HUD Logo
USA%20Flag  
Site Map         A-Z Index         Text   A   A   A
HUD   >   Program Offices   >   General Counsel   >   Frequently Asked Questions   >   Security Instruments

 

Multifamily Document Reform Implementation Frequently Asked Questions

Security Instrument

If you have additional questions about this document, please submit it to MultifamilyDocumentReview@hud.gov

  

 

  1.  Will lenders be permitted to change the new HUD form Security Instrument (mortgage or deed of trust) to add a provision requring the borrower to pay an assumption fee in the event of a Transfer of Physical Assets?
  1. This question relates to the UCC financing statements as well as the Security Instrument. The collateral description attached to the recorded UCC fixture filing is supposed to be identical to the collateral description within the Security Agreement. Because the Security Agreement is now contained within the Security Instrument, the collateral description for the UCC should match that within the Security Instrument. Lender’s Counsel informed me that he created the collateral description by copying and pasting various descriptions of the collateral throughout the Security Instrument into an Exhibit attached to the UCC filing statement. Is this the correct manner in which to handle the collateral description? Is there a uniform collateral description that can be used nationally?  
  1. Are any changes permitted to Section 22(c) Events of Default?
  1.  What is intended by the language in Section 2, "Uniform Commercial Code Security Agreement," stating that no UCC filings "have been made against Borrower, the Project or the Project Assets prior to the initial or initial/final endorsement of the Note by HUD"? Is this language applicable in a refinance context? Should the language be changed to "no UCC filings existing at the time of endorsement of the Note by HUD, except those filings approved by HUD"?
  1. Paragraph 7(a)(1)(ii) of the Security Instrument provides the following: "If and so long as the Note and this Security Instrument are held by HUD, a monthly service charge in an amount equal to one-twelfth of one-half (1/12 of 1/2) percent of the average outstanding principal balance" will be required. I'm reviewing a draft 221(d)(4) Security Instrument where "(1/12 of 1/2)" has been changed to "(1/12 of 9/20)." This change, if permitted would make HUD's monthly service charge the same amount as the mortgage insurance premium. In my view, this change is necessary because Section 207(r) of the National Housing Act states that HUD's monthly service charge "shall not exceed the amount prescribed by the Secretary for mortgage insurance premiums applicable to such mortgage." If we leave the form as is, HUD runs the risk of violating the NHA by imposing a monthly service charge higher than the MIP. In light of that risk, may the HUD closing attorney allow the change to paragraph 7(a)(1)(ii)? 
  1. May paragraph 2 of the Security Instrument be changed to make reference to UCC filings made in conjunction with approved subordinate financing? The language as it exists is particularly troublesome in the context of a refinancing. 
  1. Housing Notice H 2011-07 provides guidance on the use of Subordination, Non-Disturbance and Attornment Agreements (SNDA) and includes a HUD approved SNDA form. Paragraph 3(b) of the SNDA sets out the "non-disturbance" provisions of the SNDA, which are, of course, so critically important to commercial tenants. For purposes of this query, the relevant portion of 3(b) of the SNDA states: "Subject to the observance and performance by Lessee . . . FHA lender or such other purchaser shall recognize the leasehold estate of Lessee under all of the terms, covenants and conditions of the Lease for the remaining balance of the term (as the same may be extended in accordance with the provisions of the Lease) with the same force and effect as if FHA lender or such other purchaser were the lessor under the Lease and the Lease shall remain in full force and effect and shall not be terminated, except in accordance with the terms of the Lease of this Agreement." Compare that with the language of 4f(2) of the Security Instrument which states, "All non-residential Leases, including renewals or extensions of existing Leases but excepting Leases of the entire Project, also shall provide that . . . (iv) after a foreclosure sale of the Mortgaged property or after transfer of the Mortgaged Property to Lender by a deed-in-lieu of foreclosure, Lender or any purchaser at such foreclosure sale may, at Lender's or such purchaser's option, accept or terminate such Lease." The two provisions highlighted above appear to be at odds and create an irreconcilable inconsistency. The HUD approved form of SNDA states that if there are any inconsistencies between the terms of SNDA and the terms of the Lease, the terms of the SNDA shall control, but, there is no such controlling provision for the SNDA vis a vis the HUD Security Instrument. I would point out that it appears also that the Security Instrument is inconsistent in and with itself--see 4f(2)(iii) whereby the Lease is not terminated by foreclosure or transfer and see 4f(2)(iv) whereby FHS Lender or foreclosure purchaser can terminate the Lease.
  1. Sections 4f(1)&(2) of the Security Instrument contain language for inclusion in commercial leases. The question is, whether this language must be incorporated into currently-existing leases at a subject property (e.g., if existing commercial leases must be amended in order to close an FHA insured loan) or if these provisions deal with new leases and renewals and extensions of existing leases. The existing leases are an existing legal contractual arrangement between the proposed HUD borrower as landlord and commercial lessee as tenant, and there is no legal mechanism to force a commercial tenant to modify such an existing, legally binding contract. Moreover, requesting such a modification will inevitably open up other provisions of the existing lease to further negotiation, including possible borrower/landlord concessions to achieve the required modification. Such negotiations would seem to undermine HUD's position on commercial tenants and its leases in Housing Notice H 2011-07 when it states "FHA benefits by allowing borrowers the latitude to negotiate with the widest pool of credit qualified commercial tenants." While stated in the context of discussion of the use and permissibility of SNDA's the statement is nonetheless instructive in this context.
  1. Housing Notice H2011-07 (Notice) discusses Subordination, Non-Disturbance and Attornment Agreements (SNDA) for commercial leases in the context of FHA financing. The Notice acknowledges why some commercial tenants may want or even require a SNDA to enter into a lease for commercial space and that, when that's the case, the Notice provides that, when an SNDA is used, it should be the HUD approved SNDA form attached to the Notice. The clear language of the Notice does not mandate that an SNDA be entered into as a requirement for FHA financing purposes. Rather, it uses language like, "Therefore this ML [I note this is not a Mortgagee Letter] permits the use of SNDAs..." and "SNDAs are permitted...", or, in the case of an identity of interest between borrower as landlord and commercial tenant, "an SNDA is not permitted...." Can you please clarify and confirm that SNDA's are not a HUD requirement for obtaining or closing a FHA insured loan on a property with commercial leases? 
  1. The guidance given on the 11/3/2011 conference call was that in section 19(a), sentence 3 of the Security instrument improvements should be substituted for Mortgaged Property; however, the guidance also specifically mentioned the flood insurance requirements, which are actually in the 4th sentence. It might be helpful to provide clarification.
  1. In the Security Instrument, there appears to be a small typo. Section 9 is titled Regulatory Agreement Default in the TOC and Regulatory Agreement in the body of the text. Likewise, Section 38 is titled Construction of this Agreement in the TOC and Rules of Construction in the body of the text. Section 46 is simply Termination in the TOC and Termination of HUD Rights and References. Which titles are preferred?
  1. In connection with a LIHTC transaction involving a bridge loan secured by tax credit equity, can the following language be added to the definition of "Mortgaged Property" in the Security Instrument: "Notwithstanding the foregoing or anything else in this Mortgage to the contrary, the Mortgaged Property does not include Borrower's right to receive contributions of capital from the partners in Borrower."
  1. 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.

