7375.01 REV-2, CHG 2

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CHAPTER 13. LOCAL PROCESSING AGENCY ADMINISTRATIVE REQUIREMENTS

13-1. INTRODUCTION. This Chapter contains the administrative

requirements governing all Local Processing Agencies (LPAs)

participating in the Section 312 Rehabilitation Loan Program, as

well as the additional guidelines for Local Processing Agencies

which are granted the authority to approve certain Section 312

loans.

13-2. REQUIREMENTS GOVERNING ALL LOCAL PROCESSING AGENCIES PARTICIPATING

IN THE SECTION 312 PROGRAM.

a\. Participation Agreement. All Local Processing Agencies

participating in the Section 312 Rehabilitation Loan Program

must execute with HUD Part I of the Participation Agreement,

which deals with loan processing (see Exhibit 13-1). This Part

of the Agreement authorizes the LPA to process Section 312

Rehabilitation Loan applications, and to submit qualifying

applications to HUD with the LPA\'s recommendation to approve

them. The Agreement also sets forth the legal relationship

between HUD and the LPA regarding the Section 312 Program.

(See Paragraph 13-3 of this Handbook for the additional

requirements governing LPAs which are awarded the authority to

approve certain Section 312 loans.)

b\. Local Processing Agencies and Localities. The Participation

Agreement is legally between HUD and a Local Processing Agency.

A Local Processing Agency, as defined in Paragraph 1-4-aa of

this Handbook, is the local, public agency that processes

Section 312 loans. A Locality, as defined in Paragraph 1-4-z

of this Handbook, is a unit of general local government, such

as a city or a county. An LPA may be one of the following:

\(1\) A department, agency, office or other organizational unit

of the local government, in which case the Participation

Agreement must be executed by the chief executive of the

local government, or

\(2\) A public agency designated by the locality to function as

the LPA on behalf of the locality (including but not

limited to an independent redevelopment agency) in which

case the Participation Agreement must be executed by the

chief executive of the LPA and approved by the chief

executive of the locality.

c\. LPA Functions. LPAs must comply with all the requirements

detailed in this Handbook and the Participation Agreement, and

with all other applicable Federal laws, regulations, policies

and procedures. In brief summary, LPA\'s loan processing-duties

include, but are not limited to, the following:

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7375.01 REV-2, CHG 2

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\(1\) Accepting Section 312 inquiries and initially screening

prospective borrowers to check whether they may qualify for

a Section 312 loan;

\(2\) Assisting prospective borrowers in completing the HUD

application forms;

\(3\) Obtaining and verifying information on the prospective

borrower\'s credit, finances and property;

\(4\) Inspecting the property and assuring that work write-ups

and cost estimates are prepared in accordance with the

requirements in this Handbook;

\(5\) Assisting the prospective borrower to obtain a contractor;

\(6\) Determining whether the prospective borrower, his or her

property, and the proposed work meet the eligibility

requirements of the Section 312 Rehabilitation Loan

Program;

\(7\) Determining whether the borrower is an acceptable credit

risk, and certifying the loan to HUD as approvable in

accordance with this Handbook;

\(8\) Arranging for loan settlement, and ensuring that the

appropriate HUD loan documents are used and that they are

completed correctly;

\(9\) Conducting construction inspections, requesting loan

disbursements from HUD on behalf of the borrower, using

such disbursements to make progress and final construction

payments to the borrower (or to the contractor on behalf of

the borrower), and assisting in resolving disputes

concerning construction; and

\(10\) Implementing the other requirements of the Cash Management

Notice (CPD 86-13 or successor issuance).

The foregoing brief enumeration of the Public Body\'s duties

shall not be construed to expand, define or limit the duties of

the Public Body more fully described elsewhere in this Handbook

or in the Participation Agreement.

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7375.01 REV-2, CHG 2

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d\. Staffing a Section 312 Rehabilitation Loan Program. An LPA\'s

duties and responsibilities in processing Section 312 loans may

be carried out by LPA employees, or by individuals,

partnerships or for-profit or non-profit corporations under

contract to the LPA. (See Paragraph 13-2-e of this Handbook

for requirements governing contracts with independent service

providers.) In any event, the LPA through its staff or

independent service providers, must maintain a continuing

capacity to perform adequately the following functions:

\(1\) Financial Analysis, including overseeing the financial

data verification process, performing underwriting and

credit-worthiness analysis of applicants, assisting the

borrower to prepare the application, and coordinating the

loan settlement and disbursement processes. Persons

performing these functions must have training in basic

lending and underwriting practices, a knowledge of real

estate settlement procedures and familiarity with the Cash

Management requirements of the Section 312 Program.

\(2\) Rehabilitation Construction Analysis, including performing

initial property inspection, determining basic

rehabilitation needs for code compliance, developing or

reviewing work write-up/specifications and cost estimates,

and performing work progress and completion inspections.

Persons performing these functions should have a broad

background in construction management and cost analysis as

well as a working knowledge of local code requirements.

\(3\) Clerical/Intake, including assisting the applicant in

completing their Section 312 application, typing all

necessary correspondence, verification requests, and other

forms, and handling routine telephone requests for

information. Persons performing these functions should

have strong interpersonal and clerical skills.

