**Appendix Q:**

# Mark-to-Market Requirements for 

# Section 236 Transactions and Reuse of IRP

I.  236 Program Description. Projects originally financed under Section
    236 (236) received monthly Interest Reduction Payments (IRP) from
    HUD. The IRP covered the difference between (1) the monthly payments
    to principal, interest and Mortgage Insurance Premium (P & I & MIP)
    at the coupon rate, and (2) the monthly P&I without MIP at 1%
    interest. Admission to 236 projects was limited to families whose
    incomes did not exceed the 236 income limits.

    A.  As operating expenses increased, Section 8 project-based
        assistance became necessary in many 236 projects to keep units
        affordable to low and moderate-income families. Most 236
        projects in the M2M inventory are now 100% Section 8 assisted.

    B.  All 236 Projects must continue to operate as 236 projects
        through at least the remaining term of the original 236
        financing. Compliance with the guidance herein satisfies this
        requirement.

II. Applicability of this Appendix. This Guidance is:

    A.  **Applicable to Full restructuring transactions** in which 100%
        of the units receive Section 8 project-based subsidy.

    B.  **Not Applicable to Lite transactions** - MF Housing processes
        requests to reuse IRP in Lite transactions based on MF Housing
        policy guidance.

    C.  **Not applicable to partially assisted 236 projects**. For
        partially assisted projects, contact Preservation Office staff
        in OAHP HQ.

    D.  **Rules for Reuse of IRP in M2M Restructuring.** The following
        rules are applicable to all forms of reuse:

    E.  IRP cannot be spent faster in a M2M restructuring than under the
        original schedule. The total IRP disbursed by any point in time
        must not exceed the total that would have been disbursed by that
        same point in time under the original payment schedule. To
        reiterate, the schedule for IRP reuse cannot be even a few
        months shorter than the remaining term, as doing so would
        violate a statutory provision (e.g., if 135 payments are
        remaining, one cannot round the period for reuse to 11 years
        (132 payments) because this would require faster use of funds
        than permitted; one can round to 12 years).

    F.  **The total amount of IRP available to the project cannot be
        increased**, but less than the full amount may be used.

    G.  **IRP cannot be used to pay a Mortgage Restructuring Note or
        Contingent Repayment Note (M2M debt)** when there is no fully
        amortizing first lien mortgage.

    H.  **IRP cannot be allocated partly to debt service** and partly to
        the reserve for replacement.

    I.  **IRP must be paid out in level monthly disbursements** over the
        term of the reuse.

    J.  **No 236 rents can be increased a result of a restructuring.**
        Rarely in M2M, current rents for a particular unit type will be
        found to be below market. Increasing rents for a particular unit
        type, even though the overall rents are going down, may conflict
        with applicable 236 program requirements. Contact the
        Relationship Manager if you determine that avoidance of those
        rent increases impacts project feasibility.

```{=html}
<!-- -->
```
III. Eligible Reuses of IRP. IRP may be reused for:

     A.  **Debt service payments** when an amortizing first will
         continue to exist after the restructuring. That first may be
         new FHA insured or conventional takeout financing or a
         modification of the existing insured or HUD-held 236 loan. New
         takeout financing must be fully amortizing by:

         1.  a single amortization schedule, with IRP payments spread
             evenly over the full term of the new takeout financing, or

         2.  two separately amortizing pieces (a bifurcated schedule)
             within a single loan and mortgage).

             a.  One piece pays off in a shorter period and may have a
                 different interest rate than the other.

             b.  Example: a total loan of \$1,500,000. The A piece of
                 \$1,000,000 has an interest rate of 6% and pays off in
                 11 years (generally equal to the remaining term of the
                 original IRP schedule). The B piece of \$500,000 has a
                 market interest rate and pays off in 30 years based on
                 cash flow projections.

```{=html}
<!-- -->
```
B.  **Deposits to the Reserve for Replacement account**, no matter what
    type of first mortgage financing will remain after the restructuring
    (new takeouts, modifications, or when no amortizing debt in first
    position).