 

  1. Lender's counsel has requested the following amendment. Is this something that should be added nationwide on a future form? "51. Waiver of Trial by Jury. Borrower and Lender each (a) agrees not to elect a trial by jury with respect to any issue arising out of this Security Agreement or the relationship between the parties as lender and borrower that is triable of right by a jury and (b) waives any right to trial by jury with respect to such issue to the extent that any such right exists now or in the future. This waiver of right to trial by jury is separately given by each party, knowingly and voluntarily with the benefit of competent legal counsel."
  1. (2/16/2012       
    The placement of the defined term "Security Instrument" in the opening paragraph of the Security Instrument document is a little confusing to me.  As written, it's not clear that "Security Instrument" (in the parenthetical) refers to all of the preceding clauses; as written, it may refer only to Program Obligations.  Additionally, because the first four lines are in caps, it's not immediately clear that "Mortgage" and "Program Obligations" are defined terms.  Therefore, I think the first two clauses should appear as follows:  "THIS MULTIFAMILY (MORTGAGE, DEED OF TRUST, DEED TO SECURE DEBT, OR OTHER DESIGNATION AS APPROPRIATE IN JURISDICTION), ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT ("Security Instrument") which, for as long as the loan is insured or held by HUD, shall be deemed to be the Mortgage as defined by Program Obligations . . . ."
  1. 3/15/2012       
    With regard to borrower financial statements, Section 15(d) of the Security Instrument provides: "Within 120 days after the end of the fiscal year of Borrower, Borrower shall furnish to Lender a statement of income and expenses of Borrower's operation of the Mortgaged Property for that fiscal year." Whereas, Section 18 of the Regulatory Agreement provides: "Within ninety (90) days, or such period established in writing by HUD, following the end of each fiscal year, Borrower shall furnish HUD and Lender with a complete annual financial report based upon an examination of the books and records of Borrower prepared in accordance with GAAP, audited in accordance with Generally Accepted Auditing Standards ("GASS") and the Government Auditing Standards ("GAS") and any additional requirements of HUD unless the report is waived in writing by HUD". The two sections appear to contradict each other with regard to the delivery deadline for financial statements. Should the Security Instrument be revised to 90 days?
  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). 
  1. 4/26/2012       
    Editorial correction to the Security Instrument, in Section 43. 
  1. 4/26/2012       
    The note provides for late penalties after 10 days and an assignment upon default after 30 days. There is no provision for a grace period so theoretically a lender can accelerate the debt if the payment is one day late. Would it be reasonable to express a grace period in the note?
  1. 4/30/2012       
    For refinances in New York, borrowers often rely on Supplemental and Consolidated, Modified and Extended Notes and Mortgages in order to pay the mortgage recording tax on only the new (supplemental) money. First, the original note is assigned to the new lender through an assignment of note. Then, a supplemental note is made in favor of the new lender, secured by a supplemental mortgage. Finally, the original note and supplemental note are consolidated by a Consolidated, Modified, and Extended Note. HUD only endorsed the CME Note. The CME Note is accompanied by a CME Mortgage, which is a consolidation of the existing mortgage and the supplemental mortgage into the new mortgage amount. We would like to modify the Consolidated Note and the Security Instrument in order to reflect this practice. More specifically, we would like to add language to the Security Instrument which lays out the practice described above. We would outline information regarding the different mortgages, include that the mortgages are consolidated and extended (to meet the term of the FHA insurance), and state that the parties consent to the assignment of note and the consolidation. In the event that we do not want to permit such changes to the Security Instrument form, an alternative would be to permit a separate Consolidation, Extension, Modification Agreement. Such an agreement would essentially contain recitals regarding the mortgages, consent to the consolidation, and extend the term. This Agreement would be a recorded document. We may want to consider including explanatory language in the Note as well. Also, should we be using the new documents for the Supplemental Note and Mortgage? We would have the Supplemental Note and Mortgage be the same form as the Consolidated versions. The Supplemental and Consolidated versions have been the same in the past. Here, however, the Security Instrument encompasses the mortgage, assignment of rents, and the security agreement. This seems to go beyond what is needed, especially since the Supplemental Mortgage is taken out by the CME Security Instrument. If we are to use the new documents, would revisions be permitted to streamline them to just what is needed to effectuate the consolidation? 
  1. 5/1/2012       

    Editorial corrections have been made to certain page numbers in the TOC for the Security Agreement.
     
