U.S. Department of Housing and Urban Development

H O U S I N G

Notice: H 95-25 (HUD)

Secretary\'s Representatives, Issued: March 27, 1995

State Coordinators, Expires: March 31, 1996

Directors of Housing,

Directors of Multifamily Housing

Subject: Implementation of Section 542(b) of the Housing and

Community Development Act of 1992: Risk Sharing

Pilot Program

INTRODUCTION

This Notice provides guidance to Field staff for implementing the

Section 542(b) Risk Sharing Pilot Program(542(b)). Part I of

this Notice provides a general program description and Part II

discusses the State/Area Office staff\'s role relative to the

542(b) program. The terms \"risk sharing\" and \"reinsurance\" as

used in the Risk Sharing Agreements are synonymous. \"Risk

sharing\" is the predominant term used in the Risk Sharing

Agreements for the Federal National Mortgage Association,

National Cooperative Bank, and the Federal Home Loan Bank of

Seattle. The Federal Home Loan Mortgage Corporation\'s Risk

Sharing Agreement uses the term \"reinsurance\".

I. PROGRAM DESCRIPTION

Section 542(b) of the Housing and Community Development Act of

1992, as amended by Section 307 of the Multifamily Property

Disposition Reform Act of 1994, authorized the Department to

enter into Risk Sharing Agreements with Qualified Participating

Entities (QPEs). QPEs include the Government Sponsored

Enterprises (Federal National Mortgage Association and Federal

Home Loan Mortgage Corporation), State and local housing finance

agencies, financial institutions, and the Federal Housing Finance

Board. Major purposes of these Risk Sharing Agreements are to:

\-- increase the supply of affordable multifamily housing,

\-- provide a more adequate supply of mortgage credit in

underserved housing markets; and

\-- encourage major financial institutions to expand their

participation in mortgage lending.

HUD chose to implement 542(b) in Fiscal Year 1994 through

execution of Risk Sharing Agreements with selected QPEs in which

HUD agrees to provide reinsurance on loans for affordable

multifamily housing. Generally, these Risk Sharing Agreements

provide for reimbursement to the QPE for losses on eligible loans

for 50 percent of the defined loss.

The QPE and/or its approved lenders will use origination,

underwriting, and servicing procedures established by the QPE and

identified or referenced in the Risk Sharing Agreement for

Mortgage Loans subject to a Risk Sharing Obligation under the

Agreement. By permitting QPEs to process, underwrite, and

service loans and to manage and dispose of properties which fall

into default, HUD expects that affordable housing will be made

available to eligible families in a timely manner.

A. HOW THE PROGRAM WORKS

Section 542(b) of the Act represents a new insurance

authority independent of the National Housing Act (NHA).

Consequently, Mortgage Loans reinsured under 542(b) do not

receive full mortgage insurance nor are they coinsured under

the NHA. This new authority embarks HUD on a new course

where other entities assume the first position on any risk of

loss and HUD shares in the loss by reimbursing on a pro rata

basis.

The QPE will assume all up front costs relating to the

Mortgage Loan and any risks of construction to the extent

they lend during construction. HUD will not reinsure

construction loans. HUD does not reinsure the Mortgage Loan

until the project has been completed and is at least 50

percent occupied.

Upon its purchase of an eligible loan, the QPE will request a

Risk Sharing Obligation from HUD. The Risk Sharing

Obligation will commit HUD to share in any eligible loss on

the loan as defined in and determined under the Risk Sharing

Agreement. In the event of default, the QPE may pay all

costs associated with loan disposition and may seek

reimbursement from HUD. In most cases, the HUD risk share

will be 50 percent pro rata. Some QPEs, however, may assume

a larger risk share, but in no case will HUD\'s share be more

than 50 percent.

Mortgage Loans will not be assigned to HUD nor will HUD take

possession of the properties. The Risk Sharing Program will

be Headquarters based. However, Headquarters will ask

State/Area Office staff to perform tasks which include

execution of the Addendum to Risk Sharing Agreement,

depositing the first Risk Sharing Premium, and subsidy

layering reviews, if required. The role of the State/Area

Office staff will be discussed in more detail in Part II of

this Notice.

B. APPLICATIONS FROM QPEs

HUD will not establish a Notice of Fund Availability nor

accept unsolicited applications from QPEs to participate in

the 542(b) Risk Sharing Pilot Program. During this pilot

program, HUD will selectively invite participation by QPEs

representing alternative market areas to test a variety of

risk sharing options and assess the most effective means of

credit enhancement. To date, HUD has entered into Risk

Sharing Agreements with the Federal National Mortgage

Association, Federal Home Loan Mortgage Corporation, National

Cooperative Bank and the Federal Home Loan Bank of Seattle.

C. EXECUTION OF RISK SHARING AGREEMENT

Execution of a Risk Sharing Agreement is a prerequisite for

participation in this program. The Risk Sharing Agreement

governs the rights and obligations of HUD and the QPE under

the pilot program.

1\. Provisions. The Risk Sharing Agreement includes, among

other things, the allocation of units and the risk

sharing level at which the QPE has been approved to

participate in the program.

2\. Addendum to Risk Sharing Agreement. An Addendum to Risk

Sharing Agreement is required for each individual loan

reinsured by HUD. The QPEs will number the Addendums in

consecutive order. A fully executed addendum commits HUD

to provide reinsurance for a specific loan.

D. ALLOCATIONS

The Section 542(b) pilot program was authorized 15,000 units

through Fiscal Year 1994. Headquarters has allocated the

units to the QPEs which have been approved to participate in

the pilot program. The allocation system for insurance

authority and credit subsidy will be as follows:

1\. Units will be committed to a QPE upon execution of the

Risk Sharing Agreement. The commitment of units will

expire 5 years from the anniversary date of the Risk

Sharing Agreement.

2\. Headquarters will obligate insurance authority and credit

subsidy to QPEs in accordance with procedures set forth

in the Risk Sharing Agreements. These procedures provide

assurances to the QPE of the availability of insurance

authority and credit subsidy when a Risk Sharing Addendum

is executed.