\(4\) Program Management/Supervision, including providing

overall direction, coordination, management and

supervision to the other members of the rehabilitation

team. Persons performing this function should have strong

leadership, management and interpersonal skills.

e\. Contracting with Independent Service Providers to Carry out LPA

Administrative Responsibilities. The LPA may enter into one or

more service contracts with individuals, partnerships or

private non-profit or for-profit corporations to perform some

or all of the functions detailed in the Participation

Agreement, Part 1, but not

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7375.01 REV-2, CHG 2

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the loan approval functions described in Part II of the

Agreement (see Exhibit 13-1) or executing the documents

described in Paragraph 13-2-f of this Handbook. Services which

may be contracted out include, but are not limited to,

conducting work write-ups and cost estimates, providing loan

settlement or construction inspection services, and verifying

financial information. Such service contract shall not relieve

the LPA of legal responsibility for the actions taken by the

service provider. It may provide that the contractor shall

indemnify the LPA for any loss caused by the contractor\'s

actions, provided that such indemnification shall not be a

condition precedent to the LPA\'s payment for the loss.

The requirements governing procurements for these type of

services depend on who takes primary responsibility for the

procurement.

\(1\) If the LPA assumes responsibility for the procurement, the

requirements of 24 CFR 85.36 apply to the selection of the

contractors, if either CDBG or Section 312 funds are used

to pay the contractor.

\(2\) If the borrower assumes responsibility, it is not required

that the procurement be in compliance with the procurement

requirements in this Handbook or with 24 CFR 85.36.

\(3\) In cases where the service contract is funded with proceeds

from the borrower\'s Section 312 loan, regardless of whether

the LPA or the borrower assumes responsibility for the

procurement, the requirements of Chapter 3 governing

eligible uses of Section 312 loan funds must be met.

\(4\) Deciding whether the LPA or Borrower Assumes

Responsibility. The LPA is deemed to have assumed

responsibility for the procurement if the LPA selects the

service contractor and negotiates the price and requires

only the owner\'s written approval of the contractor\'s

selection, or if the LPA requires that a particular service

provider be used. If, on the other hand, the owner makes

the actual selection of the service contractor, the LPA is

not seen as assuming responsibility.

The borrower is deemed to have the responsibility even if

the LPA assists the borrower by providing technical

assistance, collecting and summarizing bids, or advising

the borrower on how to evaluate a service contractor\'s

proposal, provided that the borrower remains free to accept

the proposal or reject it and seek other eligible service

providers.

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7375.01 REV-2, CHG 2

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\(5\) Requirements of 24 CFR 85.36. This regulation states that

for procurements of services costing in the aggregate of

not more than \$25,000, \"relatively simple and informal

procurement methods\" may be utilized. For other

procurements, noncompetitive negotiation, competitive

negotiation, or competitive sealed bids (formal

advertising) may be required, depending on the situation.

For more details, see 24 CFR 85.36, originally published

on March 11, 1988, in 53 F.R. 8034.

f\. Executing Certifications and Recommendations on the

Application. Even if an LPA contracts with an independent

service provider to carry out certain LPA administrative

responsibilities in accordance with Paragraph 13-2-e of this

Handbook, an authorized LPA official must execute the

applicable certifications and recommendations on the Section

312 application (Blocks F and G on the HUD-6230 for

owner-occupants of single-family properties and Blocks X and XI

on the HUD-6243 for all other borrowers), the Notice of

Cancellation (6230-C), Security Form (40027), Direct Deposit

Authorization (40026), and Disposition of Funds Statement

(Guideform 11-1). In addition, where an opinion or other

action of LPA counsel is required by this Handbook (e.g.

Section 9-3.g, concerning enforceability of loan documents

executed at settlement, or sign-off on Public Body

Participation Agreement, Parts I and II, Exhibit 13-1), the

counsel must have a direct attorney-client relationship with

the LPA rather than being an employee or attorney of an

independent service provider.

g\. LPA Responsibility to Inform HUD if Basis for Cancelling a Loan

Occurs. If the LPA determines that one or more of the

conditions in the Rehabilitation Loan Agreement, Section 6-a,

occurs, the LPA must so inform the HUD Field Office. The

conditions stipulated in this Section of the Rehabilitation

Loan Agreement include but are not limited to the following:

\(1\) If construction does not begin within 60 days from the

date the LPA gives notice to the borrower and any

contractor to commence work;

\(2\) If the borrower or contractor ceases construction work for

more than 30 days, unless extended by HUD in accordance

with the requirements governing such extensions;

\(3\) If the borrower abandons the property.

If settlement has occurred and the LPA has not drawn down

Section 312 funds, the LPA must complete a Notice of

Cancellation Form (HUD-6230-C) and submit it to the

Rehabilitation Management Specialist in the HUD Field Office

for approval. If settlement has

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7375.01 REV-2, CHG 2

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occurred and loan funds have been disbursed, the LPA must inform

the Rehabilitation Management Specialist in the HUD Field Office,

in which case HUD will determine whether it will terminate the

loan. (See Paragraph 9-7 of the Handbook and the Cash Management

Notice for further information on loan cancellations,

terminations, and pay-offs.)

h\. Record-keeping. The LPA must keep and maintain full and accurate

books and records of its administration of the Section 312

Program. At a minimum, the LPA must maintain the following

information for the specified periods of time:

\(1\) Documentation of the basis upon which the LPA determined and

certified to HUD that the rehabilitation financed by a

Section 312 loan would be part of, or necessary or

appropriate to, the execution of a HUD CDBG, UDAG or Urban

Homesteading Program. This must be retained for 3 years

from the completion of rehabilitation.

\(2\) Copies of all correspondence, applications, verifications,

work write-ups, rehabilitation contracts and Self-Help

Agreements, cost estimates, inspection reports, vouchers and

other disbursement records, accounts, the register of

significant contacts with the borrower, and legal documents

related to each approved loan. These must be retained

for 3 years following the date of completion of the Section

312-assisted rehabilitation.