  1. 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. . . ” 
  1. 5/1/2012       
    Editorial correction to paragraph 19 (a) of Security Instrument to change the words “Mortgaged Property is” to “Improvements are”. 
  1. 5/3/2012       
    May this collateral be added to the Security Instrument or is a separate security agreement required? Please clarify, since there are different interpretations across the field offices which is causing conflicts with lender's counsel. (i) Accounts; (ii) Chattel paper; (iii) Inventory; (iv) Equipment; (v) Instruments, including Promissory Notes; (vi) Investment Property; (vii) Documents; (viii) Deposit accounts; (ix) Debtor's claim for interference with contracts; (x) Letter-of-credit rights; (xi) General intangibles, including payment intangibles; (xii) supporting obligations; (xiii) Intentionally Deleted; and (xiv) to the extent not listed above as original collateral, proceeds and products of the foregoing. 
  1. 6/20/2012       
    The lender's counsel has requested to make the previously approved change to Paragraph 7(a)(1)(ii) of the Security Instrument to reflect a service charge of 1/12 of 9/20. Because the Q&A dated 12/13 permits this change, I have told him it is acceptable. In light of the adjustment to the language in the most recent round of corrections, is this change still permitted?
  1. 7/25/2012 Does Paragraph 31 (Notice) of the Security Instrument require all principals (defined at 24 CFR 200.215) to be listed? Or only those defined in the Firm Commitment to be listed in Paragraph 50 of the Regulatory Agreement and Paragraph 6 of the Security Instrument?
  1. 11/16/2012       
    Editorial Correction to Security Instrument Section 48(h).
  1. 2/21/2013       
    There appears to be a typo in Section 21(a)(c) of the Security Instrument. This portion of 21(a) refers to transfers that do not require prior HUD approval, and clause (c) says that HUD approval is not required "for an interest by inheritance or by Court decree." While I think the intent of this clause can be divined, it doesn't make sense grammatically. Section 21(a)(c) of the Security Instrument parallels Section 36(a)(iii) of the Reg Agreement, which says that HUD approval is not required "for acquisition of an interest by inheritance or by Court decree." Accordingly, it appears that a couple of words were mistakenly left out of Section 21(a)(c) of the Security Instrument, which should be corrected to read "for acquisition of an interest by inheritance or by Court decree."
  1. 3/26/2013       
    With regard to Section 19(a) of the Security Instrument which deals with the requirement that "Borrower shall maintain flood insurance covering the Improvements" please respond to the following: (1) If some, but not all, of the Improvements are located in a special-flood-hazard area (SFHA), is the Section 19(a) requirement satisfied if only the Improvements in the SFHA are covered by flood insurance?; and (2) Is it correct to interpret the scope of "Improvements" with respect to the flood insurance requirement to apply only to buildings and structures, and to exclude "alterations" in the nature of paved areas, utility facilities, etc., that do not constitute buildings or structures?

 

  1. 3/05/2014   
    I have a question regarding Paragraph 7(a)(1)(ii) of the Security Instrument which provides that "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 (1/12 of 1/2) percent of the average outstanding principal balance".  With the new MIP rates, for example on a 207/223(f) transaction, the MIP is now 60bps.  My understanding was that in cases where HUD held the Note, you wanted the ability to charge a monthly service charge that was the same amount as the MIP.  If that is the case, the Security Instrument as it currently reads would limit you to charging up to 1/12 of 50bps for the monthly service charge, certainly a lower amount than what was being paid as MIP.  Is HUD okay limiting its monthly service charge to 1/12 of 50bps for transactions where the MIP would be higher?  Or should we amend the section to match the MIP (i.e. for a 207/223(f) revise to read "one-twelfth of six-tenths (1/12 of 6/10)")?
  1. 4/10/2014   
  1. 9/11/2014   
  1. 9/18/2014   

1.  In the version of the Closing Guide that was sent around for field counsel consideration, the Appendices included a rider to the Security Instrument for use when the property was ground leased to our mortgagor.  In the later version of the Closing Guide that was sent to the ABA for consideration, that rider was omitted.  Why was that rider dropped? 

As you know, one goal in revising the Multifamily documents is to eliminate the need for extraneous riders and supplemental language or other extra requirements, particularly those requirements that vary from HUD office to HUD office.  Because of the revisions to the Security Instrument and the Ground Lease Addenda, the former Rider to the Mortage relating to Ground Leases is no longer necessary.  Although, on the surface, the provisions of the Rider are different from those of either the Security Instrument or the Ground Lease Addenda, the provisions of the Security Instrument and Ground Lease Addenda adequately protect HUD’s interests, to an equal or greater extent than the Ground Lease Rider protected the same interests.  Therefore, the Ground Lease Rider is not needed..

   Back to top

<

2.  The security agreement in the Security Instrument runs to the lender only – not HUD.  Without a pledge of collateral, HUD has no security interest to perfect and should not be listed as a secured party on the UCCs.  Should the attorney opinion be modified to reflect this situation, or do we need to add language by which the debtor grants HUD a security interest in the collateral?
 

The security agreement is provided to the lender; HUD only receives a security interest if the loan is assigned.  HUD should be listed on the UCC financing statements as its interest may appear.  The attorney providing the opinion asserts that the Security Instrument is sufficient to create the lien and provide the security interest to the lender.

  Back to top

3.  Do we need to delete the assignment of rents if there is a HAP contract, so that the insured lender is not taking a pledge of the HAP contract in violation of the requirements of the Section 8 Renewal Guide? 

Please see the question asking whether to delete mention of rents from the secondary financing Subordination Agreement.  If, however, by the phrase "delete the assignment of rents" the questioner is asking whether or not the HUD closing attorney should prohibit secondary financing lenders from requiring Borrowers to execute an assignment of rents, the HUD closing attorney may point out that an assignment of HAP rents is not effective unless HUD consents to such assignment and such assignment is made using the proper HUD form and approval process, and may point out that the Subordination Agreement (or, in the case of private secondary financing, the Secondary Financing Rider to the secondary financing mortgage instrument) subordinates the secondary financing lenders' rights to HUD's rights in the event of a default. 
 

