[Federal Register Volume 83, Number 123 (Tuesday, June 26, 2018)]
[Notices]
[Pages 29815-29820]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-13660]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-7001-N-28]


30-Day Notice of Proposed Information Collection: HUD Multifamily 
Rental Project Closing Documents

AGENCY: Office of the Chief Information Officer, HUD.

ACTION: Notice.

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SUMMARY: HUD has submitted the proposed information collection 
requirement described below to the Office of Management and Budget 
(OMB) for review, in accordance with the Paperwork Reduction Act (PRA). 
The purpose of this notice is to allow for an additional 30 days of 
public comment.

DATES: Comments Due Date: July 26, 2018.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposal. Comments should refer to the proposal by name and/or OMB 
Control Number and should be sent to: HUD Desk Officer, Office of 
Management and Budget, New Executive Office Building, Washington, DC 
20503; fax: 202-395-5806, Email: <a href="/cdn-cgi/l/email-protection#3f70766d7e6c4a5d52564c4c5650517f50525d115a504f11585049"><span class="__cf_email__" data-cfemail="84cbcdd6c5d7f1e6e9edf7f7edebeac4ebe9e6aae1ebf4aae3ebf2">[email protected]</span></a>.

FOR FURTHER INFORMATION CONTACT: Colette Pollard, Reports Management 
Officer, QMAC, Department of Housing and Urban Development, 451 7th 
Street SW, Washington, DC 20410, email Colette <a href="/cdn-cgi/l/email-protection#6f3f0003030e1d0b2f071a0b41080019"><span class="__cf_email__" data-cfemail="fcac9390909d8e98bc948998d29b938a">[email protected]</span></a>, or 
telephone 202-402-3400. This is not a toll-free number. Persons with 
hearing or speech impairments may access this number through TTY by 
calling the toll-free Federal Relay Service at (800) 877-8339. Copies 
of available documents to be submitted to OMB may be found at: https://www.hud.gov/program_offices/housing/mfh/mfhclosingdocuments or obtained 
from Ms. Pollard.

SUPPLEMENTARY INFORMATION: This notice informs the public that HUD is 
seeking approval from OMB for the information collection described in 
Section A. The previous PRA Federal Register notice that solicited 
public

[[Page 29816]]

comment on the information collection for a period of 60 days was 
published on September 5, 2017 at 82 FR 41977.

A. Overview of Information Collection

    Title of Information Collection: HUD Multifamily Rental Project 
Closing Documents.
    OMB Approval Number: 2502-0598.
    Type of Request: Extension of currently approved collection and 
implementation of two new forms, with revisions to certain documents as 
shown in redline comparison found at the website link above.
    Form Numbers: HUD-91070M; HUD-91071M; HUD-91073M; HUD-91710M; HUD-
91712M: HUD-91725M; HUD-91725M-CERT; HUD-91725M-INST; HUD-92023M; HUD-
92070M; HUD-92223M; HUD-92408M; HUD-92412M; HUD-92414M; HUD-92420M; 
HUD-92434M; HUD-92441M; HUD-92442M; HUD-92450M; HUD-92452A-M; HUD-
92452M; HUD-92455M; HUD-92456M; HUD-92464M; HUD-92466M; HUD-92476.1M; 
HUD-92476aM; HUD-92476M; HUD-92477M; HUD-92478M; HUD-92479M; HUD-
92554M; HUD-92907M; HUD-92908M; HUD-93305M; HUD-94000M; HUD-94001M.
    Description of the need for the information and proposed use: The 
Closing Documents are used in FHA-insured multifamily rental project 
transactions. In connection with this 30-day notice, HUD generally 
tried to improve the forms in terms of readability and editorial 
corrections, while also addressing public comments received in 
connection with the 60-day notice. While complying with the PRA, this 
30-day notice provides information beyond that normally provided in 
such notices. This notice identifies substantive changes that HUD has 
made to the Closing Documents in response to public comments submitted 
in response to the 60-day notice and responds to significant issues 
raised by commenters on the Closing Documents. HUD received comments 
from four law firms and one industry group.