\(3\) All records of the kinds described in Paragraph 13-2-h-(2)

related to a potential loan application or contact with a

potential borrower for whom processing of his/her Section

312 loan application is eventually terminated or the loan

disapproved. These must be retained for 2 years after the

last contact with the potential borrower, or after he/she

was notified that processing of the loan application was

terminated or the loan disapproved, whichever is later.

\(4\) For loans to investor-owners of properties with five or more

dwelling units subject to the Rent Regulatory Agreement (see

Paragraph 9-2-c and Exhibits 9-3 and 9-4 of this Handbook),

the LPA must retain all information related to rent

increases exceeding the initially allowed maximum gross rent

for the property for 2 years after the termination of the

Rent Regulatory Agreement.

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7375.01 REV-2, CHG 3

\(5\) Records containing current and accurate data on the race

and ethnicity of program participants/beneficiaries, in

order to enable HUD to meet the requirement imposed upon it

by Section 562 of the Housing and Community Development Act

of 1987. For the purposes of section 562, \"participants\"

means rehab contractors and owners of buildings with

Section 312 loans. \"Beneficiaries\" means the occupants of

single family and multifamily homes receiving Section 312

assistance. These types of records must be retained for 3

years after the rehabilitation is complete.

i\. Self-Monitoring. Each LPA must develop procedures to monitor

its own administration of the Section 312 Program in order to

ensure quality control. For instance, the LPA may require

senior staff to randomly monitor staff work write-ups and cost

estimates by reinspecting selected properties themselves and

then reviewing the staffs\' reports, and to re-underwrite

selected loans to ensure that all program requirements are

being met.

j\. Audit. Since HUD supports the purposes of the Single Audit Act

and wishes to minimize the expense and burden that

single-program audit would entail, HUD will accept an audit

that meets the standards of 24 CFR 44.3 to 24 CFR 44.5, which

is performed concurrently with any audit performed under the

Single Audit Act, and includes the LPA\'s Section 312-related

activities within its scope, in lieu of any other audit of such

activities that HUD might require at the LPA\'s expense. An

audit that the LPA obtains under this paragraph shall be

submitted to the Regional Inspector General for Audit. \*

13-3. REQUIREMENTS GOVERNING LPAs WITH LOCAL APPROVAL AUTHORITY

a\. Loans An LPA May Approve. LPAs which obtain local loan

approval authority in accordance with Paragraph 13-3-c of this

Handbook may approve Section 312 loans only for eligible

residential properties containing one- to four-dwelling units

after rehabilitation which do not contain any non-residential

leasable space and which do not involve refinancing of existing

debt (as described in Paragraph 3-3 of this Handbook). So long

as an LPA has local loan approval authority in accordance with

Paragraph 13-3-c of this Handbook, that LPA need not submit any

such locally approvable loans to HUD for approval.

b\. Criteria for Evaluating LPAs. The determination of whether or

not an LPA is qualified to approve certain loans must be made

by the HUD Field Office. To select the LPA for approval

authority, the Field Office must determine that the LPA has:

\(1\) Sufficient staff, with demonstrated ability to

successfully undertake the tasks detailed in the

Participation Agreement (Exhibit 13-1), Part I, Section 2;

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7375.01 REV-2, CHG 3

\(2\) A thorough understanding of HUD requirements related to

Section 312 rehabilitation loans;

\(3\) A continuing capacity to train new staff with minimal HUD

Field Office assistance;

\(4\) A rehabilitation workload large enough to warrant

decentralization of loan approval authority;

\(5\) Demonstrated an ability to complete projects before

amortization effective date, comply with underwriting

criteria and have a delinquency rate lower than the

Regional and State average.

c\. Obtaining Local Loan Approval Authority. Either the LPA or the

HUD Field Office may initiate discussions concerning local loan

approval. However, When the HUD Field Office determines that

an LPA has demonstrated a capacity to undertake approval of

certain rehabilitation loan applications, it must notify the

LPA by letter. To request loan approval authority, the LPA

must transmit to the HUD Field Office (Attention: Director of

Community Planning and Development) four originals of the

Participation Agreement, Part I concerning loan processing (if

not already executed by HUD and the LPA), and Part II

concerning local loan approval authority, executed by an

authorized official of the LPA.

If the CPD Director is prepared to recommend that local loan

approval be granted, he/she shall verify that the necessary

documents have been submitted and prepare a memorandum

recommending that the Field Office Manager or Regional

Administrator, as applicable, execute the Agreement for HUD.

The Director shall route the approval package, including the

locally-executed documents, to the Field Office or Regional

Counsel, as applicable, for legal review prior to their

execution by the Field Office Manager.

When accepted, the HUD Field Office shall enter the effective

date on Parts I and II of the Agreement, and return two fully

executed originals to the LPA.

d\. If the LPA wishes to change the designated Approving Officer,

it should submit a proposed Amendment to the Agreement,

prepared by Public Body Counsel, to the HUD Field Office for

approval. Until the Field Office advises the LPA in writing

that the designee is approved, the designee may not act as the

Approving Officer.

e\. Processing Loans

\(1\) Determining Acceptable Risk. Localities with Local Loan

Approval Authority are responsible for evaluating the

underwriting risks involved in each individual case and to

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7375.01 REV-2, CHG 3

protect the Federal government\'s interest and minimize

losses under the Section 312 Program by rejecting

applications deemed unacceptable. (See Chapter 7 for

criteria for underwriting Section 312 loans.)

\(2\) Transmitting Loan Documents to HUD. An LPA that is

authorized to approve rehabilitation loan applications must

submit to the HUD Field Office the complete and approved

original and two copies of HUD Form 6230 or HUD Form 6243.