    1.  IRP may replace or supplement required deposits by the owner to
        the reserve for replacement.

    2.  The amount of IRP to be deposited to the reserve for
        replacements must be supported by the PCA analysis.

    3.  PAE's must not over-fund the reserve for replacement account in
        order to reuse all IRP available.

        IV. Determining the Optimum Reuse

```{=html}
<!-- -->
```
A.  **OAHP** expects that the most efficient reuse of the IRP will
    usually be as debt service on one piece of a bifurcated loan. Any
    deal that models the IRP reuse using the bifurcated approach is
    therefore not required to model and compare alternate IRP reuse
    scenarios.

B.  However, the PAE still has responsibility for determining the
    optimum approach for each restructuring. After completion of
    modeling using the 236 bifurcation model, the PAE may convert the
    baseline bifurcation model to the standard model and try modeling
    the deal with IRP to reserve for replacements or a single amortizing
    first (see G. below).

    1.  In determining the optimum approach for a specific project, the
        PAE should consider the entire deal, including but not limited
        to: the size of the FHA claim payment (or write-down if
        HUD-held), use or avoidance of exception rents, and the amount
        of IRP reused by the project.

    2.  If the PAE recommendation is other than the bifurcation model,
        the PAE must address the options considered and conclusions
        reached in the narrative and retain copies of all relevant
        models. (The PAE cannot recommend an alternate reuse without
        first completing the 236 bifurcation model and comparing the
        results.)

        V.  Mandatory Modeling with the 236 Bifurcation Model

            A.  **When beginning to restructure a 236 project that has
                not been previously modeled**, the PAE must use the 236
                Bifurcation Model posted on OAHP's Webpage. (If an
                earlier version of the model has already been started,
                contact OAHP's MIS Department for assistance in
                converting to the bifurcated model.)

            B.  **The 236 bifurcation model includes three 236 specific
                pages: Scheduled IRP, Bifurcation, and IRP Closing
                Exhibits.** It also includes flags, notes and changes to
                some descriptions/labels of columns or rows to clarify
                whether references to loan amount and debt service refer
                to the A piece, B piece, or both (especially on the DS &
                Loan Sizing and 2nd Loan Pro Forma pages). If there will
                be new FHA insurance, the MIP figure shown will be based
                on the total loan amount (A + B pieces) because all MIP
                will be paid by the owner out of cash flow.

            C.  **Original IRP Schedule** -- The PAE must input the
                monthly IRP payment amounts and dates from the
                original/current IRP schedule (obtained from the current
                lender/servicer) into the IRP Schedule worksheet. Do not
                just multiply the monthly IRP payment now being paid by
                the remaining term of the first. IRP amounts changed
                each year in the original schedule so inputting just the
                current payment will overstate the IRP amount available.

```{=html}
<!-- -->
```
1.  The model calculates the total IRP available for reuse based on the
    anticipated closing date entered by the PAE on the Loan Input page.
    As that date is changed in the model, the funds available will also
    be adjusted automatically. This will assist OAHP and the PAE in
    insuring that IRP funds are not overestimated.

2.  Cell G8 asks for the first month that IRP is available for use
    toward the new mortgage. Enter the first day of the second month
    after the date of the mortgage. The first payment to principal and
    interest is also generally due on the first day of the second month
    after the date of the mortgage. The model automatically computes the
    maximum annual amount of IRP available per year and other data on
    this page.

    C.  **Definitions of A and B-piece:** The M2M underwriting model
        sizes the A-piece using the IRP payments and the B piece using
        cash flow/operations. All references in Appendix Q to the A
        piece of a bifurcated loan apply to the portion of the total
        loan amount sized based on IRP payments. The loan amount
        supportable by the IRP will typically be larger than the amount
        supportable by cash flow/operations and in some cases
        (especially deals requiring exception rent) there will be no B
        piece supportable by cash flow/operations.