E. AFFORDABLE HOUSING REQUIREMENT

All projects reinsured under the Risk Sharing Pilot Program

must qualify as affordable housing as determined by Section

42(g) of the Internal Revenue Code of 1986, as amended

(Code). Affordable housing is:

1\. A project in which 20 percent or more of the units are

both rent-restricted and occupied by families whose

income is 50 percent or less of the area median income as

determined by the Commissioner, with adjustments for

household size, or

2\. A project in which 40 percent (25 percent in

New York City) or more of the units are both rent-

restricted and occupied by families whose income is 60

percent or less of the area median income as determined

by the Commissioner, with adjustments for household size.

Loans that are reinsured must be subject to a contractual

agreement (i.e., regulatory agreement or land use

restriction agreement) or covenant prohibiting the use of

the reinsured project for any purpose other than

Affordable Housing for at least 15 years from the date of

the agreement or covenant.

F. ELIGIBLE PROJECTS

Loans to finance affordable multifamily housing which is a

newly constructed, substantially rehabilitated, or an

existing project for which an acquisition loan or refinancing

loan will be made and which meet the standards set forth in

the Risk Sharing Agreement are eligible for risk sharing.

Eligible projects must also meet the following standards:

1\. At least 50 percent of the units must be leased at rents

at or above rent levels used in underwriting the Mortgage

Loan or at rents that can sustain the Mortgage Loan as

determined by the QPE;

2\. The acquisition loan or refinancing loan for an existing

project must result in the extension of the Affordability

Restriction for at least 10 more years than remain under

any existing Affordability Restriction, and result in a

total term for the Affordability Restriction of not less

than 15 years from the date of the Acquisition Loan or

Refinancing Loan. However, if there is a foreclosure,

transfer of title by deed in lieu of foreclosure or

similar event as contemplated in section 42 (h)(6)(E) of

the Code, the Affordability Restriction may terminate

within applicable vacancy decontrol rules as provided in

the Code;

3\. An eligible project may include, but is not limited to:

a\. a Single Room Occupancy project;

b\. a Board and Care/Assisted Living Facility;

c\. an Elderly project;

d\. a multifamily housing project owned by the QPE and,

e\. a multifamily housing project for which an arm\'s

length Acquisition Loan is to be made and which is

encumbered by an existing mortgage that had been

purchased for the QPE\'s portfolio prior to the

effective date of the Risk Sharing Agreement.

G. INELIGIBLE PROJECT

An ineligible project is a project:

1\. where the QPE is the mortgagee or guarantor of the loan

that is being refinanced;

2\. located in the 500-year floodplain and is likely to be

occupied by persons with disabilities affecting mobility,

e.g., persons residing in Board and Care/Assisted Living

Facilities, and retirement service centers;

3\. located in a Federal Emergency Management Agency-mapped

Special Flood Hazard Area 100-year floodplain;

4\. located within the Coastal Barrier Resources System;

5\. newly constructed or substantially rehabilitated on a

site located in a Runway Clear Zone (at a civil airport)

or Clear Zone (at a military airfield);

6\. where the Mortgage Loan is subject to Federal Housing

Administration or other federal full mortgage insurance,

co-insurance, or risk-sharing insurance or reinsurance

under Section 542(c) of the Housing and Community

Development Act of 1992;

7\. used for transient housing or hotel purposes; or

8\. that is a nursing home or intermediate care facility.

H. UNDERWRITING, SERVICING AND LIQUIDATION OF MORTGAGE LOANS

The QPE will establish and be solely responsible for the

application of the underwriting, origination, servicing,

delinquency resolution and loan disposition standards in

accordance with the Risk Sharing Agreement. The QPE will

notify the FHA Commissioner of any changes to its

underwriting, servicing, delinquency resolution and loan

disposition standards applicable to the reinsured Mortgage

Loans in the same manner it normally notifies its lenders.

The QPE will provide copies of any changes to the standards

to Headquarters, Attention: Director, Office of Insured

Multifamily Housing Development, Room 6134, 451 - 7th Street,

S.W., Washington, DC 20410.

I. RISK SHARING/REINSURANCE PREMIUM

The QPE will pay to HUD annually a Risk Sharing/Reinsurance

Premium in an amount equal to 25 basis points (0.25%) times

the average unpaid principal balance on each Mortgage Loan

reinsured under this program. The first Risk Sharing/

Reinsurance Premium will be due upon delivery to the

Designated Office of a Risk Sharing Request. The QPE will

calculate the Premium by adding the monthly unpaid principal

balance for the months from the first payment to the next

September 30th and dividing the sum by the number of months

from the first payment to September 30th.

J. RISK SHARING/REINSURANCE CLAIM AND PAYMENT

Upon occurrence of an eligible loss resulting from either a

payment or performance default, the QPE may submit a request

for a risk sharing/reinsurance payment in accordance with the

terms of the Agreement.

The QPE will submit a notification of default to

Headquarters, Attention: Director, Office of Multifamily

Housing Management, Room 6160, 451 - 7th Street, S.W.,

Washington, D.C. 20410. The QPE will determine the amount of

the loss and submit a risk sharing/reinsurance claim and a

certification from an authorized official of the QPE

certifying the accuracy of the claim and that the Mortgage

Loan has been serviced in accordance with the Risk Sharing

Agreement. The QPE will submit the claim and certification

to Headquarters, Attention: Director of Multifamily

Accounting and Servicing Division, Room 6258, 451 7th Street,

S.W., Washington, D.C. 20410.

K. PROGRAM MONITORING

Monitoring of Mortgage Loans for which HUD has a Risk Sharing

Obligation will be in the form of periodic audits and reviews

and will be performed on a remote and on-site basis.

Remote monitoring will be performed by Headquarters, Office

of Insured Multifamily Housing Development, and will be

initiated based on data contained in the computer diskette

submitted by the QPE with the Risk Sharing Request. The data

submitted by the QPE on the diskette is listed in Appendix B.

