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Multifamily Document Reform Implementation Frequently Asked Questions

General - Scrivener’s Corrections

If you have a question related to this document, please submit it to MultifamilyDocumentReview@hud.gov

 

  1. The terms "Enforcement Action Notice" and "Senior Loan Enforcement Action" are defined (at length) but not used in the Subordinate Financing Agreement. Why? Can we delete these definitions for the sake of clarity?

  2. In the definition of Affiliate, it appears there is a stray word. Can we delete the word "Borrower"?

  3. There is no Section 13 in the Subordination Agreement. Should we add "Section 13. Intentionally deleted"?

  4.  It appears that D.10 (the section that imposes obligations on the lender with respect to permits and licenses) of the Request for Endorsement of Credit Instrument & Certificate of Lender, Borrower & General Contractor, while it doesn't explicitly say so, is designed to apply to 221(d)(4)'s, not 223(f)'s or 223(a)(7)'s. The section requires the lender to acknowledge as of the date hereof that the licenses and permits are sufficient to allow the construction of the project and that the lender will confirm before final endorsement that the borrower has obtained the necessary permits, licenses, etc. to own and operate the project. It appears that, if this section was meant to apply to 223(f)'s or 223(a)(7)'s, it would require the lender to acknowledge that the borrower has obtained the necessary permits, licenses, etc. to own and operate the project "as of the date hereof" and not as of a date in the future, since final endorsement on 223(f)'s and 223(a)(7)'s occurs the date the Request for Endorsement is executed. Please let me know whether this interpretation of the section is correct.

  5. Editorial Correction to paragraph 5(iii) of the Guide for Opinion of Counsel which should read "program obligations" rather than "HUD's regulations".
  1. 4/18/2012
    In the current version of the Maryland Security Instrument Addendum, the title of the document contains two spelling errors: MULTIFAMILY DEED OF TRUST, SECRURITY AGREEMENT, ASSIGNEMENT OF RENTS, AND FIXTURE FILING (MARYLAND).

  2. 4/26/2012
    Editorial correction to the Security Instrument, in Section 43.

  3. 4/26/2012
    Editorial correction to the Note, in Section 6.   

  1. 5/1/2012
    Editorial correction to paragraph 6b of Payment Bond to change the reference to paragraph 5a to paragraph 6a.

  2. 5/1/2012
    Editorial correction to paragraph 2 of Payment Bond to correct the reference to Section 9; the reference should be to paragraph 3.

  1. 5/1/2012
    Currently the Agreement and Certification provides that Paragraph 8 is applicable in the event of a 223f or 223a7 loan. Paragraph 8 contains requirements that must be adhered to with regard to the "construction contract" and "subcontracts". This paragraph appears to be applicable to a construction loan, where there will be a construction contract, but not a 223a7 or 223f loan where there will not be. Thus, I believe the form should be revised to delete Paragraph 8 from the list of applicable paragraphs in connection with 223f and 223a7 transactions.

  2. 5/1/2012
    Editorial correction to paragraph 1(D)(10) of Request for Endorsement to delete certain language.

  3. 5/1/2012
    A new paragraph 1(C)(4) Request for Endorsement was added and the initially published 1(C)(4) was renumbered 1(C)(5) and 1(C)(5) was renumbered to 1(C)(6).  

  1. 5/1/2012
    Editorial correction to paragraph 1(A)(10) of Request for Endorsement to correct language “Mortgaged Property is” to “Improvements are”.

  2. 5/1/2012
    Editorial correction to paragraph 1(A)(7) of Request for Endorsement to add language “or non-critical deferred repairs”.

  3. 5/1/2012
    Editorial correction to paragraph 35 of Lender’s Certificate to correct language “Mortgaged Property is” to “Improvements are”.

  1. 5/2/2012
     Editorial correction to paragraph 9(a), (Alternative B), on page 6 of the Note.

  2. 5/1/2012
    Editorial corrections have been made to certain page numbers in the TOC for the Security Agreement.

  1. 5/8/2012
    On the endorsement panel of the note, the language at the bottom applicable for (a)(7) projects refers to "maker" instead of "borrower". This language has been changed so the terminology is consistent. 

  1. 5/17/2012
    Editorial correction to Regulatory Agreement, Section IX, Paragraph 50, first sentence of (c).  

  1. 6/15/2012
    Editorial Correction to Lender’s Certificate, Section 40.