    D.  **Sizing the A-piece - Bifurcation Page -** The model feeds the
        interest rate entered for the B piece from the DS and Loan
        Sizing page into C8 here. If the interest rate on the A piece is
        different (will often be lower, especially if bond financed)
        enter that rate instead. Enter the loan term to amortize the A
        piece. The model calculates the debt supportable by even monthly
        payments of IRP as debt service and prepares an amortization
        schedule for the A piece. The A-piece (IRP) will generally be
        sized based on:

        1.  the shortest possible amortization schedule in complete
            years, but never shorter than the remaining term of the
            original 236, (partial year amortizations, e.g., 15.5 years
            are not acceptable);

        2.  a lower interest rate reflecting lender's consideration of
            direct payment of IRP by HUD, the full faith and credit of
            the federal government, and, in many instances, favorable
            terms related to bond financing;

        3.  the full available IRP amount (i.e., no vacancy or
            collection losses deducted from IRP);

        4.  a debt service coverage ratio of 100%; and

        5.  do not deduct payments for MIP when sizing the A piece. If
            the new loan will be FHA insured, the model calculates MIP
            required on the total loan amount (both the A and B piece)
            and all MIP will be paid by the owner out of cash flow (see
            sizing the B piece below.)

        6.  Since the 236 statute does not permit payment of IRP funds
            to owners, items c), d), and e), above cannot be adjusted by
            the PAE.

            C.  **Sizing the B-piece:** The B piece will generally have
                an amortization period, interest rate, and other terms
                reflecting standard M2M processing. However, the PAE
                should select a DSCR for the B-piece that reflects
                consideration of the fact that the DSCR on the A-piece
                is 100% (provides no cushion) and that, if FHA insurance
                is proposed, the total MIP for A and B pieces will come
                from cash flow.

                1.  Lines 66-69 of the 2nd Loan Pro Forma breakout the
                    DSCR used in sizing the B piece and the overall DSCR
                    based on the total loan amount (A and B). These
                    calculations can assist PAEs in demonstrating to
                    potential lenders that the loans meet their basic
                    underwriting standards.

                2.  Lines 126-140 provide additional information to
                    assist in determining adequacy of coverage levels
                    for operating expenses, CRP, IPF, etc.

                3.  To achieve the necessary overall debt coverage on
                    the B piece, the PAE will sometimes determine that
                    no additional debt is supportable by cash flow,
                    eliminating the B piece. It is still appropriate to
                    use IRP to support first mortgage debt and continue
                    to use the bifurcation model. (This will often occur
                    when the restructured project requires exception
                    rents but may also occur at market rent levels.) If
                    there is no B piece, the PAE must adjust the term of
                    the M2M debt to match the term of the first with
                    only an A piece.

                4.  The OPG generally limits total amortizing debt after
                    a restructuring to the appraised value of the
                    property at the time of restructuring. The PAE
                    should request a waiver of the OPG to exceed that
                    limit when the bifurcated loan amount supportable by
                    IRP and cash flow exceeds the appraised value.

                    VI. **Optional Modeling of other Reuses of IRP**

```{=html}
<!-- -->
```
A.  The PAE may (not required) choose to model other IRP reuse scenarios
    in addition to the baseline bifurcation approach (e.g., IRP to the
    reserve for replacement account or a single amortizing first). To do
    so, the PAE must convert the baseline 236 bifurcation model to the
    standard M2M underwriting model. Refer to step by step instructions
    for conversion on the last worksheet page ("Create Standard Model")
    of the 236 bifurcation model.

B.  When modeling IRP payments to the reserve for replacement account,
    the amount to be reused must be disbursed evenly over either:

    1.  the term of the post-restructuring first lien (fully amortizing)
        mortgage, or

    2.  the term of the M2M Mortgage Restructuring Note when it is in
        first lien position (no amortizing first lien), or

    3.  the remaining term of the original 236. This may be appropriate
        where there are high anticipated reserve needs early in the loan
        term, and/or the need to build up the reserves and accumulate
        interest on reserves. Note: When deposits to the reserve are
        frontloaded in this way, the PAE must consider and address how
        reserve needs will be funded in the period after the exhaustion
        of the IRP.

```{=html}
<!-- -->
```
VII. Updating IRP Amounts Prior to Issuing the Restructuring Commitment.
     The PAE must always update the model to reflect any changes in the
     estimated closing date prior to issuing the Restructuring
     Commitment and again prior to Closing. When the closing date is
     changed in the model, the amount of IRP available will
     automatically be updated as well as the sizing of the A piece. The
     PAE must include specific language in the Restructuring Commitment
     regarding potential changes to the loan amount resulting from
     changes in closing dates (see J. below).

