discounts.
  • 2. Construction loan extension fees.

• Any charges made by the Lender for payment of counsel services or charge paid directly to the Lender’s counsel, to the extent they cause the initial service charge to exceed 2 percent, are not certifiable. However, if charges are related to “Title and Recording” expenses, certify these under the same category (see Section 13.14.9 below.)

  • Lender’s permanent placement fee is usually not more than 1.5%. It is expected to cover all permanent placement expenses, including Lender’s legal costs, but not discounts or some of the fees associated with a bond financed transaction.

• If Ginnie Mae Mortgaged Backed Securities are involved, the Lender may not assess an additional charge for the MBS application fee or for the custodial or delivery fee.

3. Recognize for cost certification:

   • Reasonable discounts based on current interest rates at the time of issuance of the Firm Commitment for projects involving insurance of advances and insurance upon completion charged by the construction and permanent Lenders. Construction loan extension fees are not earned until the time such extensions are granted. Recognize extension fees charged by the construction Lender if funded at initial endorsement and shown on the form HUD-92434M, Lender’s Certificate.

• Permanent loan fees and permanent loan extension fees, to the extent a separate permanent loan is anticipated, are earned at final closing.

• For Insurance Upon Completion cases, construction, and permanent loan extension fees, in particular, to the extent a separate permanent loan is anticipated, which are earned at final closing. The fee is shown in Statement C 2(h) and 2(i) of form HUD-92455M.

• Financing fees (including extension fees and discounts) paid on behalf of a Borrower by a third party under Statements D 3(i) and 3(j) of the Lender’s Certificate or Statements C 2(h) and 2(i) of form HUD-92455M, and shown as a current liability on the Borrower’s balance sheet to the extent there are savings in the mortgage. At final endorsement, require a promissory note be used for any unpaid balance of the obligation recognized in cost certification.

• For bond financed projects, cost of issuance, discounts, and financing fees in excess of 5.5%, provided the cost certification evidences that the Sponsor/Borrower cannot benefit monetarily from excess investment income from the proceeds of the invested obligations. Refer to Chapter 8, Section 8.15.

• The Regional Center Director will inform the MAP Lender in writing of the aggregate amount that will be allowed at cost certification for discounts, financing fees, and issuance costs. The allowed amount shall be reflected as a percentage of the mortgage loan. The amount of the fee is listed in the financing section of form HUD-92264 (or in an attachment thereto), which is a part of the Firm Commitment. The Lender will be required to acknowledge the additional costs, if any, that HUD will allow at cost certification by signing a copy of a letter from HUD to Lender detailing such costs.

MAP Guide, March 2021 Go to beginning of Chapter 13

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Chapter 13 Cost Certification 13.14 Review of Borrower’s Cost Certification

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Such acknowledgement must be filed with form HUD-92434M in order to properly review the cost certification.

4. Do not recognize for cost certification:

   • Any “side deals” (except for approved discounts) by which the Borrower agrees to pay additional sums.

Discounts required to buy down the construction and/or permanent rate to a below market rate.

5. Treat the following as a direct mortgage reduction at final endorsement:

   • Premiums paid by Lender to the Borrower or Sponsor for acquiring the construction or permanent loan.

• Partial refunds of the Commitment fee allowed in processing, which are returned to the Borrower or Sponsor.

• Discounts or other fees paid for by a contribution of a portion of the initial service charge by the Lender/Bond Underwriter.

• Rebates paid to a Borrower or Sponsor by the Lender/Bond Underwriter for bond-financed mortgages.