In addition, each October 15 and March 15, the QPE will

submit a report containing the following information:

\(1\) the original mortgage amount and outstanding unpaid

principal balance for each reinsured loan, and (2) the status

of the reinsured loan (i.e., current, delinquent, under

workout agreement, in bankruptcy, foreclosed).

On-site monitoring primarily in the form of audits or reviews

of Mortgage Loans which HUD has reinsured may be performed by

the Inspector General or the Comptroller General.

Records pertaining to the origination and servicing of a

Mortgage Loan that is reinsured by HUD must be maintained for

as long as the mortgage is reinsured. Records pertaining to

a mortgage default and claim must be maintained for a period

of 3 years from the date the QPE submits a request for a Risk

Sharing Payment.

II\. STATE/AREA RESPONSIBILITIES

The staff in the State/Area Offices will have a limited role in

administering the 542(b) program. Since projects in this

program do not receive mortgage insurance under the National

Housing Act, many of the required reviews performed by the

State/Area staff for projects with full insurance or coinsurance

do not apply to projects reinsured under 542(b). The State/Area

Office staff will not perform the following functions for 542(b)

projects:

1\. previous participation reviews

2\. site and neighborhood reviews

3\. environmental reviews

4\. Affirmative Fair Housing Marketing reviews

5\. issuance of commitments, or

6\. endorsement of loans.

The following identifies the roles of State/Area Office staff:

A. STATE/AREA OFFICE STAFF SUBSIDY LAYERING REVIEW

If a project will receive other assistance from a federal,

State or local agency, the QPE, prior to the purchase of a

Mortgage Loan, will require the mortgagor to obtain a

certification from HUD or an appropriate Housing Credit

Agency (HCA) which indicates a subsidy layering review has

been performed and the level of proposed government

assistance does not exceed that required for project

feasibility. (See Administrative Guidelines: Limitations

on Combining HUD and Other Government Assistance; Subsidy

Layering, published in the Federal Register on December 15,

1994.) At this time a HUD project number will probably not

have been assigned, as it predates any HUD involvement.

The QPE, the QPE\'s lender, or the mortgagor should call the

HCA or HUD State/Area Office which has review authority

where the project is located to obtain guidance regarding

submission requirements. Implementing instructions for

performing subsidy layering reviews are contained in Notice

[H
95-4](http://www.hudclips.org/sub_nonhud/html/nph-brs.cgi?d=HSGN&s1=95-4%5Bno%5D&SECT1=TXTHLB&SECT5=HSGN&u=../html/shortcut.htm&p=1&r=1&f=G)
, issued February 20, 1995.

It is important that subsidy layering requests be processed

quickly. Therefore, the following procedures will apply:

1\. If the Designated Office (see below) is contacted with

a request for a subsidy layering review by phone or by

receipt of a package, the Designated Office shall call

the HUD State/Area Office with jurisdiction to

determine whether they are performing subsidy layering

reviews, or if an HCA has accepted the authority to

perform such reviews for that jurisdiction.

2\. The QPE (or other entity requesting the subsidy

layering review) shall be notified by telephone of the

name, address and phone number of the HCA or HUD

State/Area Office which will perform the review and,

if necessary, the package shall be returned or

forwarded to the appropriate party.

3\. In some instances, the QPE may have attempted to

identify the HUD State/Area Office with jurisdiction

and submit the request directly. If the receiving

Office determines that the request was misdirected,

the requesting entity shall be notified by telephone

of the name, address and phone number of the HCA or

HUD State/Area Office which will perform the review

and, if necessary, the package shall be returned or

forwarded to the appropriate party.

4\. Questions relating to subsidy layering reviews for

542(b) projects may be directed to Headquarters,

Office of Insured Multifamily Housing Development,

Attention: Technical Support Division. The

telephone number for the Technical Support Division

is (202) 708-0035.

B. DESIGNATED OFFICE PROCESSING OF RISK SHARING REQUEST

After the QPE has completed the purchase of a Mortgage

Loan, the QPE must request HUD to undertake a Risk Sharing

Obligation. The QPE will submit to the Designated Office,

Director of Multifamily Housing, a Risk Sharing Request

which will include: (1) the first Risk Sharing Premium,

\(2\) the Addendum to Risk Sharing Agreement (Addendum) in

the format prescribed in Attachment A, (3) a computer

diskette containing the information in Attachment B; and

\(4\) evidence of the required subsidy layering review.

1\. Designation of State/Area Office Responsibility for

Risk Sharing Request

The HUD State/Area Office responsible for handling the

Risk Sharing Request will be determined by the

location of the QPE\'s Regional/Member Office in whose

jurisdiction the project is located and not by the

physical location of the project and HUD\'s standard

State/Area Office jurisdictions. Currently, the

Designated State/Area Offices and the QPEs\' Regional

Offices are:

Federal

National Home Loan

HUD State/ Fannie Mae Freddie Mac Cooperative Bank of

Area Offices Reg. Offices Reg. Offices Bank Seattle

1\. New York \-- New York

2\. Maryland \-- \-- Wash., DC

3\. Pennsylvania Philadelphia \--

4\. Virginia \-- Reston

Federal

National Home Loan

HUD State/ Fannie Mae Freddie Mac Cooperative Bank of

Area Offices Reg. Offices Reg. Offices Bank Seattle

5\. Georgia Atlanta \-- \-- \--

6\. Illinois Chicago Chicago \-- \--

7\. Texas Ft. Worth \-- \-- \--

8\. Los Angeles Los Angeles Los Angeles \-- \--

9\. Washington \-- \-- \-- Seattle

Other Designated Offices may be added as the pilot

program is expanded. Each Designated Office will be

given a copy of the executed Agreement for each QPE

it will be handling and a copy of the signatures of

each QPE\'s authorized officials.

2\. Project Number - A new set of project numbers for the

542(b) Risk Sharing Pilot Program has been established.