VIII. Closing Responsibilities Tied to IRP Reuse.

      A.  **No HUD Multifamily Housing involvement is necessary if IRP
          reuse goes**:

          1.  for payments to the Reserve for Replacement account, or

          2.  to support debt on new takeout financing that is a
              223(a)(7) refinance or a 236 mortgage modification.

```{=html}
<!-- -->
```
B.  **OPG Appendix N Attachment 7** provides specific guidance on
    preparing the 290 form for a 223(a)(7) refinance when the loan has a
    bifurcated amortization schedule. (PAEs should enter the total
    amount of the first P&I payment due (total of A & B) in Item 14 and
    print to the right \"SPECIAL AMORTIZATION REQUIRED\". This notifies
    HUD's accounting staff to refer to the Mortgage Note and manually
    load the amortization schedules into the F47 data system.)
    Paragraph J. below provides language to be included in the
    Restructuring Commitment addressing required IRP related closing
    documents.

C.  **OAHP and the PAE must coordinate** the IRP decoupling and reuse
    with Multifamily (MF) Housing staff in the appropriate HUD Hub or
    Program Center when IRP goes to support debt on new takeout
    financing that is neither a 223(a)(7) refinance nor a 236 mortgage
    modification. MF Housing refers to this reuse as "decoupling" the
    IRP from the original 236 loan so it can support other, amortizing,
    first lien debt. PAE coordination and follow-up with the owner and
    the local HUD office on the decoupling is essential. OAHP does not
    have legal authority to close the IRP reuse aspects of those deals
    -- Housing must be involved. (Concern about coordination is not, on
    its own, an acceptable justification for re-using IRP instead for
    deposit to the Reserve for Replacement account.) If MF Housing must
    decouple the IRP:

    1.  The PAE must promptly notify MF Housing when IRP decoupling is
        required and request that MF complete the decoupling approval
        letter and prepare the appropriate closing documents.

    2.  The PAE must provide MF Housing with theM2M underwriting model
        for review.

    3.  The PAE must include language conditioning approval and closing
        on MF Housing's approval of decoupling consistent with the terms
        and conditions set forth in the Restructuring Commitment (see J.
        below)

    4.  The PAE must review MF Housing's decoupling approval letter and
        verify that it is consistent with the terms and conditions set
        forth in the Restructuring Commitment. Any discrepancies (e.g.,
        a difference in the proposed IRP reuse schedule) must be
        resolved prior to closing.

    5.  MF Housing's Field Counsel will prepare the appropriate
        decoupling documents for execution at closing and oversee their
        execution.

    6.  MF Housing staff in the field should contact the appropriate
        Headquarters MF Housing staff for assistance:

    7.  The HUD Closing attorney must promptly submit the new IRP
        schedule and documentation (to avoid delays in future IRP
        payments) to HUD's Office of Accounting Operations at HUD-CFO,
        Program Accounting Division, Room 3226, 451 7th St. SW,
        Washington DC 20005.

D.  **Language for Restructuring Commitment** and 223(a)(7) Firm
    Commitment (if applicable). The owner must be provided complete,
    written notification of the 236 requirements so that there is a
    clear record of what documentation is required for execution and all
    parties are clear on their responsibilities.

```{=html}
<!-- -->
```
1.  M2M Restructuring Commitment - Suggested wording for Item 13 of the
    Restructuring Commitment (Special Conditions), including
    identification of documentation required for closing, follows in
    J.3. below.

2.  223(a)(7) Firm Commitment - If the proposed takeout financing will
    be FHA insured under 223(a)(7), the language in J.3. below must also
    be included by the PAE in the special conditions section of the
    223(a)(7) Firm Commitment.

3.  The following describes how the PAE should complete the suggested
    language that follows for the appropriate Commitments:

    a.  For ALL 236 projects, insert the language in A through D below
        plus the applicable paragraph from E below plus the applicable
        paragraph from F below.

    b.  Instructions and guidance for the PAE is provided within
        \[brackets\] and should not be included in the final
        document/conditions.

    c.  Insert data as instructed where italicized and underlined.

    d.  Where attachments are required, we have provided
        \[instructions\] identifying where to find those draft
        documents. Number them in accordance with the instructions in
        the Restructuring Commitment (e.g., Attachment 1, 2, 3, etc).