Discussion of Significant Revisions

Consolidated Certifications--Borrower, HUD-91070M
    One commenter suggested HUD merge the Owner's Certification and 
Acknowledgement of Program Obligation for Broadly Affordable, 
Affordable and Green/Energy Efficient Multifamily Housing Mortgage 
Insurance Premiums (MIPs) and the Acceptance of Housing Choice 
Vouchers, form HUD-92013-D, with the Consolidated Certifications--
Borrower, to make the closing process more efficient and reduce the 
number of forms used in closings. HUD agreed with the suggestion and 
merged the 92013-D into the HUD-91070M.
Survey Instructions and Report, HUD-91073M
    One commenter suggested HUD's Office of Multifamily Housing 
Production (Multifamily Housing) eliminate the Report portion of the 
document consistent with the LEAN/232 Healthcare program, and that to 
have the two programs with different closing requirements is arbitrary 
and capricious. HUD declines to accept this suggested change and 
comment. The risks associated with the two programs are different, thus 
it is not arbitrary and capricious for the two programs to have 
different requirements. Here, HUD has determined that the Report is 
necessary because it calls attention to important property 
characteristics, allowing HUD staff to more efficiently address the 
findings to protect HUD's interests. With the recent improvements to 
the form, HUD believes the burden estimate is realistic.
Opinion of Borrower's Counsel, HUD-91725M
    One commenter suggested changes concerning evidence of foreign 
qualification of entities within the organizational structure, as set 
out in Section I. HUD agreed with the comment and added an instruction 
to the HUD-91725M-INST to ``include foreign qualification when Borrower 
has qualified the entity voluntarily or such qualification is required 
by state law or HUD Program Obligations.''
    HUD disagreed with a comment that Section 1, paragraph S (Residual 
Receipts Note/Surplus Cash Note) should be deleted or moved because of 
new paragraph W for private secondary financing. HUD has determined 
that there may be instances where there is only a Surplus Cash Note.
    Regarding Section 1, paragraph MM (Additional Transaction 
Documents), one commenter noted that the change to include all 
documents related to the loan closing could result in disclosure of 
certain due diligence certifications and documents that HUD does not 
allow lenders to recite in the lender certification documents. HUD 
agreed with the comment and modified the HUD-91725M-INST to limit 
paragraph MM to ``all loan documents related to the FHA closing that 
will be delivered at closing that are not otherwise listed in the form 
Opinion . . .''
    HUD agreed with a comment to modify the language in opinion 4 
concerning authorization related to controlling entities within the 
borrower's organizational hierarchy ``whose authorization is 
required.'' HUD rejected a comment to delete opinion 9 because 
Multifamily Housing does in fact permit trusts as borrower entities per 
the MAP Guide.
    One commenter stated that the addition of ``Supporting Documents'' 
in opinion 11 is a change in policy, and that it results in HUD asking 
for an opinion about whether LIHTC documents prevail over the bond 
documents or vice versa. HUD disagreed with this comment as the concept 
of ``Supporting Documents'' is not new to the form. Further, neither 
``Primary Loan Documents'' nor ``Supporting Loan Documents'' include 
the secondary financing documents, Source Documents, or tax credit 
documents in paragraphs T-W of Section I. Consequently, HUD is not 
asking for an opinion about which of these documents would control over 
the others in the event there is a conflict. HUD disagreed with a 
similar comment about the addition of ``Supporting Documents'' in 
opinion 12 for the same reason.
    One commenter objected to the required disclosure of litigation 
threatened in writing in confirmation (g) of Section IV. HUD determined 
such disclosure is necessary because HUD is aware of situations where 
threatened litigation resulted in actual of filing of litigation. 
Further, HUD is adding the requirement in the 91725-INST that 
litigation threatened in writing must not only be identified, but a 
detailed explanation and risk assessment must be provided.
Exhibit A to Opinion of Borrower's Counsel, HUD-91725-CERT
    One commenter noted that the Section 7 certification that there is 
no default under the Regulatory Agreement would only be applicable in 
the context of a refinancing where there is an existing HUD Regulatory 
Agreement. HUD agreed with the comment and revised the language to 
clarify that also no state of facts that exists now or that with the 
passage of time will result in a default under the Regulatory Agreement 
or PEA (for Section 6).
    HUD agreed to a suggestion from one commenter to revise the 
signature block in the HUD-91725M to reflect signature by an attorney 
or law firm, which HUD points out is currently allowed in the 
Instructions.
Instructions to Opinion of Borrower's Counsel, HUD-91725M-INST
    HUD made several changes to the 91725M-INST that resulted from

