[Federal Register Volume 82, Number 170 (Tuesday, September 5, 2017)]
[Notices]
[Pages 41977-41980]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-18742]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6001-N-28]


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

AGENCY: Office of the Assistant Secretary for Housing--Federal Housing 
Commissioner, HUD.

ACTION: Notice.

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SUMMARY: HUD is seeking approval from the Office of Management and 
Budget (OMB) for the information collection described below. In 
accordance with the Paperwork Reduction Act, HUD is requesting comments 
from all interested parties on the proposed collection of information. 
The purpose of this notice is to allow for 60 days of public comment.

DATES: Comments Due Date: November 6, 2017.

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: Colette Pollard, Reports 
Management Officer, QDAM, Department of Housing and Urban Development, 
451 7th Street SW., Room 4176, Washington, DC 20410-5000; telephone 
202-402-3400 (this is not a toll-free number) or email at 
<a href="/cdn-cgi/l/email-protection#e7a4888b82939382c9b7888b8b869583a78f9283c9808891"><span class="__cf_email__" data-cfemail="0a4965666f7e7e6f245a6566666b786e4a627f6e246d657c">[email protected]</span></a> for a copy of the proposed forms or other 
available information. Persons with hearing or speech impairments may 
access this number through TTY by calling the toll-free Federal Relay 
Service at (800) 877-8339.

FOR FURTHER INFORMATION CONTACT: Sylvia S. Chatman, Housing Program 
Manager, Office of Multifamily Production, <a href="/cdn-cgi/l/email-protection#cf9cb6a3b9a6aee1bce1aca7aebba2aea18fa7baabe1a8a0b9"><span class="__cf_email__" data-cfemail="12416b7e647b733c613c717a73667f737c527a67763c757d64">[email protected]</span></a>, 
202-402-2994, Department of Housing and Urban Development, 451 7th 
Street SW., Washington, DC 20410. 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: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/mfh/mfhclosingdocuments.

SUPPLEMENTARY INFORMATION: This notice informs the public that HUD is 
seeking approval from OMB for the information collection described in 
Section A.

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.
    Form Numbers: HUD-91710M, HUD-91712M, HUD-92023M, HUD-92070M, HUD-
92223M, HUD-92412M, HUD-92414M, HUD-92450M, HUD-92452A-M, HUD-92452M, 
HUD-92455M, HUD-92456M, HUD-91073M, HUD-92464M, HUD-92476.1M, HUD-
92476a-M, HUD-92477M, HUD-92478M, HUD-92479M, HUD-91725M, HUD-91725M-
CERT, HUD-91725M-INST, HUD-92434M, HUD-92442M, HUD-92466M, HUD-92554M, 
HUD-94000M, HUD-94001M, HUD-93305M, HUD-92476M, HUD-92420M, HUD-92408M, 
HUD-91070M, HUD-91071M, HUD-92907, HUD-92908
    Description of the need for the information and proposed use: The 
Closing Documents were revised to: provide clarification, improve 
readability, ensure consistency across the documents, correct 
previously provided information, and to reflect the 2016 MAP Guide and 
the FHA Multifamily Closing Guide. The following is a discussion of 
noteworthy changes to certain of the Closing Documents, and an 
explanation of two new Closing Documents.

Revisions to the Closing Documents

Regulatory Agreement, HUD-92466M
    Given that the definitions of ``Principal'' and ``Affiliate'' no 
longer appear at 24 CFR 200.215 following changes to HUD's Previous 
Participation Rule, HUD proposes to add the prior definition of 
Principal and Affiliate from 24 CFR 200.215 as defined terms.
    HUD proposes to reincorporate the definition of ``Residual 
Receipts'' into the form. The term means certain funds which are 
restricted in their use by

[[Page 41978]]