        IX. Special Conditions for projects originally financed under
            Section 236.

```{=html}
<!-- -->
```
A.  **Effective** enter closing date the 236 basic rents for this
    project are enter new section 8 rents by bedroom size.

B.  **Effective** enter closing date the 236 market rents for this
    project are : enter new section 8 rents by bedroom size. \[same as A
    above\]

C.  **These new 236 rents, as well as the new Section 8 rents must be
    reflected by the owner on the Rent Schedule, form HUD-92458**, which
    must be submitted with the Owner's first voucher for payment under
    the new HAP Contract.

D.  **The Owner** is required to continue to operate the project as a
    236 through enter date , except that if new takeout financing is
    provided that requires decoupling the IRP from the 236 loan to
    support payments toward other debt, this date shall be as specified
    in the decoupling approval and contract documents executed at
    Closing. \[Insert the later of the following dates: 1) the end of
    the original 236 mortgage term, 2) the end of the new 223(a)(7)/236
    mortgage term (if a bifurcated loan, use the term related to the IRP
    payments), or 3) the end of the modified 236 mortgage term\]

```{=html}
<!-- -->
```
X.  Regulatory Agreement and M2M Rider**.** \[Insert one of the
    following paragraphs, based on the anticipated take-out financing
    reflected in this Restructuring Commitment as Item E (and renumber
    subparagraphs appropriately).\]

    24. **This 236 loan is being refinanced pursuant to 223(a)(7).** At
        Closing, the Owner must execute the following documents:

        1.  **New 236 Regulatory Agreement, copy attached**. \[Use the
            7-77 edition of the same form number as the original
            Agreement (e.g., HUD 93135 for NP, 93136 for LD), unless the
            type of mortgagor entity will change as a result of a TPA.
            Hard copies can be obtained from OAHP's Closing Team.
            Electronic files for those forms are available in Standard
            Legal Documents section, OPG Chapter 7 on the OAHP website
            (not available from HUDCLIPS).\]

        2.  **M2M Rider** to the 236 Regulatory Agreement, copy
            attached. \[Copies available from the Standard Legal
            Documents section, OPG Chapter 7 on the OAHP website.\]

        3.  The same form of Regulatory Agreement and Rider required for
            the first will be executed for the M2M Mortgage
            Restructuring Note and Contingent Repayment Note.

            B.  **This 236 loan is being modified (not paid off)** and
                the existing 236 Regulatory Agreement will remain in
                place. At Closing, the Owner must execute:

```{=html}
<!-- -->
```
1.  M2M Rider to the 236 Regulatory Agreement, copy attached. \[Copies
    available from the Standard Legal Documents section, OPG Chapter 7
    on the OAHP website.\]

2.  The same form of Regulatory Agreement and Rider required for the
    first will be executed for the M2M Mortgage Restructuring Note and
    Contingent Repayment Note.

    C.  **This 236 loan is being paid off** (or written off if HUD held)
        and refinanced with takeout financing that is not a 223(a)(7)
        insured loan. \[(e.g., 221(d)(3) or (4), 223(f), conventional,
        Risk Sharing)\]. The basic M2M Rider to the Regulatory Agreement
        will be executed at Closing \[not the 236 Rider\].

```{=html}
<!-- -->
```
1.  If the takeout is FHA insured (223(f), 221(d)(3) or (4)), the local
    HUD office processing the loan application will address the
    appropriate documentation (e.g., Regulatory Agreement) for the new
    first in their approval and ensure those documents are executed at
    Closing. The PAE attorney must prepare the following documents for
    execution at Closing:

    a.  (The basic Rider to the Regulatory Agreement -- as a supplement
        to the Regulatory Agreement prepared by MF Housing. \[not the
        236 Rider\]

    b.  Regulatory Agreements and Riders for the M2M Mortgage
        Restructuring Note and Contingent Repayment Note. Use the same
        form of Regulatory Agreements that MF Housing prepares for the
        new FHA insured first, and the basic M2M Rider for each.