 Back to top

 

4.  Will lenders be permitted to change the new HUD form Security Instrument (mortgage or deed of trust) to add a provision requring the borrower to pay an assumption fee in the event of a Transfer of Physical Assets? 

No, although an assumption fee may be charged, the Security Instrument may not be altered without the consent of the Assistant General Counsel for Insured Housing. 

Back to top

 

5.  This question relates to the UCC financing statements as well as the Security Instrument. The collateral description attached to the recorded UCC fixture filing is supposed to be identical to the collateral description within the Security Agreement. Because the Security Agreement is now contained within the Security Instrument, the collateral description for the UCC should match that within the Security Instrument. Lender’s Counsel informed me that he created the collateral description by copying and pasting various descriptions of the collateral throughout the Security Instrument into an Exhibit attached to the UCC filing statement. Is this the correct manner in which to handle the collateral description? Is there a uniform collateral description that can be used nationally? 

Yes. This is the correct manner to handle the collateral description in the UCC financing statement. The Lender’s Certificate obligates Lender to insure that the collateral description is adequate to perfect an interest in all mortgaged property. If the Lender deems it necessary, Lender may expand the collateral description for the UCC financing statement or even require a separate security agreement. No, HUD does not have a uniform expanded collateral description for UCC financing statements.

Back to top

6.  Are any changes permitted to Section 22(c) Events of Default? 

No. A question has come up concerning the scope of Section 22(c). If the Lender sends a notice of default (which it may not always be required to do so), it is required to send a copy of that notice to the Borrower's Principals. The sole purpose of this requirement is to provide notice of the potential default so that if the Principals want to step in and timely cure the default they will have been given notice of the problem. This language does not create any additional rights for the Principals.

Back to top

7.  What is intended by the language in Section 2, "Uniform Commercial Code Security Agreement," stating that no UCC filings "have been made against Borrower, the Project or the Project Assets prior to the initial or initial/final endorsement of the Note by HUD"? Is this language applicable in a refinance context? Should the language be changed to "no UCC filings existing at the time of endorsement of the Note by HUD, except those filings approved by HUD"? 

In the context of a refinancing, if any existing UCC filings to be released in connection with the refinancing transaction will not be released at the time of closing and initial endorsement, and consequently Borrower is unable or unwilling to make the representation set forth in Section 2, Borrower may, prior to the sentence that begins "Borrower represents and warrants to Lender that no UCC filings have been made..." add the phrase "Except for UCC filings disclosed to Lender and HUD that are to be released in connection with the HUD-insured transaction".

Back to top

8.  Paragraph 7(a)(1)(ii) of the Security Instrument provides the following: "If and so long as the Note and this Security Instrument are held by HUD, a monthly service charge in an amount equal to one-twelfth of one-half (1/12 of 1/2) percent of the average outstanding principal balance" will be required. I'm reviewing a draft 221(d)(4) Security Instrument where "(1/12 of 1/2)" has been changed to "(1/12 of 9/20)." This change, if permitted would make HUD's monthly service charge the same amount as the mortgage insurance premium. In my view, this change is necessary because Section 207(r) of the National Housing Act states that HUD's monthly service charge "shall not exceed the amount prescribed by the Secretary for mortgage insurance premiums applicable to such mortgage." If we leave the form as is, HUD runs the risk of violating the NHA by imposing a monthly service charge higher than the MIP. In light of that risk, may the HUD closing attorney allow the change to paragraph 7(a)(1)(ii)?


The form Security Instrument has been corrected to allow a monthly service charge limited to the lesser of the amount permitted by law or one-twelfth of one-half percent.  Please use the corrected form; it has been posted on HUD Clips.

Back to top

9.  May paragraph 2 of the Security Instrument be changed to make reference to UCC filings made in conjunction with approved subordinate financing? The language as it exists is particularly troublesome in the context of a refinancing.


 Yes.


In the case of a refinancing with preexisting UCC filings that will be terminated, Borrower may, prior to the sentence that begins "Borrower represents and warrants to Lender that no UCC filings have been made..." add the phrase "Except for UCC filings disclosed to Lender and HUD that are to be released in connection with the HUD-insured transaction".

In the case of a refinancing with preexisting subordinate UCC filings that will be resubordinated, Borrower may, prior to the sentence that begins "Borrower represents and warrants to Lender that no UCC filings have been made..." add the phrase "Except for UCC filings disclosed to and approved by Lender and HUD that shall be subordinate to the Security Instrument and Lender’s UCC filings in connection with the HUD-insured transaction".

Back to top

10. Housing Notice H 2011-07 provides guidance on the use of Subordination, Non-Disturbance and Attornment Agreements (SNDA) and includes a HUD approved SNDA form. Paragraph 3(b) of the SNDA sets out the "non-disturbance" provisions of the SNDA, which are, of course, so critically important to commercial tenants. For purposes of this query, the relevant portion of 3(b) of the SNDA states: "Subject to the observance and performance by Lessee . . . FHA lender or such other purchaser shall recognize the leasehold estate of Lessee under all of the terms, covenants and conditions of the Lease for the remaining balance of the term (as the same may be extended in accordance with the provisions of the Lease) with the same force and effect as if FHA lender or such other purchaser were the lessor under the Lease and the Lease shall remain in full force and effect and shall not be terminated, except in accordance with the terms of the Lease of this Agreement." Compare that with the language of 4f(2) of the Security Instrument which states, "All non-residential Leases, including renewals or extensions of existing Leases but excepting Leases of the entire Project, also shall provide that . . . (iv) after a foreclosure sale of the Mortgaged property or after transfer of the Mortgaged Property to Lender by a deed-in-lieu of foreclosure, Lender or any purchaser at such foreclosure sale may, at Lender's or such purchaser's option, accept or terminate such Lease." The two provisions highlighted above appear to be at odds and create an irreconcilable inconsistency. The HUD approved form of SNDA states that if there are any inconsistencies between the terms of SNDA and the terms of the Lease, the terms of the SNDA shall control, but, there is no such controlling provision for the SNDA vis a vis the HUD Security Instrument. I would point out that it appears also that the Security Instrument is inconsistent in and with itself--see 4f(2)(iii) whereby the Lease is not terminated by foreclosure or transfer and see 4f(2)(iv) whereby FHS Lender or foreclosure purchaser can terminate the Lease.