Headquarters will issue a block of project numbers to

each QPE. The QPE will assign a project number to each

Mortgage Loan when it submits a Risk Sharing Request to

the Designated Office. The QPE will assign project

numbers in sequential order.

a\. Office prefix: the QPE will use the 3-digit

prefixes established by HUD and assigned to each

State/Area Office. The prefix will identify the

location of the project. Participating QPEs have

been provided a list of applicable 3-digit

prefixes and the jurisdictions covered by these

prefixes (Attachment C). The Designated Office

will verify that the QPE has used the correct

office prefix.

b\. Project number: risk sharing projects

reinsured under Section 542(b) will have

numbers beginning at 97001 and proceed to

97999\. QPEs have been assigned the following

block of project numbers:

i\. Federal National Mortgage Association - 97001

to 97250.

ii\. Federal Home Loan Mortgage Corporation -

97251 to 972500.

iii\. National Cooperative Bank - 97501 to

97650\.

iv\. Federal Home Loan Bank of Seattle - 97651

to 97800.

v\. Other unassigned project numbers - 97801 to

97999\.

The Designated Office will verify that the QPE has used

the appropriate block of numbers assigned to it and

that the numbers are assigned in sequential order.

C. EXECUTION OF ADDENDUM TO RISK SHARING AGREEMENT.

Within 15 days of the Designated Office\'s receipt of a

complete Risk Sharing Request, the Designated Office

will review the Risk Sharing Request to ensure that all

required documents and materials identified in II. B.

have been submitted and are acceptable.

The Designated Office will check to see if the QPE has:

1\. submitted 3 copies of the Addendum with 3 original

signatures by the authorized official;

2\. submitted signed certifications as specified in

Exhibit C-1 (Addendum to Risk Sharing Agreement)

of each QPE\'s Agreement. The Designated Office is

responsible for determining only that all required

certifications have been submitted and have been

signed by an authorized official of the QPE. The

Designated Office is not expected to review

anything relating to the certifications, e.g.,

lead-based paint results;

3\. submitted a check for the initial risk sharing/

reinsurance premium. The Designated Office will

deposit the first Risk Sharing/Reinsurance Premium

and prepare the official receipts and schedule of

collections in accordance with the procedures

established in [Handbooks
4410.1](http://www.hudclips.org/sub_nonhud/html/nph-brs.cgi?d=HSGH&s1=4410.1%5Bno%5D&SECT1=TXTHLB&SECT5=HSGH&u=../html/shortcut.htm&p=1&r=0&f=S)
REV CHG, Project

Fiscal Procedures and [4110.1,
REV-1](http://www.hudclips.org/sub_nonhud/html/nph-brs.cgi?d=HSGH&s1=4110.1%5Bno%5D&SECT1=TXTHLB&SECT5=HSGH&u=../html/shortcut.htm&p=1&r=0&f=S)
, Single Family

Remittance Processing Procedures;

4\. provided the legal description for the project to

be reinsured;

5\. submitted evidence of subsidy layering review from the

HUD State/Area Office or the appropriate HCA that the

level of government assistance does not exceed that

required for project feasibility; and

6\. submitted the computer diskette. The Designated Office

is not responsible for determining the completeness or

acceptability of data on the diskette.

If the Multifamily Housing Director has knowledge from

other sources, including in-house sources, that the Risk

Sharing Request does not meet the requirements of the Risk

Sharing Agreement, e.g., that there is fraud or material

misrepresentation, or if all required submissions are not

complete, the Multifamily Housing Director may refuse to

execute the Addendum and must notify the QPE in writing of

the grounds for the refusal. This notification must be

done within 15 days of receipt of the Risk Sharing Request

and should be sent to the QPE return receipt requested.

Once the Designated Office has determined that the Risk

Sharing Request is complete and acceptable, the Director of

Multifamily Housing will sign the Addendum. The Effective

Date of the Addendum will be established in accordance with

Article 1 (I) of the Risk Sharing Agreement. If the

Effective Date, entered by the QPE in the Addendum to Risk

Sharing Agreement (Attachment A), is more than 5 days prior

to the date the Addendum is submitted (in accordance with

Article 12 (XII) of the Risk Sharing Agreement which

defines date of receipt), then the Multifamily Housing

Director will change the Effective Date. The execution of

the Addendum by the Multifamily Housing Director signifies

that HUD has undertaken a Risk Sharing Obligation for that

specific Mortgage Loan.

The Director of Multifamily Housing will send the original

executed Addendum and computer diskette to the Director,

Office of Insured Multifamily Housing Development. The

Designated Office will return a copy of the executed

Addendum with the original signature of the Director of

Multifamily Housing to the QPE and retain a copy in its

files.

If the Multifamily Housing Director does not execute the

Addendum within 15 days of receipt of a complete Risk

Sharing Request that meets the terms of the Risk Sharing

Agreement and fails to send a written notice to the QPE of

its refusal to do so, the Addendum will be deemed to have

been executed. Neverthless, the Multifamily Housing

Director must still execute the Addendum. The Effective

Date will be determined in accordance with Articles 1 (I)

and 12 (XII) of the Risk Sharing Agreement.

Nicolas P. Retsinas

Assistant Secretary for Housing-

Federal Housing Commissioner

ATTACHMENT A

ADDENDUM TO RISK SHARING AGREEMENT

Addendum No.:\_\_\_\_\_\_\_\_\_\_\_\_\_\_

EFFECTIVE DATE:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

This addendum modifies the Risk Sharing Agreement

(Agreement), by and between
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

whose address is
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

and the United States Department of Housing and Urban Development

(\"HUD\") dated the \_\_\_\_\_\_ day of \_\_\_\_\_\_\_\_\_\_\_\_\_,
199\_.