  1. 6/20/2012
    May Section 40 of the Lender's Certificate be modified to read as follows (with the phrase "and HUD, as its interest appears" shown as deleted text):  "40.  Lender certifies that the security agreement and the Uniform Commercial Code Financing Statement filings, along with any other documents required by State law, establish a perfected first lien security interest under the Uniform Commercial Code in the UCC Collateral in favor of Lender [[and HUD, as its interest appears]].  Lender acknowledges that it must maintain a perfected lien position in the UCC Collateral for the life of the Loan."  If the requested modification is not permitted, may the Security Instrument be modified to provide a security interest in favor of HUD, in accordance with Section 40 of the Lender's Certificate?

  1. 9/24/2012
    In Regulatory Agreement paragraph 46a, Lender's counsel has made a correction to the word "Term" where it appears before "Business Day" to read "term" (lower case t). This may be a scrivener's error that you may wish to correct. The capitalization of "Term" suggests a defined term and also suggests the Term of the loan to me.

  2. 11/16/2012
    Editorial Correction to Security Instrument Section 48(h).

  3. 3/21/2013
    Definition of " Surplus Cash" in Regulatory Agreement has changed. 

 

 

 

1.  The terms "Enforcement Action Notice" and "Senior Loan Enforcement Action" are defined (at length) but not used in the Subordinate Financing Agreement. Why? Can we delete these definitions for the sake of clarity?

These terms will be deleted in version published in HUDCLIPS on September 1, 2011.

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2.  In the definition of Affiliate, it appears there is a stray word. Can we delete the word "Borrower"?

Yes. The insertion of the word "Borrower" into the definition of "Affiliate" is a typographical error and will be corrected when the documents are published in HUDCLIPS on September 1, 2011.

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3.  There is no Section 13 in the Subordination Agreement. Should we add "Section 13. Intentionally deleted"?

 The phrase "Intentionally omitted" will be included at section 13 when the documents are published in HUDCLIPS on September 1, 2011.

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4.  It appears that D.10 (the section that imposes obligations on the lender with respect to permits and licenses) of the Request for Endorsement of Credit Instrument & Certificate of Lender, Borrower & General Contractor, while it doesn't explicitly say so, is designed to apply to 221(d)(4)'s, not 223(f)'s or 223(a)(7)'s. The section requires the lender to acknowledge as of the date hereof that the licenses and permits are sufficient to allow the construction of the project and that the lender will confirm before final endorsement that the borrower has obtained the necessary permits, licenses, etc. to own and operate the project. It appears that, if this section was meant to apply to 223(f)'s or 223(a)(7)'s, it would require the lender to acknowledge that the borrower has obtained the necessary permits, licenses, etc. to own and operate the project "as of the date hereof" and not as of a date in the future, since final endorsement on 223(f)'s and 223(a)(7)'s occurs the date the Request for Endorsement is executed. Please let me know whether this interpretation of the section is correct.

 Thanks for pointing out this scrivener’s error in the document. The Request for Endorsement has been revised and the corrected version is in the process of being posted onto HUDCLIPS.

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5. Editorial Correction to paragraph 5(iii) of the Guide for Opinion of Counsel which should read "program obligations" rather than "HUD's regulations".

In the revised Multifamily Guide for the Borrower's Counsel Opinion, paragraph 5(iii), the phrase "HUD's Regulations" is used instead of the phrase that we use in the other documents, "Program Obligations." This is a scrivener's error and will be corrected in the document published on HUDclips.

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6.  I believe sections 50 & 51 should be renumbered to 49 & 50 on the Illinois State Addendum to the Security Instrument. Otherwise, there is no section 49.

Changes that are needed to be made to the State Addenda can be made at the Regional level. All changed addenda must be submitted to Millicent Potts, Assistant General Counsel, so that the new addenda can be posted on HUDclips

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7. Editorial Correction to the Security Instrument's Table of Contents

There are scrivener's errors in the Table of Contents that are being changed in the Security Instrument posted on HUDclips. They are: Section 9 is being changed to read "Regulatory Agreement"; Section 36 is being changed to read "Relationship of Parties...."; Section 38 is being changed to read "Rules of Construction" and Section 46 is being changed to read "Termination of HUD Rights and References."  In addition, we are deleting an extra space between HUD and a comma in Section 43, line 6.

