4535.3 REV-1

CHAPTER 2

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CHAPTER 2. BASIC APPLICATION PROCEDURES AND CONTROL OF FUNDS

2-1. SUBMISSION OF APPLICATIONS. Any Borrower interested in applying for

a Section 106(b) \"seed money\" loan shall submit its application for

such monies with its application for a Section 202 fund reservation

or at any time subsequent to receipt of a Section 202 fund

reservation and prior to the initial closing of its Section 202

loan. In determining whether to apply for a \"seed money\" loan, the

Borrower must be aware that the Section 106(b) Program provides a

loan and not a grant and that the Loan Contract and Trust Agreement

is a binding contractual obligation. Further, the Borrower is

required to spend its share of the \"seed money\" first; and, in the

event of losses, the Borrower must lose its share first.

a\. Required Contracts. In the event the Section 106(b) application

includes amounts for the architect, consultant, and/or

attorney, copies of the contracts between the Borrower and each

of these parties must accompany the \"seed money\" applications.

If the Borrower has not contracted with an architect,

consultant and/or attorney by the time it submits it \"seed

money\" application or if no contract exists, as may be the case

with the attorney, the Borrower shall provide estimates of the

costs for such services on the Section 106(b) application, and

shall base its estimates on fees typically charged by such

parties for projects of similar type and size.

b\. Other Documentation. All available receipts for any

expenditures claimed and any bills for current obligations must

be submitted. Where bills and/or receipts are not available

because the Borrower is making an application for a Section

106(b) loan prior to creating a particular \"seed money\"

expenditure, the Borrower must provide an estimated cost for

that particular item for purposes of establishing a total loan

amount.

c\. Allowance for Cost Estimates. The Borrower is allowed to submit

estimated costs for certain items (e.g. architect fees, legal

fees, soil borings, topographical surveys, etc.) in order to

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Page 2-1 6/79

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4535.3 REV-1

CHAPTER 2

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afford it the opportunity to submit its Section 106(b) loan

application simultaneously with its application for a section

202 fund reservation. Such allowance facilitates the processing

of the Section 106(b) loan application while taking into

consideration the fact that certain anticipated costs, which

would be otherwise eligible for a Section 106(b) loan, may not

have been incurred at the Section 202 Fund Reservation Stage.

In those cases where estimated amounts are reported, the Field

Office shall make the appropriate adjustment for those estimated

line items upon receipt of bills or other documentation

reflecting actual expenditures at the time the requisitions are

submitted. The Field Office is authorized to approve adjustments

in line items and increases in loan amount (provided such

adjustment or increase does not result in a loan amount

exceeding \$50,000) in accordance with Chapter 3, paragraph 3-6

and Chapter 4, paragraph 4-9 contained herein.

d\. Evidence of Borrower\'s Cash Contribution. If the Borrower has

not expended or obligated its required cash share of the \"seed

money,\" it must furnish evidence of its ability to provide the

required funds with its application.

e\. Application for \"Seed Money\" Loan. Form HUD 92290, Section

106(b) Nonprofit Sponsor Assistance \"Seed Money\" Loan

Application (Appendix 3), must be submitted in an original and

three (3) copies and must be completed in accordance with the

instructions contained thereon.

2-2. ACCEPTANCE OF APPLICATIONS FOR PROCESSING.

a\. Determining Acceptable Applications. The Processing Control and

Records Staff (PCRS) shall review each application to determine

that all forms and documentation are included. Applications for

Section 106(b) loans shall not be accepted for processing if the

Field Office has evidence that the Borrower or Sponsor or any

entity controlled by or under the control of the Borrower or

Sponsor has a delinquent \"seed money\" loan under Section 106(b)

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4535.3 REV-1

CHAPTER 2

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of Housing and Urban Development Act of 1968 or Section 207 of

the Appalachian Redevelopment Act of 1965. Only those

applications submitted by eligible Borrowers which are complete

and do not fall into the category outlined in the preceding

sentence shall be accepted for processing.

b\. Incomplete or Unacceptable Applications. If the application is

incomplete or is determined to be unacceptable because a related

delinquent loan exists as outlined in subparagraph 2-2a above,

the Field Office shall immediately so advise the Borrower in

writing. The Borrower will be given fifteen (15) calendar days

to resolve the delinquency or to submit the missing exhibits.

If the problems are not resolved satisfactorily within the time

period allotted, the Field Office shall return the Section

106(b) application package to the Borrower and shall advise the

Borrower that the application may be resubmitted when the

outstanding loan is settled in a manner satisfactory to HUD or

when the application package is complete.

2-3. APPLICATION NUMBER.

a\. Assignment of Application Number. An application number shall

be assigned by PCRS immediately following acceptance for

processing. This number must consist of the following:

\(1\) A two (2) letter alpha \"PA\" for Preconstruction Assistance,

\(2\) A three (3) digit numeric prefix which will be the Field

Office code (collection code),

\(3\) A sequential serial number which is assigned in the order

applications are received starting with number one (1).

NOTE: This includes all previous Section 106(b)

application numbers assigned by the Field Office, and

\(4\) A two (2) letter suffix \"EH\" for elderly or handicapped.

Example: Assuming the last Section 106(b) application

number assigned by the Field Office in Little Rock,

Arkansas, was PA 082-5, the first application accepted for

processing under the revised Section 106(b) program would

be assigned the following number: PA 082-6-EH.

NOTE: It is imperative that application numbers be

assigned in numerical sequence.

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4535.3 REV-1

CHAPTER 2

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b\. Single Borrower Filing Several Applications. If a Borrower is

applying for financial assistance for more than one project, a

separate application must be submitted for each project, and

each application will be assigned a separate application

number.

c\. Recording Section 202 and Section 8 Project Numbers. When the

Section 106(b) application number is assigned by the Field

Office, the Section 202 project number and the Section 8 project

number will be inserted in the space captioned \"FHA Project No.\"

on the Section 106(b) application, Form HUD 92290.

2-4. CONTROL OF AVAILABLE FUNDS. Records and control of the Section

106(b) Nonprofit Sponsor Assistance Fund (Fund) shall be maintained

in the FAID, OFA, under procedures prescribed below. Since all

Field Office approvals of Section 106(b) applications are subject to

the availability of funds, the FAID shall be responsible for keeping

loan-approvals within the amount of available funds. No one shall

commit funds to a Borrower except pursuant to a formal reservation

for funds authorized by OFA, as provided in paragraph 3-4 of this

Handbook.

2-5. REPORTS.

a\. Monthly Fund Status Reports. Monthly reports on the status of

the Fund shall be prepared by General and Program Accounting,

and forwarded to the Direct Loan Branch, Development Division in

the Office of Multifamily Housing Development and to the Housing

Budget Division, Office of Management. These reports will

consist of a summary showing funds appropriated, reservations

for loans approved, repayments, loans canceled, and the

unobligated balance.

b\. Monthly Project Status Reports. A project status report also

must be prepared monthly by General and Program Accounting for

the original Section 106(b) program and the revised Sections

106(b)/202 program and forwarded to those parties identified in

paragraph 2-5a above. This must show the name of the Borrower,

the project number, the reservation amount, the date of the

reservation, the amounts which have been disbursed, repaid,

and/or canceled, and the amount currently outstanding.

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