By submitting this Addendum to Risk Sharing Agreement for

execution by HUD, (Name of QPE) represents that it has

complied with and will continue to comply with all of the

requirements of the Risk Sharing Agreement by and between

(Name of QPE) and the Commissioner, and (Name of QPE)

requests HUD to undertake a Risk Sharing Obligation with respect

to a Mortgage Loan for the project cited below:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Date of Commitment to Purchase

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(Street) Project Number

Assigned by Fannie Mae

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(City and state) Number of Units

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Mortgage Amount Project Type

Legal Description

(if additional space is required, use an attachment)

A-1

CERTIFICATIONS

Name of QPE) by and through the signature of the

undersigned, hereby certifies to the following with respect to

the Mortgage Loan:

\(1\) With respect to a Multifamily Housing Project receiving

assistance from any Federal, State, or local agency in

addition to a Risk Sharing Obligation provided under this

Agreement, prior to the (Name of QPE) purchase of the

Mortgage Loan, the Mortgagor obtained a review from HUD

or a Housing Credit Agency in accordance with the

\"Administrative Guidelines\--Limitations on Combining Low

Income Housing Tax Credits with Other Government

Assistance\" (59 Federal Register 9332, 2/25/94) as

amended from time to time, and HUD or the Housing Credit

Agency determined that the level of government assistance

does not exceed that required for project feasibility.

(Name of QPE) submits herewith any determinations

received from HUD or a Housing Credit Agency.

\(2\) The Mortgaged Property is free from all liens other than

liens of the Mortgage Loan, except that the Mortgaged

Property may be subject to such inferior liens approved

by (Name of QPE) as long as the Mortgage Loan has first

priority for payment.

\(3\) The Mortgage Loan is subject to an Affordability

Restriction.

\(4\) The Mortgage Loan has been underwritten and shall be

serviced in accordance with the (Name of QPE) standards

specified in the Risk Sharing Agreement.

\(5\) The Lender is an eligible Lender under standards

specified in the Risk Sharing Agreement.

\(6\) The Mortgage Loan meets the requirements of this Risk

Sharing Agreement.

\(7\) The (Name of QPE) has complied, and has taken action to

ensure that the Lender or servicer of the loan has

complied and will continue to comply, with the following:

\(i\) the Fair Housing Act, as implemented by 24 C.F.R. part

[100](http://www.hudclips.org/sub_nonhud/html/nph-brs.cgi?d=CF97&l=20&s1=100.$%5Bno%5D&SECT1=TXTHLB&SECT5=CF97&u=../cgi/legis.cgi&p=1&r=0&f=S);
(ii) the Equal Credit Opportunity Act, as

A-2

implemented by [24 C.F.R. part
202](http://www.hudclips.org/sub_nonhud/html/nph-brs.cgi?d=CF97&l=20&s1=202.$%5Bno%5D&SECT1=TXTHLB&SECT5=CF97&u=../cgi/legis.cgi&p=1&r=0&f=S);
and (iii) State and local

fair housing and equal opportunity laws applicable to

lenders.

\(8\) The (Name of QPE) has taken appropriate action to ensure

that the Multifamily Housing Project complies with the

requirements of the Lead-Based Paint Poisoning Prevention

Act (42 U.S.C. 4821-4846). Title 24 C.F.R. Part 35 and

24 C.F.R. Section 200.820 was consulted by the (Name of

QPE) for guidance in achieving such compliance.

\(9\) As of the date that the Lender received the mortgagor\'s

loan application, the Project Principals did not appear

on the portion of the List of Parties Excluded from

Federal Procurement or Nonprocurement Programs compiled,

maintained and distributed by the General Services

Administration (GSA) containing the names and other

information about persons who have been debarred,

suspended, or voluntarily excluded under Executive Order

12549 and the regulations at 24 C.F.R. Part 24, and those

who have determined to be ineligible.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

QPE Authorized Agent Date

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Title

A-3

ACCEPTANCE OF RISK SHARING OBLIGATION

The Commissioner, acting herein on behalf of the Secretary of

Housing and Urban Development, hereby agrees, under and subject

to the terms of the Risk Sharing Agreement dated
\_\_\_\_\_\_\_\_\_\_\_\_\_

entered into between HUD and (Name of QPE), to undertake a Risk

Sharing Obligation for the (insert Project Name and Property

Address) Mortgage Loan effective (insert Effective Date).

Department of Housing and

Urban Development

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Date:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Authorized Agent

A-4

ATTACHMENT B

DISKETTE INFORMATION

As part of each Reinsurance Request the QPE shall provide to

HUD a computer diskette \[type of disk and format to be specified\]

which shall contain the following information:

1\. Qualified Participating Entity

Name and address of Qualified Participating Entity (QPE)

QPE Contact Person including address and phone number

HUD Mortgagee Number

Total number of units allocated to the QPE

QPE Regional Office

HUD Regional Office code (HUD to provide list)

HUD Field Office code (HUD to provide list)

Addendum Number for Addendum to Risk Sharing Agreement

2\. Project Information

Multifamily Housing Project number assigned by the QPE

Multifamily Housing Project name

Multifamily Housing Project address including street

address, city, county, State and Zip Code

identification of any secondary financing including the name

and address of the lender and the terms of such financing

originating Lender name, address, and HUD mortgagee number

(if any)

servicing Lender name, address and HUD mortgagee number (if

any) if different from originating Lender

B-1

Mortgagor name

Mortgagor address including street address, city, county,

State and Zip code

Mortgage Loan amount

interest rate

first payment date and maturity date

QPE purchase date

Level Annuity Monthly Payment (LAMP) (P/I)

description of the Affordability Restriction

category of Lender under this Agreement

Project Congressional District

Project Census Tract

Project County Code

SMSA Code

Central City Code

Mortgage Loan Term

Project receiving tax credits

Project Production Method - new construction, etc.

Type of Building - highrise, townhouse, etc.

Name of Buildings in Project

Years Project Built

Size, Type and Number of Units

Type of mortgagor - profit-motivated, nonprofit, limited

dividend, etc.

B-2

ATTACHMENT C

HUD REGION CODES AND

STATE/AREA CODES AND JURISDICTIONS

This Attachment delineates the geographical jurisdictions within

which Region and State/Area Offices perform their major program

operating functions of the Office of Housing. For the 542(b)

program only, the QPE will use the HUD Region code and the 3-

digit State/Area Office prefixes specified in this Attachment C.