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8.  4/18/2012
In the current version of the Maryland Security Instrument Addendum, the title of the document contains two spelling errors: MULTIFAMILY DEED OF TRUST, SECRURITY AGREEMENT, ASSIGNEMENT OF RENTS, AND FIXTURE FILING (MARYLAND).

 Corrections have been made to the Maryland Security Instrument Addendum, and the revised document is being posted on the HUD website.

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09. 4/26/2012
Editorial correction to the Security Instrument, in Section 43.

Insert “for a period of thirty (30) days”, in Section 43 of the Security Instrument, in the first
sentence, immediately after the word “continuing.”

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 Editorial correction to the Note, in Section 6.

10. 4/26/2012
Editorial correction to the Note, in Section 6

Insert “for a period of thirty (30) days”, in Section 6 of the Note, in the first sentence,
immediately after the word “continuing.”

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11. 5/1/2012
Editorial correction to paragraph 6b of Payment Bond to change the reference to paragraph 5a to paragraph 6a.

 

Paragraph 6b of the Payment Bond should read: “(i) Claimants gave the notice required by paragraph 6a."

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12. 5/1/2012
Editorial correction to paragraph 2 of Payment Bond to correct the reference to Section 9; the reference should be to paragraph 3.

Paragraph 2 of the Payment Bond should read: “Contractor and Surety, jointly and severally (“Obligors”) bind themselves, their heirs, executors, administrators, successors and assigns, to Obligees, for the use and benefit of Claimants as hereinafter defined in paragraph 3 in the sum of
. . . . “

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13. 5/1/2012
Currently the Agreement and Certification provides that Paragraph 8 is applicable in the event of a 223f or 223a7 loan. Paragraph 8 contains requirements that must be adhered to with regard to the "construction contract" and "subcontracts". This paragraph appears to be applicable to a construction loan, where there will be a construction contract, but not a 223a7 or 223f loan where there will not be. Thus, I believe the form should be revised to delete Paragraph 8 from the list of applicable paragraphs in connection with 223f and 223a7 transactions.

Yes, The form will be changed to remove the reference to paragraph 8 from the option box for "Financing or refinancing." Only paragraphs 1, 2, and 6 are applicable to 223(f) and 223(a)(7) refinancings. Strikeouts of the construction provisions are allowed in a refinancing.

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14. 5/1/2012
Editorial correction to paragraph 1(D)(10) of Request for Endorsement to delete certain language.

Paragraph 1(D)(10) of Request for Endorsement should read: “Lender acknowledges, based on its reasonable due diligence, that Borrower has obtained the necessary governmental certificates, permits, licenses, qualifications and approvals of Governmental Authorities to own and operate the Mortgaged Property and to carry out all of the transactions required by the Loan
Documents . . . . “

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15. 5/1/2012
A new paragraph 1(C)(4) Request for Endorsement was added and the initially published 1(C)(4) was renumbered 1(C)(5) and 1(C)(5) was renumbered to 1(C)(6).

The new inserted paragraph 1(C)(4) of the Request for Endorsement should read: “List any other escrows:  . . .” and the initially published 1(C)(4) is renumbered 1(C)(5) and 1(C)(5) is renumbered to 1(C)(6).

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16. 5/1/2012
Editorial correction to paragraph 1(C)(3) of Request for Endorsement to correct language.

Paragraph 1(C)(3) of the Request for Endorsement should read: “As required by the Firm Commitment (if required, check and complete the applicable paragraph).
Submitted separately is the sponsor’s guarantee to meet an initial operating deficit (dated_____, 20__, and executed by______).”

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17.  5/1/2012
Editorial correction to paragraph 1(C)(1)(c) of Request for Endorsement to correct language.


Paragraph 1(C)(1)(c) of the Request for Endorsement should read: “Lender has [collected from Borrower in cash] OR [set aside from the final disbursement of Loan proceeds] funds totaling [150% of the amount necessary to complete the items of delayed completion] OR [120% of the amount necessary to complete non-critical deferred repairs] described in Paragraph 1 A 7, above. The [Escrow Agreement for incomplete Construction] OR [Escrow Agreement of Non-critical Deferred Repairs] is attached hereto.

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18. 5/1/2012
Editorial correction to paragraph 1(A)(10) of Request for Endorsement to correct language “Mortgaged Property is” to “Improvements are”.