[[Page 29817]]

comments discussed above relative to the HUD-91725M.
    Two commenters objected to the requirement that paragraphs Y 
(Zoning) and GG (Utility Letters) be dated within 120 days of closing 
as being too inflexible. HUD agreed with the comment and revised the 
instructions to reflect that the timeframe for the documentation will 
vary depending on the circumstances and specific facts of a given 
transaction, keeping in mind that HUD is interested in receiving recent 
documentation. Notwithstanding, the date of documentation must not be 
more than one year prior to closing.
    One commenter stated that the instruction for Section I, paragraph 
a, seems to indicate all organizational documents up the chain of the 
borrower must be included in the Opinion, even if they do not show up 
in the signature block of the borrower. The commenter also believes 
that discretion should be afforded to the local counsel to determine 
which organizational documents are necessary or relevant to issue the 
legal opinion in accordance with state law. HUD disagreed with this 
comment. Discretion is provided to local counsel, but the Opinion form 
is drafted to ensure that all entities in the chain are identified if 
necessary to establish authorization. The instructions state: ``. . . 
Borrower's Counsel's review must include the organizational documents 
of Borrower and any controlling entity within the Borrower's 
organizational hierarchy to the extent necessary to provide the 
required opinion.''
    HUD made a correction to the instructions for paragraph T (Public 
Entity Agreement) of Section I to establish that the term not only 
covers agreements between a borrower and a public entity, but also any 
agreement which binds the project, regardless of whether the current 
borrower is a signatory.
Lease Addendum, HUD-92070M
    One commenter suggested HUD add bracketed options for different 
possible defined terms for the parties and documents. HUD rejected this 
suggestion because the different possible names are too numerous, and 
there is already flexibility to allow the underlying terms from the 
lease to be incorporated into the defined terms of the Lease Addendum. 
In response to a comment about the definition of ``days,'' HUD revised 
the form to clarify that ``days'' means calendar days. HUD agreed with 
a comment to revise the form to require landlords to deliver an 
estoppel certificate from time to time to the tenant, lender, or HUD.
    HUD disagreed with a comment to add Native American tribal lands as 
a public entity eligible for waiver of the HUD option to purchase in 
Section 7. HUD Multifamily Housing will consider such requests on a 
case-by-case basis in Headquarters due to the unique and complex laws 
and requirements governing Native American tribal land.
    One commenter requested clarification of lender's cure and 
foreclosure rights under Section 11. HUD rejected this comment as it 
appeared to confuse lender's rights under the Lease Addendum with 
lender's rights under the Security Instrument. The Security Instrument 
provides that borrower's failure to pay to lender ground rents is a 
Monetary Event of Default under the Security Instrument; HUD determined 
the Lease Addendum does not also need to provide that nonpayment of 
ground rents is a default under the Security Instrument.
    Another comment requested HUD add a finite term to the cure period 
in Section 11. HUD disagreed with the comment because the time required 
to cure will vary depending on the circumstances. Consequently, HUD has 
determined that reasonableness is the appropriate standard where the 
lender or HUD are reasonably and diligently pursuing a cure of a Ground 