This is to provide HUD the statistical data needed for

program administration, to allow for the entry of the loan

into HUD\'s automated Cash Management System, and for

verification of fund availability and recordation of the

obligation by the Regional Accounting Division for each

approval loan. In addition, the Field Office will review

all approved applications to determine whether the loan, on

its face, meets the requirements for a 3 percent interest

rate, if applicable, or whether the Treasury rate is

appropriate for the week it was approved by the LPA.

\(3\) Restriction on Notifying Applicant of Loan Approval. After

a loan application has been approved by the LPA, the

approval, as such, becomes a valid approval only if funds

are available. Consequently, no loan approval under the

Participation Agreement is valid until the HUD Regional

Accounting Division determines that funds are available for

the subject application, and notifies the Cash Management

Contractor and Field Office, in accordance with Paragraph

8-3 of this Handbook and the Cash Management Notice. The

LPA must not notify any prospective borrower that his/her

loan has been approved until receipt of such notice from

the Field Office. The LPA must note in its files the means

and date of notification to the applicant of loan approval.

\(4\) Using a Loan Committee. While the LPA must designate an

\"Approving Officer\" to obtain loan approval authority, it

may utilize a \"loan committee\" approach to review and

recommend loan applications to the Approving Officer. This

committee can be comprised of Community Development

personnel, local business or banking professionals, city

finance personnel and perhaps community organization

representatives. Use of a loan committee can assure an

even-handed evaluation of applications and allow input by

other municipal and private sector persons, thereby

strengthening the loan review process.

Public sector officials on a loan committee or involved in

any other way in the Section 312 loan review process must

comply with the conflict of interest requirements detailed

in Paragraph 12-15 of this Handbook. During the time that

a private sector official is on a loan committee or 1 year

thereafter, they are also covered by Paragraph 12-15 of

this Handbook.

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Exhibit 13-1

I-1

AGREEMENT FOR PUBLIC BODIES PARTICIPATING IN THE

SECTION 312 REHABILITATION LOAN PROGRAM

PART I - LOAN PROCESSING

THIS AGREEMENT has been executed and entered into by and

between
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(Fill in name of city, county, or other local governmental entity)

(hereinafter referred to as the \"Public Body\"), and the United States
of

America, acting by and through the Secretary of Housing and Urban

Development (hereinafter referred to as the \"Secretary\") for effect on

the date specified in Section 7 below.

IN CONSIDERATION OF THEIR MUTUAL COVENANTS, PROMISES, AND

REPRESENTATIONS CONTAINED HEREIN, THE PARTIES DO AGREE AS FOLLOWS:

Section 1. PURPOSE OF AGREEMENT

The Public Body has responsibility and jurisdiction to carry out

one or more local Community Development Block Grant (CDBG), Urban

Development Action Grant (UDAG), or Urban Homesteading Programs with

resources provided in part by the Secretary pursuant to applicable

regulations, policies and requirements. In connection with such

Program(s), this Agreement authorizes the Public Body to process, and to

submit to the Secretary with the Public Body\'s recommendation to

approve, applications by private property owners for rehabilitation

loans under Section 312 of the Housing Act of 1964, as amended (42

U.S.C. 1452b, hereinafter referred to as \"Section 312 loans\"). This

Agreement delineates the legal relationship between the Secretary and

the Public Body with respect to the making of such loans. All Public

Bodies authorized to process Section 312 loans for the Secretary\'s

approval, shall execute this PART I; Public Bodies which are also

authorized to approve certain Section 312 loans on behalf of the

Secretary shall in addition separately execute PART II-LOCAL LOAN

APPROVAL, which shall be deemed incorporated by reference in this

Agreement after its execution by the parties thereto.

Section 2. COMPLIANCE WITH PROGRAM REQUIREMENTS

In carrying out loan processing or approval activities under this

Agreement, the Public Body shall comply with all applicable laws

(including Section 312), the Secretary\'s Section 312 regulations at 24

CFR Part 510, all other applicable Federal regulations, this Agreement,

and the Secretary\'s additional requirements, policies, and procedures
in

the Section 312 Rehabilitation Loan Program Handbook (HUD-7375.01

REV-2), the Cash Management System Notice (CPD 86-13), and any

applicable successor or additional issuances (hereinafter collectively

referred to as \"Program Requirements\").

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I-2

Under this Agreement, and in accordance with such Program Requirements,

the Public Body\'s loan processing duties generally include, but are not

limited to, the following:

a\. Accepting Section 312 inquiries and initially screening

prospective borrowers to check whether they may qualify for a

Section 312 loan:

b\. Assisting prospective borrowers in completing the HUD

application forms;

c\. Obtaining and verifying information on the prospective

borrower\'s credit, finances and property;

d\. Inspecting the property that is the subject of a Section 312

application and assuring that work write-ups and cost estimates are

prepared in accordance with Program Requirements;

e\. Assisting the prospective borrower to obtain a contractor;

f\. Determining whether the prospective borrower, his or her

property, and the proposed work meet the eligibility requirements

of the Section 312 Rehabilitation Loan Program;

g\. Determining whether the borrower is an acceptable credit risk,

and certifying the loan to HUD as approvable under all Program

Requirements, which includes certifying that the rehabilitation is

a part of, or is necessary or appropriate to the execution of, a

CDBG, UDAG, or Urban Homesteading Program;

h\. Arranging for loan settlement, including assuring that the loan

is made using the appropriate HUD loan documents, correctly

completed;

i\. Conducting construction inspections, requesting loan

disbursements from HUD on behalf of the borrower, using such

disbursements to make progress and final construction payments to

the borrower (or to the contractor on behalf of the borrower), and

assisting in resolving disputes concerning construction, in

accordance with the Program Requirements; and

j\. Implementing the other requirements of the Cash Management

System Notice (CPD 86-13 or successor issuance);

The foregoing brief enumeration of the Public Body\'s duties shall not
be

construed to expand, define or limit the duties of the Public Body

described in the Program Requirements. In the event of any conflict

between the foregoing description and the Program Requirements, the

Program Requirements shall be controlling.