Paragraph 1(A)(10) of the Request for Endorsement should read: “If Lender determined that any of the Improvements are located in an area identified by the Federal Emergency
Management Agency . . . .”

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19. 5/1/2012
Editorial correction to paragraph 1(A)(7) of Request for Endorsement to add language “or non-critical deferred repairs”.

Paragraph 1(A)(7) of the Request for Endorsement should read: “To the best of our knowledge and information, any required repairs have been completed in accordance with Program Obligations, except for such items approved by HUD for delayed completion or non
critical deferred repairs as indicated on a separate schedule . . . . ”

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20. 5/1/2012
Editorial correction to paragraph 35 of Lender’s Certificate to correct language “Mortgaged Property is” to “Improvements are”.


Paragraph 35 of the Lender’s Certificate “If Lender determined that any of the Improvements
are located in an area identified by the Federal Emergency Management Agency . . . .”

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21.  5/1/2012
Editorial correction to paragraph 19 (a) of Security Instrument to change the words “Mortgaged Property is” to “Improvements are”.


Paragraph 19(a), sentence 4, of the Security Instrument should read “If any of the Improvements are located in an area identified by the Federal Emergency Management Agency . . . .”

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22. 5/1/2012
Editorial correction to paragraph 7(a)(1)(ii) of Security Instrument to add language “the lesser of the amount permitted by law or. . . ”

Paragraph 7(a)(1)(ii) of the Security Instrument should read: “(ii) If and so long as the Note and this Security Instrument are held by HUD, a monthly service charge in an amount equal to the lesser of the amount permitted by law or one-twelfth of one-half . . . “

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23. 5/1/2012
Editorial corrections have been made to certain page numbers in the TOC for the Security Agreement.

The following editorial corrections have been made to the Table of Contents of the Security Instrument: Section 7 changed to page 19; Section 12 changed to page 23; and Section 14
changed to page 24.
 

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24. 5/2/2012
Editorial correction to paragraph 9(a), (Alternative B), on page 6 of the Note.

REVISED ANSWER (published 5/2012 to correct previous answer published 11/17/11 which has been deleted from the site. Language that follows matches document in HUDclips). Section 9(a) (Alternative B) should read: "This Note contains a prepayment restriction and prepayment premium charge acceptable to HUD as to term, amount, and conditions, which are set forth in the attached Rider 1, including that in the event of a default, pursuant to Program Obligations, HUD may override any lockout or any prepayment premium, or combination thereof, in Rider 1 on the  last day of any calendar month during any year in which the prepayment premium is greater than one percent (1%) in order to facilitate a partial or full refinancing of the Mortgaged Property and avoid a mortgage insurance claim.” The originally published Note had a scrivener’s error in the text, and we had previously published slightly different language to the same effect, but the foregoing language is the language to be used going forward. Please note that the Note has
been revised accordingly and published on HUDClips.

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25. 5/1/2012
Editorial corrections have been made to certain page numbers in the TOC for the Security Agreement.

The following editorial corrections have been made to the Table of Contents of the Security Instrument: Section 7 changed to page 19; Section 12 changed to page 23; and Section 14 changed to page 24. 

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26. 5/8/2012
On the endorsement panel of the note, the language at the bottom applicable for (a)(7) projects refers to "maker" instead of "borrower". This language has been changed so the terminology is consistent.

This term has been corrected in the document posted on HUDclips
 

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27. 5/17/2012
Editorial correction to Regulatory Agreement, Section IX, Paragraph 50, first sentence of (c).

The first sentence of paragraph (c) now reads as follows: "for its own acts and deeds, or acts and
deeds of others, which it has authorized in violation of the provisions of this Section 50."  

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28. 6/20/2012
Editorial Correction to Lender’s Certificate, Section 40.

The first sentence of the section will now read, " Lender certifies that the security agreement and
the Uniform Commercial Code Financing Statement filings, along with any other documents required by State law, establish a perfected first lien security interest under the Uniform Commercial Code in the UCC Collateral in favor of Lender."

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29. 6/20/2012
May Section 40 of the Lender's Certificate be modified to read as follows (with the phrase "and HUD, as its interest appears" shown as deleted text):  "40.  Lender certifies that the security agreement and the Uniform Commercial Code Financing Statement filings, along with any other documents required by State law, establish a perfected first lien security interest under the Uniform Commercial Code in the UCC Collateral in favor of Lender [[and HUD, as its interest appears]].  Lender acknowledges that it must maintain a perfected lien position in the UCC Collateral for the life of the Loan."  If the requested modification is not permitted, may the Security Instrument be modified to provide a security interest in favor of HUD, in accordance with Section 40 of the Lender's Certificate?