Lease Event of Default.
Surplus Cash Note, HUD-92223M
    One commenter suggested the recent addition of the limitation on 
borrowers' repayment to 75% of cumulative Surplus Cash in Section 2 
should not be in this document but rather in the Regulatory Agreement. 
HUD disagreed with the comment because it is important that payees of 
borrowers have no doubt or misunderstanding about this limitation when 
the borrower is the maker on multiple Surplus Cash Notes or any other 
subordinate loans. Payees will not necessarily know to look to the 
Regulatory Agreement for this restriction on repayment. Another 
commenter suggested that the limitation is mathematically unclear, with 
which HUD disagreed. The comment didn't seem to take into consideration 
that a borrower could be the maker on more than one Surplus Cash Note, 
and without the language in question, could result in the borrower 
paying more than 75% of Surplus Cash in a given year to repayment on 
multiple subordinate loans. Regarding this same requirement, HUD made 
further revisions to clarify that the 75% of available Surplus Cash 
limitation applies to all subordinate debt of the borrower, not just 
debt under Surplus Cash Notes.
    One commenter requested HUD add ``except upon the prior written 
approval of HUD'' to the end of Section 8 to allow for the sale or 
assignment of the Surplus Cash Note for LIHTC transactions. HUD did not 
accept this requested policy change, as the present requirement has not 
been a barrier to using LIHTC in FHA Multifamily transactions, and HUD 
does not anticipate it being a barrier in the future.
    HUD added bracketed language in Section 9 to accommodate the policy 
to allow for compounding of interest in certain LIHTC transactions.
Subordination Agreement--Public, HUD-92420
    HUD agreed with several commenters that Section 3(b) needed further 
clarification to allow for an exception to the general rule that the 
subordinate loan may not mature before the FHA-insured loan for 
forgivable loans. HUD rejected a comment that the HUD-required language 
in Section 3 should not be required when the subordinate loan is 
forgivable, as these protections are still needed for forgivable loans 
in the event the borrower defaults under a forgivable loan and the 
subordinate lender seeks repayment.
    HUD added language in Section 3(c) that payments due under 
borrowers' subordinate loans are limited to 75% of cumulative Surplus 
Cash, consistent with MAP Guide policy and the Surplus Cash Note. One 
commenter asked that HUD add back ``from project income'' (from the 
version of the form published in connection with the 60-day notice) 
relative to payments due under the subordinate note. HUD rejected this 
change as unnecessary because the Subordination Agreement--Public 
continues to permit borrower repayment from non-project sources. In 
response to a commenter and consistent with the change to the Surplus 
Cash Note, HUD made a change to Section 3 to allow for compounding of 
interest for certain eligible LIHTC transactions. One commenter 
suggested that removal of the requirement in Section 5 that the 
subordinate lien be extinguished upon a deed in lieu of foreclosure is 
contrary to the MAP Guide. While the commenter is correct, HUD 
Multifamily Housing decided to revise this policy (for public 
subordinate lenders only) as reflected in the document; the next 
issuance of the MAP Guide will include this revised policy.
    A commenter asked that Section 10 be revised to allow for automatic 
re-subordination of the subordinate lien for Sections 223(a)(7) and 
223(f) refinancings; HUD declined to make this change as the form 
already requires