No, there is no conflict between paragraph 4(f) of the Security Instrument and paragraph 3(b) model Subordination, Non-Disturbance, Attornment Agreement (SNDA)of Housing Notice H2011-07 as to non-disturbance provisions. The language required by paragraph 4(f) of the Security Instrument must be includedin all commercial leases. If HUD approves the use of a SNDA, the provisions of the HUD-approved SNDA provide that the provisions of the SNDA shall supersede the commercial lease provisions, to the extent the commercial lease provisions are inconsistent with the provisions of the SNDA. Consequently, where there is a HUD approved SNDA, the provisions of the SNDA related to non-disturbance supersede the provisions in the commercial lease related to non-disturbance.

Back to top

11.  Sections 4f(1)&(2) of the Security Instrument contain language for inclusion in commercial leases. The question is, whether this language must be incorporated into currently-existing leases at a subject property (e.g., if existing commercial leases must be amended in order to close an FHA insured loan) or if these provisions deal with new leases and renewals and extensions of existing leases. The existing leases are an existing legal contractual arrangement between the proposed HUD borrower as landlord and commercial lessee as tenant, and there is no legal mechanism to force a commercial tenant to modify such an existing, legally binding contract. Moreover, requesting such a modification will inevitably open up other provisions of the existing lease to further negotiation, including possible borrower/landlord concessions to achieve the required modification. Such negotiations would seem to undermine HUD's position on commercial tenants and its leases in Housing Notice H 2011-07 when it states "FHA benefits by allowing borrowers the latitude to negotiate with the widest pool of credit qualified commercial tenants." While stated in the context of discussion of the use and permissibility of SNDA's the statement is nonetheless instructive in this context.


The language required by Sections 4(f)(1) and (2) of the Security Instrument apply to new commercial leases and renewals and extensions of existing commercial leases. If the continuation of an existing commercial lease is permitted at the time a mortgage on the property is insured by HUD, the existing lease does not have to be amended to include language required by Sections 4(f)(1) and (2). However, when the existing commercial lease comes up for renewal or an extension of the lease term is requested, the lease must be amended to include the language required by Sections 4(f)(1) and (2) of the Security Instrument. HUD's underwriting conclusions will determine if a Subordination, Non-Disturbance, Attornment Agreement will be permitted on an existing commercial lease in place at the time a loan on the property is insured by HUD. Any changes to the existing lease required as a condition of HUD underwriting should be reflected as a special condition of the firm commitment.

Back to top

12.  Housing Notice H2011-07 (Notice) discusses Subordination, Non-Disturbance and Attornment Agreements (SNDA) for commercial leases in the context of FHA financing. The Notice acknowledges why some commercial tenants may want or even require a SNDA to enter into a lease for commercial space and that, when that's the case, the Notice provides that, when an SNDA is used, it should be the HUD approved SNDA form attached to the Notice. The clear language of the Notice does not mandate that an SNDA be entered into as a requirement for FHA financing purposes. Rather, it uses language like, "Therefore this ML [I note this is not a Mortgagee Letter] permits the use of SNDAs..." and "SNDAs are permitted...", or, in the case of an identity of interest between borrower as landlord and commercial tenant, "an SNDA is not permitted...." Can you please clarify and confirm that SNDA's are not a HUD requirement for obtaining or closing a FHA insured loan on a property with commercial leases?

Whether a Subordination, Non-Disturbance, Attornment Agreement will be required as a condition to obtaining FHA insured financing will depend upon HUD's underwriting conclusions for the specific loan, taking into consideration the commercial lease.

Back to top

13. The guidance given on the 11/3/2011 conference call was that in section 19(a), sentence 3 of the Security instrument improvements should be substituted for Mortgaged Property; however, the guidance also specifically mentioned the flood insurance requirements, which are actually in the 4th sentence. It might be helpful to provide clarification.


The change discussed on the call, replacing Mortgaged Property with Improvements, was made to the document that is posted on HUDclips. You are correct that the change was made to sentence 4, not to sentence 3.
 

Back to top

14. In the Security Instrument, there appears to be a small typo. Section 9 is titled Regulatory Agreement Default in the TOC and Regulatory Agreement in the body of the text. Likewise, Section 38 is titled Construction of this Agreement in the TOC and Rules of Construction in the body of the text. Section 46 is simply Termination in the TOC and Termination of HUD Rights and References. Which titles are preferred?


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.

Back to top

15.  In connection with a LIHTC transaction involving a bridge loan secured by tax credit equity, can the following language be added to the definition of "Mortgaged Property" in the Security Instrument: "Notwithstanding the foregoing or anything else in this Mortgage to the contrary, the Mortgaged Property does not include Borrower's right to receive contributions of capital from the partners in Borrower."


The definition of Mortgaged Property cannot be changed unless there is a compelling deal-specific reasons that the field office concluded is warranted and the OGC Office of Insured Housing concludes the requested change is warranted in accordance with the procedures set forth in the January 3, 2012, email from the Acting Associate General Counsel for Insured Housing. With respect to this question, Mortgaged Property does not include a Borrower's right to receive contributions of capital from the partners of Borrower. Therefore it is not necessary to modify the definition.

Back to top

 

16.  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.

