Texas Administrative Code › Title 10 - COMMUNITY DEVELOPMENT › Part 1 - TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS › Chapter 13 - MULTIFAMILY DIRECT LOAN RULE › Section 13.12 - Pre-Closing Amendments to Direct Loan Terms

Current through Reg. 49, No. 28; July 12, 2024
(a) Closing Memo to Underwriting Report. Any
				changes to the total development cost, expenses, income, and/or other sources
				of funds from time of the publication of the initial Underwriting Report at the
				time of award to the time of loan closing, if the type or amount of the sources
				and uses have changed must be reevaluated by the Real Estate Analysis division,
				which will typically publish a Closing Memo to the Underwriting Report. The
				Report may recommend changes to the principal amount and/or the repayment
				structure for the Multifamily Direct Loan pursuant to §
									11.302 of this title (relating to
				Underwriting Rules and Guidelines), except that the change must have been an
				available option in the rule or NOFA (as applicable), and may not be made to
				awards that were competitively scored to the extent that change would have
				caused the Development to lose points. This will allow the Department to uphold
				the competitive process, mitigate any increased risk, and to ensure that the
				Development is not oversubsidized. Where the Department determines such risk is
				not adequately mitigated, the award may be terminated or reconsidered by the
				Board. If the changes cause the total Debt Coverage Ratio (DCR) to no longer
				comply with 10 TAC §
									11.302 of this title (relating to
				Underwriting Rules and Guidelines), the award may be subject to termination.
				The Department may require the Closing Memo to be completed before providing a
				Contract to the Development Owner.
(b) Executive Approval Required Pre-Closing.
				The Executive Director or authorized designee may approve amendments to loan
				terms prior to closing as described in paragraphs (1) - (6) of this subsection.
				Under no circumstances may an amendment cause the Department to violate or be
				at risk of violating a federal requirement or deadline.
(1) Extensions to the loan closing date
				required in 10 TAC §
										13.11(c)(4) of
				this chapter (relating to Post-Award Requirements) may be approved prior to
				closing. An Applicant must submit sufficient evidence documenting good cause,
				including but not limited to, documented delays caused by circumstances outside
				the control of the applicant or constraints in arranging a multiple fund source
				closing.
(2) Changes to the
				construction term and/or loan maturity date to accommodate the requirements of
				other lenders or to maintain parity of term may be approved prior to
				closing.
(3) Extensions to the
				Construction Completion date or date of receipt of a Closed Final Development
				Inspection Letter required in 10 TAC §
										13.11(c)(8) of
				this chapter may be requested but generally are not approved prior to initial
				loan closing. Extensions under this paragraph are determined based on
				documentation that the extension is necessary to complete construction and that
				there is good cause for the extension.
(4) Only to the extent determined necessary
				by Real Estate Analysis to maintain financial feasibility, changes to the
				amortization period (not to exceed 40 years) or interest rate (to not less than
				the minimum specified in rule or NOFA) may be approved if such changes continue
				to meet all requirements of Chapter 11, Chapter 13, and the NOFA.
(5) Decreases in the Direct Loan amount,
				provided the decrease does not jeopardize the financial viability of the
				Development in the determination of Real Estate Analysis may be approved prior
				to closing, though the Development Owner may be subject to penalties as further
				described in 10 TAC §
										13.11 of this chapter (relating to
				Post-Award Requirements). Increases will not be approved unless the Applicant
				applies for the additional funding under an open NOFA.
(6) Changes to other loan terms or
				requirements that would not require a waiver, as necessary to facilitate the
				loan closing without exposing the Department to undue financial risk.