Program Obligations and applicable business documents (e.g., HAP 
Contract, Use Agreement) as may be more specifically described in the 
Residual Receipts Rider attached to the Regulatory Agreement. This 
definition has been reincorporated because a number of HUD loan 
documents make reference to Residual Receipts, including some documents 
that refer to the Regulatory Agreement as the source of the definition. 
However, because the source of Residual Receipts requirements now 
ultimately lies in programs other than FHA insurance (e.g., in 
connection with certain Section 8 HAP contracts), the definition for 
purposes of this document does not describe all instances when Residual 
Receipts would apply nor does it precisely describe the method for 
calculating Residual Receipts. Instead the definition makes reference 
to such other potential sources of Residual Receipts requirements, as 
may be more particularly described in an attached Residual Receipts 
Rider.
Note, HUD-94001M
    HUD proposes to add alternative language for bifurcated notes for 
consistency with the MAP Guide policy allowing for such financing 
structures.
Lender's Certificate, HUD-92434M
    HUD proposes to add a new paragraph concerning No Material Adverse 
Changes for consistency with similar language in the Firm Commitment 
templates issued through Housing Notice 2016-06.
    HUD proposes the attachment of a new exhibit for the Reserve for 
Replacement funding schedule generated during the mortgage insurance 
application stage and attached to the Firm Commitment. The schedule 
represents the amounts that lenders must collect from borrowers during 
insured loan servicing unless other amounts are approved in writing by 
HUD pursuant to Program Obligations.
    HUD proposes to add a restriction formerly contained in the 
Instructions of Borrower's Counsel relating to lenders' due diligence 
obligations concerning certificates, permits, licenses, etc., that is 
more appropriate for the Lender's Certificate.
    HUD proposes to add a new section for transactions involving cash-
collateralized tax-exempt bonds combined with 4% Low Income Housing Tax 
Credits for consistency with the MAP Guide and current HUD practice.
Request for Endorsement of Credit Instrument, HUD-92455M
Certificate of Lender (HUD-92455M, Section I)
    HUD proposes to add a new paragraph concerning No Material Adverse 
Changes for consistency with similar language in the Firm Commitment 
templates issued through Housing Notice 2016-06.
    HUD proposes the attachment of a new exhibit for Reserve for 
Replacement funding schedule generated during the mortgage insurance 
application stage and attached to the Firm Commitment. The schedule 
represents the amounts that lenders must collect from borrowers during 
insured loan servicing unless other amounts are approved in writing by 
HUD pursuant to Program Obligations.
    HUD proposes to add a restriction formerly contained in the 
Instructions to Opinion of Borrower's Counsel relating to lenders' due 
diligence obligations concerning certificates, permits, licenses, etc., 
that is more appropriate for the Lender's Certificate.
    HUD proposes to add a new section for transactions involving cash-
collateralized tax-exempt bonds combined with 4% Low Income Housing Tax 
Credits for consistency with the MAP Guide and current HUD practice.
    HUD proposes to add a new certification moved from the Instructions 