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

I-3

SECTION 3. EFFECT OF PUBLIC BODY\'S FAILURE TO COMPLY

a\. Government Actions Against Public Bodies. The Secretary

reserves the right to take administrative corrective or remedial action,

in accordance with Section 9 of this Agreement, against a Public Body

which fails to comply with the Program Requirements. This Agreement

sets forth only the Secretary\'s administrative remedies under the

Section 312 Program, and nothing in this Agreement shall be construed

as either expanding or limiting any otherwise available civil or

criminal actions by the United States or the Secretary against the

Public Body, or any employee or contractor of the Public Body, whether

or not acting within the scope of their authority.

b\. Actions By Government Against Borrower or Third Parties. The

legal rights of the Government and a borrower with respect to any

Section 312 loan are controlled by the loan documents executed with

respect to that loan. Nothing in this Agreement shall be construed to

impair the rights of the United States or the Secretary to collect a

Section 312 loan in accordance with the loan documents, or to take any

otherwise available civil or criminal action against a borrower or any

third party in connection with a Section 312 loan.

c\. Actions by Borrower or Third Parties Against Government. The

Public Body acts as an independent contractor and not as the
Secretary\'s

agent in performing its functions under this Agreement. As stated in

the Rehabilitation Loan Agreement between the Secretary and each

borrower, the Secretary accepts no legal responsibility to the borrower

to supervise the Public Body in performing any function under the

Section 312 program. Although the Secretary mandates under the Program

Requirements that the Public Body undertake certain functions in

processing, approval, settlement and disbursement of Section 312 loans,

the Secretary does so for the financial benefit of the United States and

in furtherance of national program objectives, not for the direct

benefit of the individual borrower. The failure of the Public Body

properly to perform any of the Program Requirements shall not create or

justify any claim against the Secretary on the part of a Section 312

borrower, or any other person (including any rehabilitation contractor

or supplier or a tenant in an assisted property), and it shall not

constitute grounds for the borrower or any third party to contest the

validity of any Section 312 processed or approved by the Public Body

under this Agreement.

d\. Action by Borrower or Third Parties Against Public Body. The

extent of liability, if any, of the Public Body to the borrower or any

third party with respect to any function performed by the Public Body

under this Agreement or the Program Requirements shall be determined in

accordance with applicable State and local law. Nothing in this

Agreement shall be construed to mandate liability, or create a cause of

action of any kind, by the borrower or any third party against the

Public Body or by the Public Body against the borrower.

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

I-4

e\. Defend and Hold Harmless. Notwithstanding any other provision

of this Agreement, including Section 3.c. above, the Public Body will

warrant, defend and hold harmless the Government with respect to any and

all claims and losses caused by its failure to comply with the Program

Requirements or the requirements of applicable State and local law in

its processing or approval of Section 312 loans under this Agreement, or

in the subsequent settlement and administration of loans.

SECTION 4. PROGRAM ADMINISTRATION AND RECORD-KEEPING

a\. The Public Body agrees that it will, at all proper times,

provide or cause to be provided competent and adequate architectural,

engineering, financial, legal and other technical skills needed in

administering the Section 312 program, complying with the Program

Requirements, and supervising and inspecting rehabilitation work

financed by Section 312 loans processed or approved under this

Agreement. The Public Body may retain employees to carry out its duties

under this Agreement, or (as permitted by State and local law) it may

enter into one or more services contracts with individuals or private

nonprofit or for-profit organizations, including financial institutions,

to perform all or any of its functions in connection with the Section

312 loan program, except for loan approval. If any such contract for

services is funded in whole or in part by CDBG funds pursuant to 24 CFR

570.202(b)(9) or 570.206, all applicable requirements of 24 CFR Part 570

apply to the selection of the contractor (if selected by the Public

Body, rather than a borrower) and the performance of the services

rendered under the contract, as further explained in the Program

Requirements. If any such contract for services will be funded with

Section 312 funds by inclusion of an amount in an approved loan to

compensate the contractor for the contractor\'s services, the contractor

(if selected by the Public Body, rather than a borrower) shall be

selected in accordance with Section 6-5.b. of the current Section 312

Rehabilitation Loan Program Handbook, or comparable provisions of any

successor issuance, in addition to all other requirements flowing from

the use of Section 312 funds, such as equal opportunity and minority and

women\'s business enterprise requirements. Notwithstanding the existence

of any such contract for services, HUD will hold the Public Body

responsible for compliance with the Program Requirements, as fully as if

the Public Body itself had performed the contracted services.

Wherever the term \"Public Body\" is used in this Agreement, it includes

any of the Public Body\'s employees or contractors who perform services

related to the Section 312 program.

b\. The Public Body shall keep and maintain full and accurate books

and records with respect to its administration of the Section 312 loan

program. At a minimum, \"full and accurate books and records\" shall

include the specific items, which shall be retained for the specific

periods, set forth in Section \_\_\_\_\_\_\_\_\_ of the current Section
312

Rehabilitation Loan Program Handbook, or comparable provisions of any

successor issuance. The Public Body shall, at any time during normal

business hours, and as often as the Secretary or the Comptroller General

of the United States may deem necessary, permit the Secretary or

Comptroller General or their representatives to inspect, make excerpts

or transcripts of, copy, and audit, any and all of its books and records

related to the Section 312 program.