Back to top

 

17.  Lender's counsel has requested the following amendment. Is this something that should be added nationwide on a future form? "51. Waiver of Trial by Jury. Borrower and Lender each (a) agrees not to elect a trial by jury with respect to any issue arising out of this Security Agreement or the relationship between the parties as lender and borrower that is triable of right by a jury and (b) waives any right to trial by jury with respect to such issue to the extent that any such right exists now or in the future. This waiver of right to trial by jury is separately given by each party, knowingly and voluntarily with the benefit of competent legal counsel."


No. The note includes a number of provisions, including the waiver of jury trial, that govern the entire loan. As a result, the language does not need to be added to the security instrument. If inclusion of the language in the security instrument is required under state law in order to be effective, the submitter must request the change to the state-specific addendum. If the local office decides to modify the state addendum, it must send the revision to the Office of Insured Multifamily Housing to be posted on HUDClips.

Back to top

 

18.  (2/16/2012)
The placement of the defined term "Security Instrument" in the opening paragraph of the Security Instrument document is a little confusing to me.  As written, it's not clear that "Security Instrument" (in the parenthetical) refers to all of the preceding clauses; as written, it may refer only to Program Obligations.  Additionally, because the first four lines are in caps, it's not immediately clear that "Mortgage" and "Program Obligations" are defined terms.  Therefore, I think the first two clauses should appear as follows:  "THIS MULTIFAMILY (MORTGAGE, DEED OF TRUST, DEED TO SECURE DEBT, OR OTHER DESIGNATION AS APPROPRIATE IN JURISDICTION), ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT ("Security Instrument") which, for as long as the loan is insured or held by HUD, shall be deemed to be the Mortgage as defined by Program Obligations . . . ."


The parenthetical "(Security Instrument)" at the end of the opening paragraph refers to the entire preceding phrase, not just to Program Obligations.  The defined term "Security Instrument" intentionally encompasses the phrase "shall be deemed to be the mortgage as defined by Program Obligations."  This was determined to be necessary as "mortgage" is the defined term in the National Housing Act, 12 USC 1707(a), and in the regulations, 24 CFR 200.3(b), for the first mortgage on real estate that HUD insures.  The intent of the definition is to clearly equate the "Security Instrument" as defined in the documents to the statutory and regulatory definition of "mortgage."

Back to top

 
19.  3/15/2012
With regard to borrower financial statements, Section 15(d) of the Security Instrument provides: "Within 120 days after the end of the fiscal year of Borrower, Borrower shall furnish to Lender a statement of income and expenses of Borrower's operation of the Mortgaged Property for that fiscal year." Whereas, Section 18 of the Regulatory Agreement provides: "Within ninety (90) days, or such period established in writing by HUD, following the end of each fiscal year, Borrower shall furnish HUD and Lender with a complete annual financial report based upon an examination of the books and records of Borrower prepared in accordance with GAAP, audited in accordance with Generally Accepted Auditing Standards ("GASS") and the Government Auditing Standards ("GAS") and any additional requirements of HUD unless the report is waived in writing by HUD". The two sections appear to contradict each other with regard to the delivery deadline for financial statements. Should the Security Instrument be revised to 90 days?


 


No. Section 18 of the Regulatory Agreement sets forth the financial reporting requirements for projects with a HUD-insured or HUD-held Loan. The 120 day reporting requirements of Section 15(d) of the Security Instrument only apply when HUD no longer insures or holds the Loan. This may occur, for example, if HUD sells the Note. The last sentence of Section 15(d) states: "Notwithstanding the foregoing, however, so long as the Loan is insured or held by HUD, Borrower's obligation under this subsection (d) shall be satisfied by delivery to Lender, concurrently with its delivery to HUD, of a copy of the annual financial statement required to be delivered to HUD in accordance with the Regulatory Agreement." This language informs a Borrower that has either a HUD-insured and HUD-held Loan that its obligations under Section 15(d) are satisfied by delivering to Lender, concurrently with its delivery to HUD, a financial report that complies with Section 18 of the Regulatory Agreement. Once the Loan is no longer HUD-insured or HUD-held and the Security Instrument still governs the Loan, the reporting requirements of Section 15(d) apply.

Back to top

 

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

Back to top

 

 
21.  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.”
 
Back to top

 
22.  4/26/2012
The note provides for late penalties after 10 days and an assignment upon default after 30 days. There is no provision for a grace period so theoretically a lender can accelerate the debt if the payment is one day late. Would it be reasonable to express a grace period in the note?


 
It is correct that as presently constituted, the Note (and Security Instrument) does not contain a grace period allowing Borrowers an opportunity to cure a Monetary Event of Default (by means of tendering the missed monthly payment and late charges) in the event Lender immediately accelerates the debt. It appears this was an unintended result of a change made to the definition of Monetary Event of Default in Section 22(a) of the Security Instrument with the last set of document reform revisions, whereby the Department eliminated from the definition a thirty (30) day period that would have been necessary before a Monetary Event of Default could be established and the debt accelerated.

As discussed in the preamble to the issuance of the final rule to update the Department’s regulations as a result of the new HUD Multifamily closing documents and related policies, HUD intended to make certain changes in response to a commenter’s concern that it was unclear whether the 30 day period then contained in the definition of Monetary Event of Default was in addition to, or coterminous with, the 30 day period described in the regulations (24 C.F.R. § 207.255(a)(3) that Lenders must wait before they are eligible to receive mortgage insurance benefits (subject to the claim regulations). 76 Fed. Reg. 24363, 24366 (May 2, 2011). HUD agreed with the comment that the two 30 day time periods were to run simultaneously, rather than sequentially, so that Lenders would not have to wait a total of 60 days before they were eligible to commence the mortgage insurance claim process. HUD consequently removed the 30 day period from the definition of Monetary Event of Default in the Security Instrument to avoid this confusion, and in doing so, inadvertently eliminated Borrowers’ right to a grace period before Lenders could accelerate.