to Opinion of Borrower's Counsel relating to lender consent for any 
secondary financing.
Certificate of Borrower (HUD-92455M, Section II)
    Completion of construction certification was enhanced to have the 
Borrower certify to the level of craftsmanship used to complete the 
repairs.
    The following certifications were typically given separately from 
the Certificate of Borrower and collected at closing: Certification of 
Schedule of Accounts Payable, Certification of Rent Roll, Certification 
of Tenant Security Deposits. These certifications have now been 
incorporated into this document in order to reduce the number of 
separate documents collected at closing.
Opinion of Borrower's Counsel, HUD-91725M; Instructions, HUD-91725M-
INST; Exhibit A, HUD-91725M-CERT
    HUD proposes separate paragraphs related to bond, tax credit, 
secondary financing, and Public Entity Agreement (PEA) for 
clarification. The definition of PEA now includes public secondary 
financing; private secondary financing is a separate paragraph. There 
are separate opinions concerning supremacy of Primary/Supporting Loan 
for each of these matters.
    HUD proposes to add a new paragraph under documents reviewed to 
clarify (as stated in existing Instructions) that all transaction 
documents must be included.
    HUD proposes to add a new paragraph under opinions for required 
state or deal specific opinions.
    HUD proposes that Borrower's Counsel must review all organizational 
documents within Borrower's organizational structure, as is legally 
necessary, to establish the authority of the signatory executing 
transaction documents on behalf of Borrower and to give the 
authorization opinion. Also, HUD proposes to add a definition for 2nd 
tier entity foreign status certificate.
    HUD proposes to add a disclosure exception in confirmation (d) 
where another attorney in Borrower's Counsel's law firm has an interest 
in the subject matters of the Opinion. Previously the conflict/identity 
of interest had to be disclosed but it was unclear how to disclose. HUD 
proposes to add language that counsel must confirm compliance with 
applicable ethics rules rather than issuing a separate ethics opinion.
    HUD proposes to include litigation ``threatened in writing'' as 
part of the litigation disclosures.
    HUD proposes to add a definition of ``Primary Loan Documents'' to 
include HUD loan documents but not bond, tax credit, secondary 
financing, and supporting documents to ensure the supremacy opinions 
regarding bond, tax credit, and secondary financing are clear that the 
Primary Loan Documents control.
Lease Addendum, HUD-92070M
    HUD has reformatted this document for ease of reading along with 
adding section headings. There is no longer a separate instructions 
page as that caused confusion in the past. HUD proposes to revise the 
document to be a signed agreement that is attached to the underlying 
ground lease/lease, rather than an unsigned addendum. Additionally, 
recognition of HUD lease requirements formerly in the recitals are now 
proposed as part of the actual agreement.
    The proposed document has been further revised to provide two 
different options for the property interest being leased for 
consistency with new MAP Guide: Option 1, landlord owns the fee 
interest in the land and tenant/borrower owns the building and 
improvements (this is the traditional structure found in