2.  If the new takeout is not FHA insured, use the form HUD-92465 and
    the basic M2M Rider to the Regulatory Agreement \[not the 236
    Rider\] for the M2M Mortgage Restructuring Note and Contingent
    Repayment Note.

    D.  **This 236 loan is being paid off or totally written off and
        there will be no amortizing loan in first lien position after
        the restructuring**. The original Regulatory Agreement will be
        released. Use the form HUD-92465 and the basic M2M Rider to the
        Regulatory Agreement \[not the 236 Rider\] for the M2M Mortgage
        Restructuring Note and Contingent Repayment Note.

        X.  IRP Reuse**.** \[Insert one of the following paragraphs,
            based on the anticipated reuse of IRP reflected in this
            Restructuring Commitment as Item F (and renumber
            subparagraphs appropriately).\]

            A.  **IRP will be reused for payments** to the Lender for
                debt service on insert "the new 236 insured financing
                pursuant to 223(a)(7)" or "the modified 236 mortgage".
                \[Go to 2. below if IRP reuse goes to support any other
                type takeout financing.\]

```{=html}
<!-- -->
```
1.  HUD will disburse from time to time for the benefit of the Project,
    IRP Funds in the aggregate amount of \$\_insert cumulative total \$
    being reused \_, to be disbursed as \_\_insert total \# of monthly
    payments\_\_ level monthly payments of \$\_insert monthly
    amount\_\_, except that in no event shall the amount committed for
    reuse exceed the actual IRP amount remaining and available for reuse
    from the original 236 project allocation as of the actual closing
    date. These amounts are based on IRP available assuming a projected
    closing date of \_insert estimated closing date used in analysis. If
    the actual closing date changes the total IRP and monthly amounts
    will be adjusted by the PAE and this Commitment must be amended
    accordingly.

2.  The contract for reuse is reflected in the 236 regulations at
    24CFR236.501 which provides as follows: "This subpart shall
    constitute the interest reduction payment contract between the
    mortgagee and the Commissioner with respect to a mortgage insured
    under section 236 of the National Housing Act. The endorsement of
    the mortgage for insurance shall constitute the execution of the
    interest reduction payment contract with respect to the mortgage
    being insured."

3.  Upon Closing, the PAE Closing Attorney must provide HUD's Office of
    Accounting Operations (HUD-CFO, Program Accounting Division, Room
    3226, 451 7th St. SW, Washington DC 20005) with copies of the
    following documentation:

    a.  the IRP Closing Exhibit page of the 236 bifurcation model. (If
        IRP reuse is not based on results of this model, prepare and
        submit a new payment schedule for the approved reuse; and a copy
        of the original amortization schedule.)

    b.  a copy of this Restructuring Commitment; and

    c.  the operative 236 Regulatory Agreement.

```{=html}
<!-- -->
```
4.  If the original 236 mortgage is HUD-held and will be modified as
    part of the restructuring, a copy of the IRP documentation must also
    be sent to Data Prompt Services (HUD\'s servicer for HUD-held loans)
    so they can adjust their monthly billing to HUD for future IRP
    payments. Submit to Data Prompt Services, 11911 Tech Rd., Silver
    Spring, MD 20914-1961.

    B.  **IRP will be reused for payments** to the new Lender for debt
        service on an amortizing first lien loan that is neither a
        223(a)(7) of a 236 nor a modification of an existing 236 loan.
        MF Housing staff must process the IRP reuse for this project.
        (MF Housing refers to this as "decoupling" the IRP from the
        original 236 loan so it can support other, amortizing first lien
        debt.) The owner must promptly submit a request for decoupling
        to the local HUD MF Housing office with jurisdiction so that
        they can simultaneously process the IRP decoupling. The PAE will
        provide MF Housing with information from the M2M underwriting
        model for use in reviewing the decoupling request. This
        Commitment is conditioned upon MF Housing's approval of the IRP
        decoupling as described herein and the owner's execution, at
        Closing, of contract documents which implement the IRP
        decoupling and reuse of IRP as follows:

```{=html}
<!-- -->
```
1.  HUD will disburse from time to time for the benefit of the Project,
    IRP Funds in the aggregate amount of \$\_insert cumulative total \$
    being reused \_, to be disbursed as \_\_insert total \# of monthly
    payments\_\_ level monthly payments of \$\_insert monthly amount\_\_
    except that in no event shall the amount committed for reuse exceed
    the actual IRP amount remaining and available for reuse from the
    original 236 project allocation as of the actual closing date. These
    amounts are based on IRP available assuming a projected closing date
    of \_insert estimated closing date used in analysis. If the actual
    closing date changes the total IRP and monthly amounts will be
    adjusted by the PAE and this Commitment must be amended accordingly.