NEW ENGLAND

Office Code: 1

Jurisdiction: Connecticut, Maine, Massachusetts,

New Hampshire, Rhode Island, Vermont

Connecticut State Office

Operational Jurisdiction: Connecticut

State Office Prefix: 017

Massachusetts State Office

Operational Jurisdiction: Massachusetts

State Office Prefix: 020

New Hampshire State Office

Operational Jurisdiction: Maine, New Hampshire, Vermont.

State Office Prefix: Maine State Office - 022

New Hampshire State Office - 024

Vermont State Office - 026

Rhode Island State Office

Operational Jurisdiction: Rhode Island

State Office Prefix: 016

NEW JERSEY/NEW YORK

Office Code - 2

Jurisdiction: New Jersey, New York

New Jersey State Office

Operational Jurisdiction: New Jersey

State Office Prefix: 035

New York State Office

Operational Jurisdiction: The following counties are handled

by the New York Office: Bronx, Dutchess, Kings, Nassau,

Manhattan, Orange, Putnam, Queens, Richmond, Rockland,

Suffolk, Sullivan, Ulster, Westchester

State Office Prefix: 160

Buffalo Area Office

Operational Jurisdiction: The following counties are handled

by the Buffalo Office: Albany, Alleghany, Broome,

Cattaraugus, Cayuga, Chautauqua, Chemung, Chenango, Clinton,

Columbia, Cortland, Delaware, Erie, Essex, Franklin, Fulton,

Genesee, Greene, Hamilton, Herkimer, Jefferson, Lewis,

Livingston, Madison, Monroe, Montgomery, Niagara, Oneida,

Onondaga, Ontario, Orleans, Oswego, Otsego, Rensselaer, St.

Lawrence, Saratoga, Schenectady, Schoharie, Schuyler, Seneca,

Steuben, Tioga, Tompkins, Warren, Washington, Wayne, Wyoming,

Yates

Area Office Prefix: 013

MID-ATLANTIC

Office Code - 3

Jurisdiction: Delaware, District of Columbia, Maryland,

Pennsylvania, Virginia, West Virginia

District of Columbia Office

Operational Jurisdiction: District of Columbia and the

following Maryland and Virginia counties and independent

cities:

Maryland: Montgomery

Prince George\'s

Virginia: Alexandria (Ind. City)

Arlington

Fairfax

Fairfax (Ind. City)

Falls Church (Ind. City)

Loudoun

Manassas (Ind. City)

Manassas Park (Ind. City)

Prince William

Office Prefix: 000

Maryland State Office

Operational Jurisdiction: All counties and independent

cities except Montgomery and Prince George\'s Counties which

are within the jurisdiction of the District of Columbia

Office

State Office Prefix: 052

Pennsylvania State Office

Operational Jurisdiction: Delaware and the following

counties in Pennsylvania: Adams, Berks, Bradford, Bucks,

Carbon, Centre, Chester, Clinton, Columbia, Cumberland,

Dauphin, Delaware, Franklin, Juniata, Lackawanna, Lancaster,

Lebanon, Lehigh Luzerne, Lycoming, Mifflin, Monroe,

Montgomery, Montour, Northampton, Northumberland, Perry,

Philadelphia, Pike, Schuylkill, Snyder, Sullivan,

Susquehanna, Tioga, Union, Wayne, Wyoming, York

State Office Prefix: Delaware State Office - 032

Pennsylvania State Office - 034

Pittsburgh Area Office

Operational Jurisdiction: The following counties are handled

by the Pittsburgh Office: Allegheny, Armstrong, Beaver,

Bedford, Blair, Butler, Cambria, Cameron, Clarion,

Clearfield, Crawford, Elk, Erie, Fayette, Forest, Fulton,

Greene, Huntingdon, Indiana, Jefferson, Lawrence, McKean,

Mercer, Potter, Somerset, Venango, Warren, Washington,

Westmoreland

State Office Prefix: 033

Virginia State Office

Operational Jurisdiction: All counties and independent

cities except for the following:

Alexandria (Ind. City) Loudoun

Arlington Manassas (Ind. City)

Fairfax Manassas Park (Ind. City)

Fairfax (Ind. City) Prince William

Falls Church (Ind. City)