[[Page 29818]]

automatic subordination of refinancing the FHA-insured senior loan, 
which includes FHA refinancings. HUD made a technical correction in 
Section 10(d) to remove the allowance of deletion of this paragraph for 
forgivable loans. This paragraph contains an important senior lender 
protection that is applicable to forgivable loans in the event of a 
default under the forgivable loan and payment becomes due.
    One commenter requested HUD add the schedule/exhibits of senior and 
subordinate loan documents to the signature page. HUD agreed with this 
comment and made the corresponding revision.
Lender's Certificate, HUD-92434M
    HUD accepted several editorial and other non-substantive 
corrections suggested by commenters and shown in the redline comparison 
published in connection with this 30-day notice.
    In response to a comment, HUD added language in Section B.2. to 
accommodate situations where certain Firm Commitment conditions cannot 
be satisfied until after initial closing. HUD further revised language 
in Section B.4 to clarify the Firm Commitment should not be attached to 
the Lender's Certificate in response to another comment.
    One commenter objected to references to the reserve for replacement 
amount and related exhibit in Section C.4; HUD disagreed the references 
could lead to an inconsistency but changed the language to reference 
the Firm Commitment instead of the Regulatory Agreement. Relative to 
UCC searches in Section C.8, one commenter asked to qualify the 
provision for UCC filing searches to exclude UCC filings to be 
terminated upon closing of the insured loan; HUD rejected this change 
in procedure. Similarly, HUD rejected a requested change to Section E.7 
for materials stored off-site to be limited to those paid from insured 
loan proceeds, as HUD's collateral for the insured loan includes all 
borrower assets, not only those paid from insured loan proceeds.
    One commenter asked HUD to modify Section E.10 to allow for 
inclusion of an exhibit describing delayed permits and approvals to be 
obtained at a later date, but the commenter did not provide a rationale 
for the requested modification. HUD therefore declined to accept this 
change. Concerning lenders' due diligence in Section E.10 in ensuring 
all required permits and approvals have been obtained, HUD agreed with 
several commenters that the prohibition against relying on the Opinion 
of Borrower's Counsel should be removed. However, HUD determined that 
the ``reasonable'' standard for the required due diligence should 
remain. Another commenter asked HUD to revise the definition of ``HUD-
insured Loan Funds'' in Section F; HUD rejected the language as 
unnecessary given existing guidance on these structures.
    One commenter suggested that HUD add the Lender's Assurance of 
Permanent Financing to the Lender's Certificate; while HUD generally 
agreed with the comment, HUD decided it would be too difficult to adopt 
at this time.
Building Loan Agreement, HUD-92441M
    HUD did not receive comments on this document but decided to make a 
needed technical correction to add language in Section 4(c) to ensure 
compliance with 24 CFR 200.54.
Construction Contract, HUD-92442M
    HUD agreed to make several non-substantive editorial changes to 
improve the document in response to several comments and as shown in 
the redline comparison published in connection with this 30-day notice.
    HUD declined a request to remove the requirement in Article 2.C. 
for the lender to sign the plans and specifications as this is a MAP 
Guide requirement that HUD has decided to maintain. HUD agreed to a 
proposed change in Article 3.A to set the start date for work within 
fourteen days of the date of the Construction Contract.
    One commenter requested HUD modify the liquidated damages provision 
in Article 3(E) to allow borrowers to recoup soft costs. HUD declined 
to revise its policy that soft costs not be allowed in the calculation 
of liquidated damages. Another commenter asked about the Identity of 
Interest Amendment referenced within the form. HUD has determined that 
this form should not have been removed from the MAP Guide Appendices as 
it is still required when applicable. The MAP Guide will be revised to 
again include this document in the appendices.
    One commenter noted that the bracketed language in Section 4.E is 
confusing because Section 2.A.8 does not include the incentive payment 
addendum as a construction document in identity of interest cases, but 
Section 4.E requires the addendum for identity of interest cases. HUD 
agrees with this comment and has revised Section 2.A.8 (re-numbered as 
Section 2.A.7) accordingly.
    HUD agreed with one comment that the owner as opposed to the 
contractor is sometimes responsible for paying for the building permits 
and as-built survey and made corresponding changes in Article 7.A and 
7.C to allow for this possibility.
Performance Bond, HUD-92452M
    No public comments were submitted for this form, but HUD determined 
that several technical corrections were needed. HUD revised Section 3 
to use the already-defined term ``Obligees'' rather than separately 
listing Borrower and Lender as ``Obligees.'' This change is consistent 
with the first paragraph of the form and with Section 2 of the form 
Payment Bond, HUD-92452A-M Separately, HUD included a parenthetical 
definition of the already-capitalized term ``Obligor,'' which is 
similarly defined in the form Payment Bond.
Request for Endorsement of Credit Instrument, HUD-92455M
    HUD accepted several editorial and other non-substantive 
corrections suggested by commenters and shown in the redline comparison 
published in connection with this 30-day notice.
    One commenter requested HUD revise the language in Section I.A.7 to 
qualify lender's certification about completion of borrower's repairs 
``Based on the Repair Certification of Borrower . . . .'' or ``to the 
best of lender's knowledge and information . . . .'' This change is 
unnecessary as the entire section is qualified by the best of lender's 
knowledge. HUD rejected a similar comment with respect to the new No 
Material Adverse Change certification in Section I.A.14 given that the 
entire section is qualified by the best of lender's knowledge. Further, 
this new provision was explicitly identified in the 60-day notice as 
new, rather than a clarification of the form, as the commenter 
suggested.
    Regarding the 50% holdback for cash-out refinances in Section 
223(f) and addressed in Section I.B.1 of the form, HUD declined to 
change its policy at this time to allow for an alternative percentage.
    One commenter objected to the reference to the reserve for 
replacement amount and exhibit in Section I.B.5. HUD disagreed the 
reference could lead to an inconsistency and notes that the provision 
references the Firm Commitment instead of the Regulatory Agreement and 
made further edits to clarify that the Firm Commitment is not attached 
to the form.
    Regarding the list of fees and charges of lender in Section I.C.3, 
HUD disagreed with a request to reference the Certified Closing 
Statement instead of a separate list, as HUD wants this