2.  The PAE must verify that the terms and conditions of MF Housing's
    decoupling approval letter are consistent with this Commitment. Any
    discrepancies must be resolved prior to Closing (e.g., if different
    amortization schedule, etc.). MF Housing's Field Counsel will
    prepare the appropriate decoupling documents for execution at
    Closing and handle that aspect. \[Do NOT attach the 236(s) grant and
    use agreement! -- the Decoupling Approval will include copies of the
    appropriate, different documents for the owner to sign\]

3.  Upon Closing, the PAE Attorney must retain copies of the decoupling
    approval letter and the executed documents related to the decoupling
    for the docket file. MF Housing's Field Counsel will provide the
    necessary paperwork to implement the change in IRP payments related
    to the decoupling to HUD's Office of Accounting Operations (HUD-CFO,
    Program Accounting Division, Room 3226, 451 7th St. SW, Washington
    DC 20005).

    C.  **IRP will be reused for payments** to the Lender for deposit
        into the Project's Reserve for Replacement Account (the "Reserve
        Account").

```{=html}
<!-- -->
```
1.  HUD will disburse, from time to time, for the benefit of the
    Project, IRP Funds in the aggregate amount of \$\_insert cumulative
    total \$ being reused \_, to be disbursed as \_\_insert total \# of
    monthly payments\_\_ level monthly payments of \$\_insert monthly
    amount\_\_ except that in no event shall the amount committed for
    reuse exceed the actual IRP amount remaining and available for reuse
    from the original 236 project allocation as of the actual closing
    date. These amounts are based on IRP available assuming a projected
    closing date of \_insert estimated closing date used in analysis. If
    the actual closing date changes the total IRP and monthly amounts
    will be adjusted by the PAE and this Commitment must be amended
    accordingly.

2.  At closing, the Owner must enter into a 236(s) Grant Agreement and
    236(s) Use Agreement. These documents address the statutory
    requirement that the owner continue to operate the Project as a 236
    for a period not less than the remaining term of the original 236
    mortgage. Copies of the grant and use agreements are attached. An
    IRP reuse schedule reflecting the above terms and conditions will be
    an exhibit to the 236(s) Grant Agreement. \[Copies available from
    the Standard Legal Documents section, OPG Chapter 7 on the OAHP
    website (entitled M2M 236(s) grant agmt and use agmt).\]

3.  Upon Closing, the PAE Closing Attorney must provide HUD's Office of
    Accounting Operations (HUD-CFO, Program Accounting Division, Room
    3226, 451 7th St. SW, Washington DC 20005) with copies of the
    following documentation:

    a.  the new payment schedule for reuse of IRP (may use the schedule
        attached as exhibit to the 236(s) Grant Agreement);

    b.  the original amortization schedule (to cross reference the new
        schedule with the original project allocations);

    c.  a copy of this Restructuring Commitment; and

    d.  \(4\) copies of the executed Grant Agreement and Use Agreement.

```{=html}
<!-- -->
```
4.  If the original 236 loan will remain HUD held, a copy of the
    documentation must also be sent to Data Prompt Services (HUD\'s
    servicer for HUD-held loans) so they can adjust their monthly
    billing to HUD for future IRP payments. (Submit to Data Prompt
    Services, 11911 Tech Rd., Silver Spring, MD 20914-1961.) This will
    occur either when:

    a.  a HUD held 236 mortgage is modified, or

    b.  a HUD held 236 is totally written off and new takeout financing
        (amortizing debt) is not originated.