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

I-5

SECTION 5. MAKING AND TERMINATING LOAN OBLIGATIONS

a\. Upon receipt of the documentation required by the Program

Requirements to be submitted to the Secretary for loan approval, the

Secretary will review the loan for compliance with all such Requirements

and will advise the Public Body whether or not the loan is approved by

sending the Public Body written notification of loan approval followed

by one or more validated copies of the approved application. Until both

the written notification and validated application(s) are received, the

Public Body is not authorized to advise any potential borrower that his

or her loan application has been approved by the Secretary. The

Secretary is not legally committed to make a Section 312 loan to any

borrower until the written notification of approval is sent to the

Public Body after recordation of the loan obligation by the applicable

HUD Regional Accounting Division.

b\. After notification of loan approval as described in Section

4.a. above and before loan settlement (closing), the Secretary and/or

the Public Body may cancel an approved Section 312 loan only for the

following reasons:

\(i\) Failure of the borrower and the Public Body to pay the

required application fee and any escrow amounts, provide any

necessary Supplemental Financing, and close the loan in accordance

with the Program requirements and within the time period specified

(see Paragraphs 2-3.b and 9-1 to 9-5 of current Handbook,

HUD-7375.01 REV-2, or comparable provisions of any successor

issuance);

\(ii\) The loan is cancelled with the consent of the borrower

pursuant to procedures in the above-cited Handbook or any successor

issuance (see Paragraph 9-7 of current Handbook);

\(iii\) The loan is rescinded by a borrower in accordance with

Truth-in-Lending procedures (see Paragraph 9-2.d. of current

Handbook, or comparable provisions of any successor issuance);

\(iv\) Any reason stated in Paragraphs 6.a.(5) through (8) of the

Rehabilitation Loan Agreement required to be executed between the

borrower and the Secretary at loan closing (see Exhibit 9-11 to the

above cited Handbook), or comparable provisions in any successor

form of Agreement.

c\. After loan settlement, the Secretary and/or the Public Body may

cancel or terminate the loan only for the reasons set forth in Paragraph

6 of the Rehabilitation Loan Agreement between the Secretary and the

borrower with respect to the approved loan.

SECTION 6. RIGHTS UNDER OTHER CONTRACTS

The rights of the parties under this Agreement shall be in addition

to, and not in derogation of, the rights of the same parties under the

separate contract for Federal assistance for any of the Public Body\'s

Programs described in Section 1 hereof.

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

I-6

SECTION 7. EFFECTIVE DATE AND TERM OF AGREEMENT

a\. This Agreement shall take effect on
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

or on the date of its execution by the last of the parties hereto to

execute this Agreement, whichever date is later.

b\. This Agreement shall remain in effect until suspended or

terminated in accordance with Section 8 or 9 of this Agreement. As long

as this Agreement is in effect, the Public Body may process and

submit Section 312 loans to the Secretary for approval, subject to the

availability of Section 312 funds for obligation

SECTION 8. VOLUNTARY SUSPENSION OR TERMINATION.

a\. Suspension at Public Body Request. Whenever the Public Body

believes that it lacks the capacity to process or approve loans in

accordance with the Program Requirements, as applicable, it shall give

the Secretary notice that it is temporarily suspending both Parts I

and II of this Agreement, or only Part II of this Agreement, as

applicable. In addition, the Public Body may, in its discretion, give

the Secretary notice for any other reason that it is temporarily

suspending Parts I and II, or Part II only, at any other time. Any such

suspension shall be effective immediately when sent or at any later time

specified by the Public Body, up to thirty (30) calendar days after the

notice is sent, provided that the Secretary may require the Public Body

to continue under Part II for a specified period, not to exceed sixty

\(60\) days, in order to accommodate the additional loan approval
workload

if the Public Body has elected to suspend its functions only under Part

II of this Agreement. After a suspension at the Public Body\'s request

under this Section 8.a., the suspended functions under this Agreement

may not be reinstated except with the written consent of both parties.

b\. Termination. Parts I and II of this Agreement, or Part II

only, shall terminate without any further action by either party hereto

after \_\_\_\_\_\_\_\_\_ consecutive calendar months of suspension,
unless

earlier terminated for cause or convenience by the Secretary. In

addition, the Public Body may give the Secretary notice that it is

terminating this Agreement at any time for any reason. Any such

termination shall be effective immediately when sent, provided that the

Secretary may require the Public Body to continue under Part II for a

specified period, not to exceed sixty (60) days, in order to accommodate

the additional loan approval workload if the Public Body has elected to

terminate its functions only under Part II of this Agreement. In

addition, if the Secretary should decide for the convenience of the

Government to discontinue permitting Public Bodies to process and

approve, or only to approve, Section 312 loans, the Secretary may give

the Public Body (together with other Public Bodies participating in the

Section 312 program) notice of termination of Part I and Part II, or

only Part II, of this Agreement, as of the date specified by the

Secretary.

c\. Effect of Suspension or Termination. While Parts I and II of

this Agreement are suspended or terminated under Section 8 or 9 hereof,

the Public Body is not authorized to submit additional loans to the

Secretary for approval, or to approve additional loans, and it shall

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

I-7

incur no additional costs under the CDBG program for processing or

approving Section 312 loans, unless otherwise specifically authorized in

writing by the Secretary. However, unless otherwise specifically

directed by the Secretary in writing, the Public Body shall continue to

take all actions necessary to comply with the Program Requirements with

respect to all loans approved by the Secretary or the Public Body, as

applicable, prior to the notice of suspension or termination, including

the performance of affirmative activities such as closing approved

loans, inspecting properties being rehabilitated, and requesting

disbursement of loan funds on behalf of the borrower; and it may

continue to incur costs under the CDBG program (in accordance with all

CDBG requirements) for those continuing loan administration

activities. If only Part II of this Agreement is suspended or

terminated under Section 8 or 9 hereof, the Public Body may continue to

process and submit loans to the Secretary for approval, and it may incur

costs under the CDBG program for that activity (in accordance with all

CDBG requirements), but it may not approve the Section 312 loans under

Part II, nor may it incur CDBG program costs for that function.