[[Page 29819]]

information separated from the other information that is included in 
the Certified Closing Statement.
    One commenter asked HUD to modify Section I.C.11 to allow for 
inclusion of an exhibit describing delayed permits and approvals to be 
obtained at a later date but did not provide any rationale for the 
modification. HUD therefore declined to accept the requested 
modification. Concerning lenders' due diligence in I.C.11 in ensuring 
all required permits and approvals have been obtained, HUD agreed with 
several commenters that the prohibition against relying on the Opinion 
of Borrower's Counsel should be removed, but kept the ``reasonable'' 
standard for the required due diligence. Another commenter asked HUD to 
revise the definition of ``HUD-insured Loan Funds'' in Section I.D.; 
HUD rejected the language as unnecessary given existing guidance on 
these structures.
    HUD disagreed with a comment concerning Section II.A.1, requesting 
that the borrower certification about the Certificate of Lender be 
qualified, because the entire section is already qualified by 
``knowledge and belief.'' HUD further disagreed with the request in 
II.A.to exclude customary vendor payables not over thirty days old from 
the list of unpaid obligations, as these items fall outside the scope 
of the language in most scenarios. One commenter objected to newly 
added language requiring the borrower to certify to the status of the 
Mortgaged Property and Security Instrument as more appropriate for a 
title company. HUD rejected this comment as borrowers in FHA-insured 
Multifamily transactions are sophisticated business entities that can 
engage professionals to assist them in making these determinations.
    One commenter suggested that HUD add the Lender's Assurance of 
Permanent Financing to the Certificate of Lender; while HUD generally 
agreed with the comment, HUD decided it would be too difficult to adopt 
at this time.
Regulatory Agreement, HUD-92466M
    One commenter requested HUD revise the definition of ``Affiliate'' 
to change ``policy'' to ``actions,'' but did not sufficiently identify 
or explain the commenter's perceived deficiencies with the current 
definition. HUD therefore declined to make the requested change. As a 
general matter, HUD believes that the terms ``Affiliate'' and 
``Principal'' in the context of the Regulatory Agreement should remain 
distinct from ``Controlling Participant'' or any other term in the new 
previous participation regulations because the participants and scope 
of activity is different. Accordingly, HUD has elected to largely 
preserve the former 24 CFR 200.215 definitions of ``Affiliate'' and 
``Principal'' previously referenced in the Regulatory Agreement rather 
than referencing the new term or regulations.
    One commenter requested HUD elaborate on the types of assets that 
can be held by borrowers apart from the Mortgaged Property defined in 
I.1.s. HUD declined to make changes to this paragraph to incorporate 
any additional specific examples of permissible non-project funds. As 
stated in prior FAQs, references to items such as distributed Surplus 
Cash and permissible loan repayments are themselves examples of 
potential non-project funds. If a party is uncertain as to how to treat 
a particular asset after reviewing applicable Program Obligation, such 
party should contact the Office of Multifamily Housing for guidance.
    One commenter requested that HUD improve the definition of Residual 
Receipts in I.1.dd. HUD declined to make the proposed change to the new 
definition of Residual Receipts, as it would be inappropriate to 
describe a method of calculating Residual Receipts in this document 
because any residual receipts requirements will generally stem from 