It was not HUD’s intent through this revision to the definition of Monetary Event of Default to overturn the longstanding policy contained in the previous FHA mortgage and note, which effectively provided Borrowers a grace period for a default for nonpayment by authorizing Lenders to accelerate the debt only after “such default is not made good prior to the due date on the next such installment . . . .” This oversight is evident in the Department’s response to the commenter’s concern discussed above, where HUD stated in the preamble “[b]oth the regulation and the Security Instrument provide that if the default is not cured within 30 days, then the lender will be able to accelerate.” While the regulations in 24 C.F.R. § 207.256(a) do in fact refer to the 30 days Lenders must wait before they may commence the mortgage insurance claim process as a “grace period,” the preceding statement from the regulatory preamble concerning the 30 day period to cure is not accurate with respect to the Security Instrument (and Note). Nonetheless, it is clear from its response that HUD intended to require in the documents that Lenders wait a period of 30 days within which Borrowers could cure a Monetary Event of Default before being able to accelerate.

 As a result of this scrivener’s error, the Department is making the following corrections to the Note and Security Instrument provisions governing Acceleration:

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

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

The revised documents will be posted to HUDclips.

Back to top

 23.  4/30/2012
For refinances in New York, borrowers often rely on Supplemental and Consolidated, Modified and Extended Notes and Mortgages in order to pay the mortgage recording tax on only the new (supplemental) money. First, the original note is assigned to the new lender through an assignment of note. Then, a supplemental note is made in favor of the new lender, secured by a supplemental mortgage. Finally, the original note and supplemental note are consolidated by a Consolidated, Modified, and Extended Note. HUD only endorsed the CME Note. The CME Note is accompanied by a CME Mortgage, which is a consolidation of the existing mortgage and the supplemental mortgage into the new mortgage amount. We would like to modify the Consolidated Note and the Security Instrument in order to reflect this practice. More specifically, we would like to add language to the Security Instrument which lays out the practice described above. We would outline information regarding the different mortgages, include that the mortgages are consolidated and extended (to meet the term of the FHA insurance), and state that the parties consent to the assignment of note and the consolidation. In the event that we do not want to permit such changes to the Security Instrument form, an alternative would be to permit a separate Consolidation, Extension, Modification Agreement. Such an agreement would essentially contain recitals regarding the mortgages, consent to the consolidation, and extend the term. This Agreement would be a recorded document. We may want to consider including explanatory language in the Note as well. Also, should we be using the new documents for the Supplemental Note and Mortgage? We would have the Supplemental Note and Mortgage be the same form as the Consolidated versions. The Supplemental and Consolidated versions have been the same in the past. Here, however, the Security Instrument encompasses the mortgage, assignment of rents, and the security agreement. This seems to go beyond what is needed, especially since the Supplemental Mortgage is taken out by the CME Security Instrument. If we are to use the new documents, would revisions be permitted to streamline them to just what is needed to effectuate the consolidation?

 

The Multifamily Hub/Program Center has the authority to approve a Supplemental and Consolidated or Amended and Restated loan structure, if (1) requested by the Lender; and (2) the practice is customary and legally acceptable in the jurisdiction. If this structure is used to provide a tax savings, the underwriting should not show the respective tax as a permitted expense. The loan amount does not have to be reduced, if there are other permissible mortgage costs. The MAP Guide will be changed to provide guidance to lenders and Multifamily staff.

If approved by the Hub/PC, the loan documents may be modified in order to accommodate the Supplemental and Consolidated or Amended and Restated loans. The permitted note and mortgage modifications shall take the form of (1) changing the title of the note and security instrument shall be changed to conform to the requirements of the local jurisdiction; and (2) a Rider to the Note and the Security Instrument. The Riders shall outline information regarding the different notes/mortgages, including that the notes/mortgages are consolidated and extended (to meet the term of the FHA insurance), and state that the parties consent to the assignment of note and the consolidation. Any additional documents required due to the loan structure (such as a Supplemental Note and Supplemental Security Instrument) must conform to the new multifamily documents.

The Closing Guide will be revised to permit these modifications as long as they are permitted by state law.

Back to top

 
24.  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.

Back to top

 
25.  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 . . . “

Back to top

 
26.  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 . . . .”

Back to top

 
27.  5/3/2012
May this collateral be added to the Security Instrument or is a separate security agreement required? Please clarify, since there are different interpretations across the field offices which is causing conflicts with lender's counsel. (i) Accounts; (ii) Chattel paper; (iii) Inventory; (iv) Equipment; (v) Instruments, including Promissory Notes; (vi) Investment Property; (vii) Documents; (viii) Deposit accounts; (ix) Debtor's claim for interference with contracts; (x) Letter-of-credit rights; (xi) General intangibles, including payment intangibles; (xii) supporting obligations; (xiii) Intentionally Deleted; and (xiv) to the extent not listed above as original collateral, proceeds and products of the foregoing.


 
The definition of Mortgaged Property cannot be changed unless there is a compelling deal-specific reason that the field office concluded is warranted and the OGC Office of Insured Housing concludes the requested change is warranted in accordance with the approved procedures. The Lender’s Certificate obligates Lender to insure that the collateral description is
adequate to perfect an interest in all Mortgaged Property.

Back to top

 

 28.  6/20/2012
The lender's counsel has requested to make the previously approved change to Paragraph 7(a)(1)(ii) of the Security Instrument to reflect a service charge of 1/12 of 9/20. Because the Q&A dated 12/13 permits this change, I have told him it is acceptable. In light of the adjustment to the language in the most recent round of
corrections, is this change still permitted?


 
No. The form has been corrected and re-posted on HUD Clips. Please use the corrected form. The
answer to the 12/13 question has been revised.

Back to top

 29.  7/25/2012
Does Paragraph 31 (Notice) of the Security Instrument require all principals (defined at 24 CFR 200.215) to be listed? Or only those defined in the Firm Commitment to be listed in Paragraph 50 of the Regulatory Agreement and Paragraph 6 of the Security Instrument?