SECTION 9. CORRECTIVE OR REMEDIAL ACTIONS

The Secretary may take corrective or remedial actions against the

Public Body if the Secretary determines, in his or her sole judgment,

that the Public Body has failed to comply with one or more of the

Program Requirements. Prior to initiating any corrective or remedial

actions under Paragraphs c. through j. of this Section, the Secretary

shall give the Public Body thirty (30) days advance notice in writing of

the Secretary\'s specific findings of noncompliance with Program

Requirements and of the proposed corrective or remedial action(s). The

Public Body may submit information to mitigate or rebut the Secretary\'s

findings during such thirty day period and the Secretary will consider

such information, but the corrective or remedial action(s) will remain

in effect unless modified or withdrawn by the Secretary. Corrective or

remedial actions may include one or more of the following:

a\. Directing the Public Body to submit to additional information

on their Section 312 Loan Program activities and/or progress

schedules or other types of reports;

b\. Issuing a letter of warning advising the Public Body of the

specific program deficiency(s) of further actions which will be

taken if the appropriate corrective action(s) are not taken;

c\. Reducing the internal HUD Section 312 loan fund assignment (if

any) for the Public Body for the current fiscal year or reducing

any such assignment for the next fiscal year;

d\. Suspending Parts I and II, or only Part 11, of this Agreement,

for a succeeding fiscal year subject to correction of specific

deficiencies noted by the Secretary (conditional suspension);

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

I-8

e\. Requesting the Public Body to voluntarily make local public

funds available to a borrower to complete the rehabilitation of his

or her property where HUD determines that the Public Body\'s

deficient administration resulted in rehabilitation that did not

meet both the requirements of the rehabilitation contract and

reasonable standards of quality for the work involved;

f\. Advising the Public Body that it may no longer process certain

classes of Section 312 loan applications until specific deficiencies

in the processing of such applications are corrected by the Public

Body; provided that the Public Body shall continue to administer

already approved loans of the affected classes unless otherwise

specified in writing by the Secretary;

g\. Advising the Public Body that it may no longer approve certain

classes of Section 312 loan applications until specific

deficiencies in the approval of such applications are corrected by

the Public Body; provided that the Public Body shall continue to

administer already approved loans of the affected classes unless

otherwise specified in writing by the Secretary;

h\. Giving the Public Body written notice of suspension of Part I

and Part II, or only Part II, of this Agreement for specified cause

for a specified period; provided that such suspension shall have

the effect set forth in Section 8.c. of this Agreement unless

otherwise specified in writing by the Secretary;

i\. Giving the Public Body written notice of termination of Part I

and Part II, or only Part II, of this Agreement for specified

cause; provided that such termination shall have the effect set

forth in Section 8.c. of this Agreement unless otherwise specified

in writing by the Secretary;

j\. Declaring an area or a locality ineligible for further Section

312 lending; provided that the Public Body shall continue to

administer Section 312 loans already approved in the area or

locality unless otherwise specified in writing by the Secretary.

SECTION 10. ACKNOWLEDGEMENT OF RECEIPT

By causing this Agreement to be duly executed and its seal to be

hereunto affixed and attested, the Public Body acknowledges that it has

received a copy of the current Section 312 Rehabilitation Loan Program

Handbook (HUD-7375.01 REV-2) and the Cash Management System Notice (CPD

Notice 86-13). The Public Body further acknowledges that it will inform

the applicable HUD Field Office, in writing, if there is any change in

the Public Body Contact Person listed in Section 11 of this Agreement,

so that the Secretary may notify the Public Body of any revisions to the

Program Requirements.

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

I-9

SECTION 11. PUBLIC BODY CONTACT

The following is the name, title, address and telephone number of

the primary Public Body contact person. This is the person to whom the

Secretary will direct all notices under this Agreement and all issuances

or other information or requirements from the Secretary concerning the

Section 312 Loan Program. The Public Body agrees that it will

immediately inform the Secretary if the name, title, address or

telephone number of the Public Body contact changes.

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

Name

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

Title

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

Department or Agency

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

Street Address or P.O. Box

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

City, State and Zip Code

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

Telephone (including Area Code)

IN WITNESSETH WHEREOF, the Public Body has caused this Agreement to

be duly executed in its behalf and its seal to be hereunto affixed and

attested; and, thereafter, the Secretary has caused the same to be duly

executed in its behalf on the dates respectively specified below.

SEAL

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

(Name of Public Body)

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

(Signature)

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

(Name of Public Body Official)

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

(Title)

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

(Date)

ATTEST:

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

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

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

I-10

UNITED STATES OF AMERICA

Secretary of Housing and

Urban Development

BY \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(Signature)

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

(Field Office Manager)

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

(Date)

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

II-1

AGREEMENT FOR PUBLIC BODIES PARTICIPATING IN

SECTION 312 REHABILITATION LOAN PROGRAM

PART II - LOCAL LOAN APPROVAL

SECTION 1. PURPOSE

Upon execution, this PART II is hereby incorporated by reference

within the AGREEMENT FOR PUBLIC BODIES PARTICIPATING IN THE SECTION 312

REHABILITATION LOAN PROGRAM, PART I - LOAN PROCESSING, also executed by

the parties hereto. The purpose of this PART II is to extend to the

Public Body authority to approve certain applications for Section 312

loans processed by the Public Body under PART 1, subject to verification

by the Secretary of fund availability for an approved loan.