separate HUD programs and source documents (e.g., Section 8 HAP 
contracts) with their own residual receipts language. Accordingly, the 
definition merely refers to residual receipts requirements in general 
terms, while the Residual Receipts Rider still functions to more 
precisely reference the source of residual receipts restrictions and 
their effect on the Regulatory Agreement.
    HUD also received a comment to provide greater clarity to the 
Section 30 listing of other occupancy and use restrictions. It was not 
HUD's intent to change policy on what information is to be shown in 
this Section 30, but rather to clarify the existing policy by making 
the separate instructions more distinct. Thus, subsection ``a'' of this 
revised Section 30 corresponds to the first sentence in the current 
version of the Regulatory Agreement. This subsection ``a'' instruction 
is designed to encompass any occupancy restrictions or policy that may 
be imposed in connection with the FHA loan itself. For further 
clarification, HUD included examples of types of loan-related occupancy 
restrictions and policies that fall under this category. The subsection 
``b'' instruction corresponds to the second sentence of the current 
version of the Section 30 language. This is intended to cover other 
occupancy restrictions that, while not a requirement of the FHA loan 
itself, may otherwise be convenient to identify in the Regulatory 
Agreement. In such cases, such other restrictions may only be 
referenced in Section 30 with the caveat that they are included for 
informational purposes only.
Escrow Agreement for Deferred Repairs, HUD-92476.1
    HUD received a comment to add alternative language for lenders that 
are approved for self-administration of the escrow. HUD agreed with 
this comment and added additional language in Sections 5 and 6 along 
with a new Exhibit C to reflect transactions where HUD has approved 
delegation to the lender of administration of the repair escrow.
    The remaining changes to the form shown in the redline comparison 
published in connection with this 30-day notice are HUD-initiated 
improvements and updates given the expanded levels of work that are 
permitted in certain 223(f) transactions. HUD added a new Alternative B 
for Sections 1 and 2 for transactions with Level 2/Level 3 repairs 
funded with tax credit equity, along with a new Exhibit D to include 
the tax credit equity pay-in schedule, and that the additional 
assurance of completion amount may be cash or a letter of credit.
    HUD added language in Section 8 to: (a) Clarify that the Latent 
Defects Deposit is only required when required by the Firm Commitment; 
(b) clarify that it is calculated on both ``critical'' and ``non-
critical'' repairs performed before or after closing; and (c) include 
the amount when a Latent Defects Deposit is required, or to insert ``N/
A'' if it is not required.
    Given that the Firm Commitment requires latent defect assurances 
when the repairs/alterations are greater than $400,000, regardless of 
when the work is completed, HUD added a new Alternative B in the 
Recitals to capture the possibility of a Latent Defects Deposit when 
all work is completed before closing and no deferred repair escrow is 
required. Further, HUD added an instruction to revise the title of the 
document and strike paragraphs 1-3 and 5-7 in such situations.
Borrower's Oath, HUD-92478M
    One commenter asked why the Borrower's Oath is notarized and why it 
can't be combined with one of the other closing documents executed by 
the borrower. This document is notarized because at least one provision 
is required by statute to be certified under oath. In terms of merging 
the contents