 
Section 31 requires the Borrower to identify the principals that the Borrower has named to receive the notices referenced in Section 31(a) of the Security Instrument. These names do not have to be the same names listed in Section 50 of the Regulatory Agreement or in Section 6 of the Security Instrument. Moreover, the Borrower does not have to list all of its principals. If the Borrower, however, chooses to list more than one principal or any or all of those listed in Section 50, it may do so. Other document provisions that refer to Section 31 of the Security Instrument include Section
22(c) of the Security Instrument and Section 18 of the Note.

Back to top

 30.  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.

Back to top

 31.  2/21/2013       
There appears to be a typo in Section 21(a)(c) of the Security Instrument. This portion of 21(a) refers to transfers that do not require prior HUD approval, and clause (c) says that HUD approval is not required "for an interest by inheritance or by Court decree." While I think the intent of this clause can be divined, it doesn't make sense grammatically. Section 21(a)(c) of the Security Instrument parallels Section 36(a)(iii) of the Reg Agreement, which says that HUD approval is not required "for acquisition of an interest by inheritance or by Court decree." Accordingly, it appears that a couple of words were mistakenly left out of Section 21(a)(c) of the Security Instrument, which should be corrected to read "for acquisition of an interest by inheritance or by Court decree."

 
You are correct. Section 21(a)(c) of the Security Instrument and Paragraph 36(a)(iii) of the Regulatory Agreement are intended to be identical provisions, unfortunately, these two words were omitted in error. Thank you for bringing this to our attention. This scrivener's edit will be corrected as part of the next iteration of the documents under the Paperwork Reduction Act.

Back to top

 32.  3/26/2013       
With regard to Section 19(a) of the Security Instrument which deals with the requirement that "Borrower shall maintain flood insurance covering the Improvements" please respond to the following: (1) If some, but not all, of the Improvements are located in a special-flood-hazard area (SFHA), is the Section 19(a) requirement satisfied if only the Improvements in the SFHA are covered by flood insurance?; and (2) Is it correct to interpret the scope of "Improvements" with respect to the flood insurance requirement to apply only to buildings and structures, and to exclude "alterations" in the nature of paved areas, utility facilities, etc., that do not constitute buildings or structures?


 
(1) Section 9.5D of the MAP guide requires flood insurance under the National Flood Insurance Program for buildings located within the FEMA mapped special flood hazard area for the term of the loan. Flood insurance is not required for buildings that are not located in the special flood hazard area. (2) For purposes of acquiring flood insurance, the borrower is required to obtain coverage for buildings as well as any machinery, equipment, fixtures and furnishings contained therein that are funded, in whole or in part, with mortgage proceeds. For additional information, please see http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/environment/review/floodinsurance.

Back to top

 33.  3/5/2014
 I have a question regarding Paragraph 7(a)(1)(ii) of the Security Instrument which provides that "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 (1/12 of 1/2) percent of the average outstanding principal balance".  With the new MIP rates, for example on a 207/223(f) transaction, the MIP is now 60bps.  My understanding was that in cases where HUD held the Note, you wanted the ability to charge a monthly service charge that was the same amount as the MIP.  If that is the case, the Security Instrument as it currently reads would limit you to charging up to 1/12 of 50bps for the monthly service charge, certainly a lower amount than what was being paid as MIP.  Is HUD okay limiting its monthly service charge to 1/12 of 50bps for transactions where the MIP would be higher?  Or should we amend the section to match the MIP (i.e. for a 207/223(f) revise to read "one-twelfth of six-tenths (1/12 of 6/10)")?

 HUD currently is engaged the Paperwork Reduction Act process for revision of the multifamily loan documents and will take this comment into consideration. In the interim, the first four lines in 7(a)(1)(ii) may be modified to replace

“If and so long as the Note and this Security Instrument are held by HUD, a monthly service change in the amount equal to the lesser of the amount permitted by law or one twelfth of one-half (1/12 of ½) percent of the average outstanding principle balance . . . .“

with

“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 (1/12 of [insert the applicable mortgage insurance premium rate provided by HUD]) percent of the average outstanding principal balance . . . .”

Back to top

 34.  4/10/2014       
I assume the real intent is to replace language so that the subsection would read as follows (emphasis added): "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 (1/12) of the applicable mortgage insurance premium rate provided by HUD of the average outstanding principal balance . . . ." Please note I have also suggested replacing the term "Housing" with "HUD," since the former term does not appear to be a defined term in the Security Instrument.

 
The answer has been clarified, amended and reposted..

Back to top

 

35.  (9/11/14)

The new Security Instrument (MORTGAGE DEED, DEED OF TRUST, DEED TO SECURE DEBT, OR OTHER DESIGNATION AS APPROPRIATE IN JURISDICTION) eliminates the table of contents. However, the HUD form has not been renumbered to pickup this change—i.e. the 1st page is page and the 2nd page is page 5. Is this an oversight?

A: Yes; thank you for bringing this formatting error to our attention. The page numbering of the Word and PDF versions of the Security Instrument on HUDCLIPS has now been corrected.

Back to top

36.  We note that on the Forms/HUDClips page that there are new Security Instrument Addenda and Note Riders to be used after August 10, 2014. However, many of the older versions were not replaced with new documents. When dealing with a deal in Louisiana (or any state missing a new security instrument addendum or note rider), is it appropriate to use the old Security Instrument Addendum and Note Rider? Additionally, the new Missouri Security Instrument Addendum link is not working and states it is downloading as a HUD error.

A: Yes, you can continue to use the old versions of the state addenda and riders if new documents are not posted. The state addenda and note riders remain effective until superseded by a new document. Revised state addenda and riders were provided by Regional Counsel only if changes made to the Closing Documents affected state law requirements. We are working on getting the link fixed for the Missouri Security Instrument Addendum.

Back to top

Back to Multifamily Document Reform Implementation Frequently Asked Questions