SECTION 2. APPLICABILITY OF LOCAL APPROVAL AUTHORITY

During the term of this Agreement, the Public Body shall have final

authority to approve or disapprove, in accordance with this Agreement

and the Program Requirements (including the loan underwriting criteria

in Chapter 7 of the Section 312 Rehabilitation Loan Program Handbook),

applications for Section 312 loans which have been processed by the

Public Body under Part I, which will contain one-to four-residential

dwelling units after rehabilitation and no nonresidential leasable space

and which do not involve refinancing of existing debt (as described in

Section 3-3 of the HUD Section 312 Rehabilitation Loan Program

Handbook). Loans involving refinancing shall be processed by the Public

Body but must be submitted to HUD for final approval. While this Part

II is in effect, the Public Body shall not submit to HUD for approval

Section 312 loans that the Public Body is authorized to approve under

this Agreement.

SECTION 3. HUD NOTIFICATION OF FUND AVAILABILITY

Upon receipt of the documentation required by the Program

Requirements (see Section 8-3 of the HUD Section 312 Rehabilitation Loan

Program Handbook and Section C-1 of the Section 312 Cash Management

System Notice) to be submitted with respect to Section 312 loans

approved by a Public Body, the Secretary shall promptly notify the

Public Body in writing whether sufficient funds are available for the

approved loan. No loan approval under this Agreement shall be valid

until the Secretary (through the applicable Regional Accounting

Division) has determined that funds are available therefor and has

notified the Public Body thereof, in accordance with Section 8-3 of the

HUD Section 312 Rehabilitation Loan Program Handbook and Section C-1 of

the Section 312 Cash Management System Notice. The Public Body shall

not notify any prospective borrower of loan approval until receipt of

such notice of availability of funds for the loan from the Secretary.

Once a Section 312 loan has been approved and the Public Body has been

notified of fund availability as set forth in this Section, it may not

be disapproved, cancelled, or modified by the Public Body or the

Secretary except for the reasons stated in Sections 5.b. and c. of

Part I of this Agreement.

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

II-2

SECTION 4. OFFICIALS AUTHORIZED TO APPROVE LOANS

a\. Criteria. Persons selected as Approving Officers for the

Section 312 loans approved under this Agreement shall have supervisory

or executive level responsibilities within the Public Body and must have

total familiarity with Section 312 requirements and policies, as well as

rehabilitation standards and financing and underwriting principles

common in the industry. However, the Public Body shall not initially,

or at any time during the term of this Agreement, confer its authority

to approve Section 312 loans under this Agreement upon any officer or

employee who personally and regularly exercises any direct

responsibilities in the administration of individual Section 312 loans

handled under the Public Body\'s Section 312 Loan Program, including,

without limitation:

1\. Preparing rehabilitation work write-ups or cost estimates, or

construction contract documents;

2\. Completing with the borrower, verifying information with

respect to, or processing a Section 312 loan application or any of the

related documents constituting the loan application file, up to the

point of approval;

3\. Assisting the borrower to select or negotiate with contractors

to perform the rehabilitation;

4\. Inspecting the rehabilitation work to ascertain whether the

work is completed or for the purpose of authorizing any partial payment

requested by a contractor; or

5\. Authorizing signing or signing Certificates of Final

Inspection.

b\. Designation.
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_,

(Name)

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_,
an employee of the

(Title)

Public Body, is hereby designated as the Approving Officer authorized to

approve Section 312 loans for the Public Body pursuant to this

Agreement.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_,

(Name)

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_,
an employee of the

(Title)

Public Body is hereby designated as Alternate Approving Officer

authorized to approve Section 312 loans for the Public Body pursuant to

this Agreement in the absence of the Approving Officer.

c\. Changing Approving Officers. The Public Body shall promptly

transmit to the Secretary a proposed amendment to this Agreement

executed by the Chief Executive Officer of the Public Body whenever it

wishes to change the identity of Public Body Officials authorized to

approve Section 312 loans under this Agreement. The amendment must be

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

II-3

agreed to by the Secretary before the new officials are authorized to

approve Section 312 loans. A loan submitted to HUD for funding and

purporting to be approved by an Approving Official who is not authorized

to approve Section 312 loans will be summarily returned to the Public

Body without action.

SECTION 5. TERM AND EFFECTIVE DATE

a\. This Part II shall take effect on
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

or on the date of its execution by the last of the parties to execute

this Agreement, whichever date is later.

b\. This Part II shall remain in effect until suspended or

terminated in accordance with Section 8 or 9 of Part I of this

Agreement. Any corrective and remedial actions affecting this Part II,

including suspension or termination for cause, shall be taken in

accordance with Section 9 of Part I and shall have the effect stated

therein.

IN WITNESSETH WHEREOF, the Public Body has caused this Attachment

to be duly executed in its behalf and its seal to be hereunto affixed

and attested; and, thereafter, the Secretary has caused the same to be

duly executed in its behalf this
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

day of \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_, 19
\_\_\_\_.

SEAL

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

(Name of Public Body)

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

(Signature)

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

(Name of Public Body Official)

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

(Title)

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

(Date)

ATTEST:

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

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

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

II-4

UNITED STATES OF AMERICA

Secretary of Housing and

Urban Development

BY \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(Signature)

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

(Title of Officer)

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(Date)