While HUD is listed as an additional secured party in the UCC financing statements, it is not a party to the Security Instrument.  HUD only becomes a party if the loan is assigned to HUD.  During the notice and comment period, HUD posted a version of the Regulatory Agreement that doubled as a Security Agreement.  This security agreement language was removed from the Regulatory Agreement in response to comments.  However, the corresponding edit was not made to the Lender's Certification.  This omission will be corrected in the document.

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30. 9/24/2012
In Regulatory Agreement paragraph 46a, Lender's counsel has made a correction to the word "Term" where it appears before "Business Day" to read "term" (lower case t). This may be a scrivener's error that you may wish to correct. The capitalization of "Term" suggests a defined term and also suggests the Term of the loan to me.

You are correct that the capitalization of "Term" suggests a defined term, but it is not a defined word in the documents. It is used in paragraph 46(a) merely as the lead-in word to the defined term
"Business Day." This is a scrivener's error that will be corrected in the next iteration of the documents.

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31. 11/16/2012
Editorial Correction to Security Instrument Section 48(h)..

The second sentence of 48(h) is revised to read: “Any such costs incurred by Lender
(including the fees and out-of-pocket costs of attorneys and technical consultants whether
incurred in connection with any judicial (appellate or otherwise) or administrative process or
otherwise) which Borrower fails to pay promptly shall become an additional part of the
indebtedness as provided in Section 13; provided that so long as the Loan is insured by HUD, no
advances made by Lender under this subsection (h) shall become an additional part of the
indebtedness unless such advances receive the prior written approval of HUD and provided
further that unless approved by HUD, Lender shall have no obligation to make such further
advances.”


The revised language was inadvertently excluded from the final version of the Security
Instrument. The revisions permit lenders to automatically add to the indebtedness certain
unreimbursed environmental costs paid by a lender on behalf of a borrower when the loan is not
insured by HUD. This revision also ensures consistency with similar provisions found in
subsections (e) and (i) of Section 48.

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32. 03/21/2013
Definition of " Surplus Cash" in Regulatory Agreement has changed. 

Definition of "Surplus Cash" in Regulatory Agreement at Section I. Definitions, paragraph gg has been changed to read as follows: "Surplus Cash" means any cash plus amounts receivable under Section 8 project-based subsidy payments (earned in the applicable fiscal period) remaining after:"


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Back to Multifamily Document Reform Implementation Frequently Asked Questions

Scriveners Documents Regarding:

Please see the Q&A's in this category for an explanation of what changes have been made to each document.  Documents can be accessed on HUDclips:  http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/forms/hud9.  Any document revised for scrivener’s errors will be reposted on HUDclips.  The “reposted” date below refers to the date that the document was reposted on HUDclips.”   

  • Regulatory Agreement (Doc HUD-92466M-revised & reposted 4/13/12)  
  • Security Instrument (Doc HUD-94000M-revised & reposted 5/14/12)
  • Note (Doc HUD-94001M-revised & reposted 5/14/12)
  • Lenders Cert (Doc HUD-92434M-revised & reposted 06/20/12)
  • Request for Endorsement (Doc HUD-92455M-revised & reposted 11/30/11)
  • Subordination Agreement (Doc HUD-92420M-revised & reposted 11/30/11)
  • Agreement and Certification (Doc HUD-93305M-revised & reposted 2/21/12)
  • Guide for Borrower's Counsel's Opinion (Doc HUD-91725M-word version revised & reposted 11/30/11, pdf revised and reposted 2/21/12)
  • Payment Bond (Doc HUD-92452A-M-revised & reposed 2/21/12)
  • Maryland Security Instrument State Addendum (Maryland Addendum to Doc HUD-94000M-revised and reposted 4/13/12)
  • Missouri Security Instrument State Addendum (Missouri Addendum to Doc HUD-94000M-revised and reposted 11/9/11)
  • Louisiana Security Instrument State Addendum (Louisiana Addendum to Doc HUD-94000M-revised and reposted 3/19/12)
  • Ohio Security Instrument State Addendum (Ohio Addendum to Doc HUD-94000M-revised and reposted 4/18/12)