[[Page 29820]]

into another document. HUD declined to accept this suggestion because 
the notary requirement and the form's contents support keeping it as a 
stand-alone document.
Supplementary Conditions to the Construction Contract, HUD-92554M
    HUD received a comment to add to this document any provisions in 
the AIA A201 that HUD requires be stricken or modified per the FHA 
Multifamily Program Closing Guide. HUD declined to make this change. 
Including the requested change is not practical because the closing 
documents are renewed every three years, and the AIA A201 document may 
change prior to or soon after the documents are renewed. HUD has 
determined that it is more practical to announce changes in policy via 
the Closing Guide or other HUD directives.
Subordination Agreement--Private, HUD-92907M
    One commenter asked HUD to clarify whether all ``Subordinate Loan 
Documents'' referenced in Section 1(p) actually means ``all'' of such 
documents. HUD determined no additional clarification is needed, the 
document clearly states, ``include all documents.'' HUD added language 
in Section 3(c)(1) that payments due under borrower subordinate loans 
are limited to 75% of cumulative Surplus Cash, consistent with MAP 
Guide policy and the Surplus Cash Note. To be consistent with the 
change to the Surplus Cash Note and Multifamily Housing policy, HUD 
made a change to Section 3(c)(4) to allow for compounding of interest 
for certain eligible LIHTC transactions.
    A commenter asked that Section 10 be revised to allow for automatic 
re-subordination of the subordinate lien for Sections 223(a)(7) and 
223(f) refinancings; HUD declined to make this change as the form 
already requires automatic subordination of refinancing the FHA-insured 
senior loan, which includes FHA refinancings. One commenter requested 
HUD add the schedule/exhibits of senior and subordinate loan documents 
to the signature page. HUD agreed with this comment and made the 
corresponding revision.
Agreement and Certification, HUD-93305M
    One commenter requested that Section 14 be revised to not require 
attachment of special condition certifications. HUD agreed with the 
comment and removed the requirement to attach the separate 
certifications. These certifications should be inserted into the body 
of the document in Section 14.
Security Instrument, HUD-94000M
    One commenter asked for additional clarity on the content of 
Exhibit B. HUD agreed with the comment and added instructions to 
indicate that form state Addendum provisions do not need to be 
separately referenced in the Exhibit B specifically if such addenda are 
otherwise validly attached to and incorporated in the Security 
Instrument under applicable state law. HUD similarly revised the 
instruction language in Sections 43 and 49.
    Another commenter suggested HUD add as an option ``[Leasehold]'' 
where the document covers a leasehold estate. HUD agreed with the 
suggestion and added the term ``Leasehold'' as optional bracketed 
language on the Security Instrument cover, title on page 2, and 
preamble paragraph. This language is to be inserted for transactions 
involving a leasehold estate. Note that use of the Security Instrument 
in such transactions must comply with the HUD requirements for 
leasehold mortgages, including use of the form Lease Addendum.
Note, HUD-94001M
    One commenter requested additional language to harmonize the Note 
with the requirements of form HUD-9807 to put borrowers on notice of 
HUD's administrative prepayment procedures to protect lenders from 
arguments that they are improperly conditioning prepayment on HUD 
approval. HUD declines to add the suggested language to the Note. The 
existing Note language does not conflict with form HUD-9807. To the 
extent any party has questions on HUD's administrative processes 
regarding loan prepayment or FHA insurance termination, please refer to 
relevant Program Obligations and forms, including Section 11.8 of the 
MAP Guide and the instructions in form HUD-9807.
    Respondents (i.e. affected public): Lenders, Borrowers, Housing 
Finance Agencies, Government Agencies that support affordable housing, 
Multifamily Housing Developers, Lenders' Counsel, Borrowers' Counsel, 
Contractors, Architects, Secondary Financing Lenders
    Estimated Number of Respondents: 17,468.
    Estimated Number of Responses: 17,468.
    Frequency of Response: 1.
    Average Hours per Response: .72 hours.
    Total Estimated Burden Hours: 12,576.96.

B. Solicitation of Public Comment

    This notice is soliciting comments from members of the public and 
affected parties concerning the collection of information described in 
Section A on the following:
    (1) Whether the proposed collection of information is necessary for 
the proper performance of the functions of the agency, including 
whether the information will have practical utility;
    (2) The accuracy of the agency's estimate of the burden of the 
proposed collection of information;
    (3) Ways to enhance the quality, utility, and clarity of the 
information to be collected; and
    (4) Ways to minimize the burden of the collection of information on 
those who are to respond; including through the use of appropriate 
automated collection techniques or other forms of information 
technology, e.g., permitting electronic submission of responses.
    HUD encourages interested parties to submit comments in response to 
these questions. Please note that HUD will not consider any redline/
strikeout comparison documents submitted by commenters, as it is far 
too inefficient for HUD to consolidate and consider comparison versions 
of each of the documents from numerous interested parties. HUD will 
only consider proposed changes to the documents listed under Section A 
that are submitted in narrative and/or bulleted form (preferably in MS 
Word form), accompanied by a detailed explanation and rationale for 
each requested change. However, commenters may include in their 
detailed explanation and rationale the relevant excerpt(s) from the 
document(s) with redline/strikeouts.

    Authority: Section 3507 of the Paperwork Reduction Act of 1995, 
44 U.S.C. Chapter 35.

    Dated: June 8, 2018.
Colette Pollard,
Department Reports Management Officer, Office of the Chief Information 
Officer.
[FR Doc. 2018-13660 Filed 6-25-18; 8:45 am]
 BILLING CODE 4210-67-P


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