State Office Prefix: 050

West Virginia State Office

Operational Jurisdiction: West Virginia

State Office Prefix: 045

SOUTHEAST/CARRIBEAN

Office Code - 4

Jurisdiction: Alabama, Caribbean, Florida, Georgia,

Kentucky, Mississippi, North Carolina, South Carolina,

Tennessee

Alabama State Office

Operational Jurisdiction: Alabama

State Office Prefix: 060

Caribbean Office

Operational Jurisdiction: Panama Canal Zone, Puerto Rico,

Virgin Islands

Office Prefix: 056

Georgia State Office

Operational Jurisdiction: Georgia

State Office Prefix: 061

Jacksonville Area Office

Operational Jurisdiction: Florida

State Office Prefix: 069

Kentucky State Office

Operational Jurisdiction: Kentucky

State Office Prefix: 083

Mississippi State Office

Operational Jurisdiction: Mississippi

State Office Prefix: 065

North Carolina State Office

Operational Jurisdiction: North Carolina

State Office Prefix: 188

South Carolina State Office

Operational Jurisdiction: South Carolina

State Office Prefix: 054

Tennessee State Office

Operational Jurisdiction: The following counties are handled

by the Nashville Office: Bedford, Benton, Cannon, Carroll,

Cheatham, Chester, Clay, Coffee, Crockett, Davidson,

Decatur,, DeKalb, Dickson, Dyer, Fayette, Franklin, Gibson,

Giles, Hardeman, Hardin, Haywood, Henderson, Henry, Hickman,

Houston, Humphreys, Jackson, Lake, Lauderdale, Lawrence,

Lewis, Lincoln, Macon, Madison, Marshall, Maury, McNairy,

Montgomery, Moore, Obion, Overton, Perry, Putman, Robertson,

Rutherford, Shelby, Smith, Stewart, Sumner, Tipton,

Trousdale, Van Buren, Warren, Wayne, Weakley, White,

Williamson, Wilson

Office Prefix: 081

Knoxville Area Office

Operational Jurisdiction: The following counties are handled

by the Knoxville Office: Anderson, Bledsoe, Blunt, Bradley,

Campbell, Carter, Claiborne, Cocke, Cumberland, Fentress,

Grainger, Greene, Grundy, Hamblen, Hamilton, Hancock,

Hawkins, Jefferson, Johnson, Knox, Loudon, Marion, McMinn,

Meigs, Monroe, Morgan, Pickett, Polk, Rhea, Roane, Scott,

Sequatchie, Sevier, Sullivan, Unicoi, Union, Washington

Area Office Prefix: 088

MIDWEST

Office Code - 5

Jurisdiction: Illinois, Indiana, Michigan, Minnesota, Ohio,

Wisconsin

Illinois State Office

Operational Jurisdiction: Illinois

State Office Code: 072

Indiana State Office

Operational Jurisdiction: Indiana

State Office Prefix: 077

Michigan State Office

Operational Jurisdiction: The following counties are handled

by the Michigan State Office: Alcona, Alpena, Arenac, Bay,

Genesee, Gladwin, Huron, Iosco, Lapeer, Lenawee, Livingston,

Macomb, Midland, Monroe, Montmorency, Oakland, Ogemaw,

Oscoda, Presque Isle, Saginaw, St. Clair, Sanilac,

Schiawassee, Tuscola, Washtenaw, Wayne

State Office Prefix: 048

Grand Rapids Area Office

Operational Jurisdiction: The following counties are handled

by the Grand Rapids Area Office: Alger, Allegan, Antrim,

Baraga, Barry, Benzie, Berrien, Branch, Calhoun, Cass,

Charlevoix, Cheboygan, Chippewa, Clare, Clinton, Crawford,

Delta, Dickinson, Eaton, Emmet, Gogebic, Grand Traverse,

Gratiot, Hillsdale, Houghton, Ingham, Ionia, Iron, Isabella,

Jackson, Kalamazoo, Kalkaska, Kent, Keewenaw, Lake, Leelanaw,

Luce, Mackinac, Manistee, Marquette, Mason, Mecosta,

Menominee, Missaukee, Montcalm, Muskegon, Newaygo, Oceana,

Ontonagon, Osceola, Otsego, Ottawa, Roscommon, St. Joseph,

Schoolcraft, Van Buren, Wexford

Area Office Prefix: 047

Minnesota State Office

Operational Jurisdiction: Minnesota

State Office Prefix: 092

Ohio State Office

Operational Jurisdiction: The following counties are handled

by the Ohio State Office: Allen, Athens, Auglaize, Belmont,

Champaign, Clark, Coshocton, Delaware, Fairfield, Fayette,

Franklin, Gallia, Guernsey, Hardin, Hocking, Jackson, Knox,

Lawrence, Licking, Logan, Madison, Marion, Meigs, Mercer,

Monroe, Morgan, Morrow, Muskingum, Noble, Perry, Pickaway,

Pike, Putnam, Ross, Scioto, Shelby, Union, Van Werton,

Vinton, Washington

State Office Prefix: 043

Cincinnati Area Office

Operational Jurisdiction: The following counties are handled

by the Cincinnati Office: Adams, Brown, Butler, Clermont,

Clinton, Darke, Greene, Hamilton, Highland, Miami,

Montgomery, Preble, Warren

Area Office Prefix: 040

Cleveland Area Office

Operational Jurisdiction: The following counties are handled

by the Cleveland Office: Ashland, Ashtabula, Carroll,

Columbiana, Crawford, Cuyahoga, Defiance, Erie, Fulton,

Geauga, Hancock, Harrison, Henry, Holmes, Huron, Jefferson,

Lake, Lorain, Lucas, Mahoning, Medina, Ottawa, Paulding,

Portage, Richland, Sandusky, Seneca, Stark, Summitt, Trumbul,

Tuscarawas, Wayne, Williams, Wood, Wyandot

Area Office Prefix: 042

Wisconsin State Office

Operational Jurisdiction: Wisconsin

State Office Prefix: 075

SOUTHWEST

Office Code - 6

Jurisdiction: Arkansas, Louisiana, New Mexico, Oklahoma,

Texas

Arkansas State Office

Operational Jurisdiction: Arkansas

State Office Prefix: 082

Louisiana State Office

Operational Jurisdiction: Louisiana

State Office Prefix: 059

Oklahoma State Office

Operational Jurisdiction: Oklahoma

State Office Prefix: 118

Texas State Office

Operational Jurisdiction: New Mexico and the following

counties are handled by the Texas State Office: Anderson,

Andrews, Armstrong, Bailey, Borden, Bowie, Brewster, Briscoe,

Camp, Carson, Cass, Castro, Cherokee, Childress, Cochran,

Collin, Collingsworth, Cottle, Crane, Crosby, Culbertson,

Dallas, Dallas, Dawson, Deaf Smith, Delta, Dickens, Donley,