[[Page 41979]]

the existing Lease Addendum); Option 2, the landlord owns the land, 
building and improvement in fee simple, which the tenant/borrower 
leases--this structure is now permitted in the revised MAP Guide in 
certain circumstances.
    HUD proposes to add minimum requirements if a memo of lease is 
recorded instead of the entire ground lease, subject to state law 
requirements. This should establish greater uniformity with respect to 
different practices in different HUD offices.
    The document now memorializes an existing but previously separate 
HUD requirement that landlords provide an estoppel certificate. HUD 
further proposes a bracketed option for deletion of the HUD option to 
purchase the fee estate when authorized in writing by HUD pursuant to 
Program Obligations, consistent with the new MAP Guide.
    Lastly, HUD proposes to add a clause to prohibit merger of the fee 
and leasehold estates without HUD consent, for the protection of HUD. 
This is a fairly typical ground lease provision.
Subordination Agreement--Public, HUD-92420M
    HUD proposes that this particular form will only be used for 
public, secondary lenders. HUD proposes a separate subordination form 
for private, subordinate lenders (see below).
    HUD proposes to add brackets to certain provisions to accommodate 
secondary financing that comes in the form of forgivable loans. HUD 
proposes to add a sentence to memorialize Senior Lender's consent to 
the Subordinate Loan pursuant to the MAP Guide.
    HUD proposes to add certain required language from the MAP Guide 
that was previously omitted. HUD also proposes to add language from the 
Surplus Cash Note that is required by the MAP Guide. HUD further 
proposes to include required HUD language to be inserted into the 
underlying promissory note so that Surplus Cash Note does not also need 
to be used. This should resolve inconsistent guidance and practice with 
respect to the form of note to use with public secondary financing that 
is secured.
    HUD proposes to remove the requirement that public, subordinate 
lenders agree that their lien be extinguished by deed in lieu of 
foreclosure. This is a concession to state and local housing finance 
agencies that have raised numerous objections to this provision over 
the last 2.5 years.
    HUD proposes a change to the prohibition against foreclosure of 
subordinate mortgages. Secondary financing lenders were previously 
prohibited from pursuing foreclosure in the event of a default under 
their loan documents. As an accommodation to public secondary financing 
lenders, Housing proposes to allow such public lenders to pursue their 
foreclosure remedies after a standstill period of 180 days. Note that 
foreclosure for a monetary event of default will still not be allowed 
while the loan is insured or HUD-held, given that that repayment 
obligations during this time are limited to 75% of available Surplus 
Cash. Consequently, public subordinate lender foreclosure can only 
occur for covenant events of default, such as for violations of use and 
affordability restrictions.
Subordination Agreement--Private, HUD-92907M
    This is an entirely new form. It replaces the Secondary Financing 
Rider found in the FHA Multifamily Program Closing Guide that was 
previously used for secured, private secondary financing. This new form 
is largely modeled after the Subordination Agreement, HUD-92420M, which 
will become the form used with public secondary financing lenders.
Residual Receipts Note, HUD-92908M
    Residual Receipts Note (Nonprofit Borrowers) (HUD-91710M) & 
Residual Receipts Note (Limited Dividend Borrowers) (HUD-91712M) will 
be merged into one form of note going forward. For new transactions, 
Housing doesn't underwrite NP or LD owners differently and so there is 
no longer an FHA-driven basis for residual receipts accounts. This was 
discussed in a public FAQ dated 6/18/2015 (highlighting that borrower's 
nonprofit status no longer triggers the requirement of residual 
receipts). However, the existing forms will continue to be made 
available for existing projects.
Supplementary Conditions to the Construction Contract, HUD-92554M
    HUD proposes to add language that the document supersedes 
conflicting provisions in the AIA Document A201 General Conditions of 
the Contract for Construction, for consistency with the FHA Multifamily 
Program Closing Guide.
Survey Instructions and Surveyor's Report, HUD-91073M
    HUD proposes revisions that are necessary to permit the form to 
work with new 2016 ALTA/NSPS standards as discussed in an FAQ from 
earlier this year. Additionally, the proposed revision to page one of 
the document isolates the instructions to make it easier for surveyors 
to understand HUD requirements and how to complete the form.
Escrow for Deferred Repairs, HUD-92476.1M
    HUD proposes to remove the term ``Non-critical'' throughout, in 
order to recognize the MAP Guide policy change to allow certain 
accessibility corrections to be paid from this escrow after initial/
final closing.
Supplement to Building Loan Agreement, HUD-92441M-SUPP
    HUD is eliminating this form from the Collection of Information and 
use in the Multifamily programs, as borrower entities can no longer 
serve as their own general contractors and remain in compliance with 
HUD's regulatory single asset entity and administrative requirements.
    Respondents (i.e. affected public): Lenders, Borrowers, Housing 
Finance Agencies, Government Agencies that support affordable housing, 
Multifamily Housing Developers, Lender's Council, Borrower's Council, 
Contractors, Architects, Secondary Financing Lenders.
    Estimated Number of Respondents: 17,468.
    Estimated Number of Responses: 17,468.
    Frequency of Response: Once per annum.
    Average Hours per Response: .70 hours.
    Total Estimated Burden: 12,359.50 hours.

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

[[Page 41980]]

consider any redline/strikeout comparison documents submitted by 
commenters, as it is far too inefficient for the Department to 
consolidate and consider redline/strikeout versions of each of the 
documents from numerous interested parties, based on HUD's past 
experience in seeking public comments on this information collection. 
HUD will only consider proposed changes to the documents listed under 
Section A that are submitted in narrative and/or bulleted 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 
redlines/strikeouts.

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

    Dated: August 29, 2017.
Dana T. Wade,
General Deputy Assistant Secretary for Housing.
[FR Doc. 2017-18742 Filed 9-1-17; 8:45 am]
 BILLING CODE 4210-67-P


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