Ector, El Paso, Fannin, Fisher, Floyd, Franklin, Freestone,

Gaines, Garza, Classcock, Gray, Grayson, Gregg, Hale, Hall,

Hansford, Harrison, Hartley, Hemphill, Henderson, Hockley,

Hopkins, Howard, Hudspeth, Hunt, Hutchinson, Jeff Davis,

Kaufman, Kent, King, Lamb, Lamar, Lipscomb, Loving, Lubbock,

Lynn, Marion, Martin, Midland, Mitchell, Moore, Morris,

Motley, Nolan, Ochiltree, Oldham, Panola, Parmer, Pecos,

Potter, Presidio, Rains, Randall, Red River, Reeves, Roberts,

Rockwall, Rusk, Scurry, Sherman, Smith, Stonewall, Swisher,

Terrell, Terry, Titus, Upshur, Upton, Van Zandt, Ward,

Wheeler, Winkler, Wood, Yoakum

State Office Prefix: 119

Houston Area Office

Operational Jurisdiction: Angelina, Austine, Brazoria,

Brazos, Burleson, Chambers, Colorado, Fort Bend, Galveston,

Grimes, Hardin, Harris, Houston, Jasper, Jefferson, Leon,

Liberty, Madison, Matagorda, Montgomery, Nacogdoches, Newton,

Orange, Polk, Robertson, Sabine, San Augustine, San Jacinto,

Shelby, Trinity, Tyler, Walker, Waller, Washington, Wharton

Area Office Prefix: 134

San Antonio Area Office

Operational Jurisdiction: The following counties are handled

by the San Antonio Area Office: Aransas, Atascosa, Bandera,

Bastrop, Bee, Bexar, Blanco, Brooks, Burnet, Caldwell,

Calhoun, Cameron, Comal, De Witt, Dimmit, Duval, Edwards,

Fayette, Frio, Gillespie, Goliad, Gonzales, Guadalup, Hays,

Hidalgo, Jackson, Jim Hogg, Jim Wells, Karnes, Kendall,

Kenedy, Kerr, Kinney, Kleberg, La Salle, Lavaca, Lee, Live

Oak, Llano, McMullen, Maverick, Medina, Nueces, Real,

Refugio, San Patricio, Starr, Travis, Uvalde, Val Verde,

Victoria, Webb, Willacy, Williamson, Wilson, Zapata, Zavala

Area Office Prefix: 115

GREAT PLAINS

Office Code: 7

Jurisdiction: Iowa, Kansas, Missouri, Nebraska

Iowa State Office

Operational Jurisdiction: Iowa

State Office Prefix: 074

Kansas/Missouri State Office

Operational Jurisdiction: Kansas and the following counties

in Missouri: Andrew, Atchison, Barry, Barton, Bates, Benton,

Buchanan, Caldwell, Camden, Carroll, Cass, Cedar, Chariton,

Christian, Clay, Clinton, Dade, Dallas, Daviess, De Kalb,

Gentry, Greene, Grundy, Harrison, Henry, Hickory, Holt,

Jackson, Jasper, Johnson, Laclede, Lafayette, Lawrence, Linn,

Livingston, McDonald, Mercer, Miller,

Morgan, Newton, Nodaway, Pettis, Platte, Polk, Pulaski,

Putnam, Ray, St. Clair, Saline, Stone, Sullivan, Taney,

Vernon, Webster, Worth

State Office Prefix: 102

St. Louis Area Office

Operational Jurisdiction: The following counties are handled

by the St. Louis Area Office: Adair, Audrain, Bollinger,

Boone, Butler, Callaway, Cape Girardeau, Carter, Clark, Cole,

Cooper, Crawford, Dent, Douglas, Dunklin, Franklin,

Gasconade, Howard, Howell, Iron, Jefferson, Knox, Lewis,

Lincoln, Macon, Madison, Maries, Marion, Mississippi,

Moniteau, Monroe, Montgomery, New Madrid, Oregon, Osage,

Ozark, Pemiscot, Perry, Phelps, Pike, Ralls, Randolph,

Reynolds, Ripley, St. Charles, St. Francois, St. Louis,

St. Louis City, St. Genevieve, Schuyler, Scotland, Scott,

Shannon, Shelby, Stoddard, Texas, Warren, Washington, Wayne,

Wright

Area Office Prefix: 085

Nebraska State Office:

Operational Jurisdiction: Nebraska

State Office Prefix: 103

ROCKY MOUNTAINS

Office Code: 8

Jurisdiction: Colorado, Montana, North Dakota, South Dakota,

Utah, Wyoming

Colorado State Office

Operational Jurisdiction; Colorado, Montana, North Dakota,

South Dakota, Utah, Wyoming

State Office Prefix: Colorado State Office - 101

Montana State Office - 093

North Dakota State Office - 094

South Dakota State Office - 091

Utah State Office - 105

Wyoming State Office - 109

PACIFIC/HAWAII

Office Code: 9

Jurisdiction: American Samoa, Arizona, California, Guam,

Hawaii, Nevada, Pacific Trust Territories

Arizona State Office

Operational Jurisdiction: Arizona

State Office Prefix: 139

California State Office

Operational Jurisdiction: Nevada and the following counties

in California: Alameda, Contra Costs, Del Dora, Fresno,

Humboldt, Kings, Lake, Marin, Mariposa, Mendocino, Merced,

Monterey, Napa, San Benito, San Francisco, San Mateo, Santa

Clara, Santa Cruz, Solano, Sonoma, Stanislaus, Tulare

State Office Code: California State Office - 120

Nevada State Office - 125

Los Angeles Area Office

Operational Jurisdiction: The following counties are handled

by the Los Angeles Area Office: Imperial, Inyo, Kern, Los

Angeles, Mono, Orange, Riverside, San Bernardino, San Diego,

San Luis Obispo, Santa Barbara, Ventura

Area Office Prefix: 170

Sacramento Area Office

Operational Jurisdiction: The following counties are handled

by the Sacramento Area Office: Alpine, Amador, Butte,

Calaversa, Colusa, El Dorado, Glenn, Lassen, Modoc, Nevada,

Placer, Plumas, Sacramento, San Joaquin, Shasta, Sierra,

Siskiyou, Sutter, Tehama, Trinity, Tuolumne, Yolo, Yuba

Area Office Prefix: 136

Hawaii State Office

Operational Jurisdiction: America Samoa, Guam, Hawaii,

Pacific Trust Territories

State Office Prefix: 140

NORTHWEST/ALASKA

Office Code: 10

Jurisdiction: Alaska, Idaho, Oregon, Washington

Alaska State Office

Operational Jurisdiction: Alaska

State Office Prefix: 130

Oregon State Office

Operational Jurisdiction: Idaho, Oregon and the following

Washington counties: Clark, Klickitat, Skamania

State Office Prefix: Idaho State Office - 124

Oregon State Office - 126

Washington Counties - 126

Washington State Office

Operational Jurisdiction: All counties except Clark,

Klickitat, Skamania

State Office Prefix: 096