Denver Multifamily Hub Protocol for Review of Closing Documents and Initiation of Closing - (Latest Revision dated 12/18/12)
- Closing Coordinator / Program
- Closing Coordinator for FHA - The Closing Coordinator will be the Senior Project Manager/Housing Representative, Ms. Cynthia H. Johnson (303) 672-5446.
- Closing Coordinator for the 202/811 Program - The Closing Coordinator will be Senior Project Manager, Elaine Chavez (303) 672-5427.
- Duties. The Closing Coordinator will coordinate:
- Receipt and review of draft closing documents within HUD,
- Dissemination of comments from HUD to the person who submitted the closing documents on behalf of the lender in FHA cases and on behalf of the project owner in Section 202/811 cases ("Lender" or "Project Owner"),
- Scheduling of the closing, and
- Commencement of the closing.
- Receipt of Closing Packages. For FHA cases, the Lender will send the Closing Coordinator four packages of draft closing documents for review by the FHA MF Hub technical staff and the Office of Counsel (OC). For Section 202/811 cases, the Project Owner will send the Closing Coordinator four packages of draft closing documents for review by the 202/811 technical staff and OC. Please note that packages arriving at HUD's Denver mailroom in the morning by regular mail or by overnight delivery reach MF Hub staff in the mid-afternoon, and packages arriving in the afternoon reach us the next morning. Please plan accordingly.
- Content and Acceptability of Packages. Closing packages must enumerate the documents required in the specific program checklist applicable to the project as well as the special conditions specifically noted in the firm commitment, using either a cover letter or the HUD program checklist. The Lender/Project Owner is responsible for obtaining all closing documents generated by third parties that require HUD approval, such as secondary financing documents, access easements, etc., and these must be included to constitute a complete package. Only the Lender/Owner may submit closing documents to HUD.
The Closing Coordinator will review the package to insure that all required documents are included and special conditions are addressed. The Closing Coordinator will determine if the package will be (a) circulated for technical and legal review, (b) held pending clarification and submission of additional documentation by the lender or project owner, or (c) returned, in its entirety, to the lender or project owner due to inadequate documentation. The Closing Coordinator then will notify the Lender/Project Owner as to the package's status. When the package is complete, the Closing Coordinator will distribute it for review within HUD.
- Amendments to Firm Commitment. Please note that the Lender or Project Owner must submit any requests for amendments to the firm commitment in advance of closing review. Even certain minor amendments affect the content of the closing documents, and fewer corrections will be needed, and the need for a second review obviated, if the amendments are completed prior to preparation and review of closing documents. Therefore, if a firm commitment amendment request is included with a draft closing package, or a firm commitment amendment request is submitted after the submission of a closing package, the package will be returned to the Lender/Project Owner.
- HUD's Review and Comments. HUD's review of closing documents will commence upon receipt of a complete package. Upon completion of HUD's review, the Closing Coordinator will provide comments to the Lender/Project Owner from all HUD reviewers, including OC. HUD's comments will indicate which draft documents, if any, should be submitted for a second review, on the theory that, in most cases, the Lender/Project Owner can address all comments by submitting revised documents at closing, rather than resubmitting them prior to closing. Please do not resubmit documents if HUD has not requested the specific document to re-review prior to closing.
- Responses to HUD Comments. HUD welcomes responses from the Lender/Project Owner that consist of comments on the documents, but the Lender/Project Representative should not submit revised documents unless HUD so requires. Any responses should be sent to the Closing Coordinator, who will disseminate them to HUD technical staff and OC. However, correspondence between OC and the lender's or owner's counsel need not be routed through the Closing Coordinator. In the event that HUD does request that particular documents be resubmitted prior to closing, only complete responses to HUD's request will be accepted (i.e., no piecemeal or partial responses will be reviewed), and all responses must be submitted in triplicate, as the Closing Coordinator will distribute them to all HUD reviewers. Email submissions will not be accepted.
HUD anticipates that the Lender/Project Owner will ensure that all documents are revised in accordance with HUD's program rules and case-specific comments prior to closing. If the Lender/Project Owner believes that it cannot or need not comply with any of HUD's comments, then he or she should notify HUD in advance of closing so that we may ensure we are in agreement.
As the review progresses and the parties prepare for closing, all communications concerning third party documents must be through the Lender/Project Owner, even if the communication is originated by the owner or owner's representative and directed to HUD staff or counsel. It is HUD's desire that the Lender/Project Owner be fully informed as to all closing matters.
- Scheduling Closings. Once HUD has provided its comments to the Lender/Project Owner and we are confident that matters can be resolved quickly, the Closing Coordinator will contact the Lender/Project Owner to establish a tentative closing date, which will be subject to the availability of all parties. Note, however, that closing on the date selected is subject to satisfactory resolution of any review comments. Special issues may require more time to resolve prior to closing so that they do not unnecessarily prolong the actual closing. The Department expects the Lender, the Lender's Attorney, the Project Owner, the Project Owner's Attorney, the Contractor, the Architect, a representative from the title company, and a representative from the Surety Bond Provider to attend the closing. At the time the closing is scheduled, the Closing Coordinator must approve the absence of any closing participant.
- Recording Package. Due to the distance between HUD's Denver office, where closings are held, and the location of most projects, HUD requires that the documents to be recorded (the "Recording Package") must be approved, executed and recorded prior to closing so that the closing may proceed and be concluded in a timely manner. Consequently, the Lender/Project Owner should submit at least three fully-executed sets of the Recording Package directly to the HUD closing attorney at least four business days prior to closing, along with forwarding instructions, to allow time for the HUD closing attorney to review it, obtain the necessary signature and notary acknowledgement, and forward it for recording, all of which must occur sufficiently in advance of closing for the title company to complete the recording and issue the policy for closing. This process may occur simultaneously with HUD's review of the closing documents. We caution lenders that only under unusual circumstances will HUD send the Recording Package forward on the same day that we receive it. Please provide advance notice of the day on which the Recording Package will arrive at HUD. If the Lender/Project Owner wishes HUD to return the Recording Package by overnight delivery, the Lender/Project Owner must include a prepaid envelope for such delivery, as HUD cannot incur this expense.
- Postponement of Closings. Please note that HUD reserves the right to postpone a closing if documents that HUD has required to be submitted by a date certain are not received, or if other circumstances make postponement necessary (such as the parties' failure to comply with other HUD requirements or if reprocessing is necessary). Certain documents must be received by the MF Hub no later than three days prior to the scheduled closing date. Those documents will be specifically identified for a particular project in the MF Hub's comments, but may include building permits, any documents not previously reviewed by HUD, any third-party items such as title and survey, and any final drafts that required re-review. If any such documents are not received three business days prior to closing, or such other date as HUD specifies, the closing will be postponed to the third business day after receipt of such documents, or such subsequent, mutually-acceptable date that HUD and the Lender/Project Owner may select.
- Closing Day Coordination. Upon arrival of closing participants, the guard on the 25th floor will notify the Closing Coordinator, who will conduct them to the Office of Counsel conference room. When the Lender/Project Owner informs the Closing Coordinator that they are ready to begin the closing, the Closing Coordinator will notify the HUD closing attorney. The Closing Coordinator will generally be available during the closing to assist with communication and transmission of documents between the closing participants and MF Hub technical staff. Please advise both the Closing Coordinator and the HUD closing attorney of any special needs or funding deadlines. If a participant in the closing is delayed in arriving at the closing, that participant should notify the Lender/Project Owner as early as possible, and the Lender/Project Owner should notify the Closing Coordinator. We will make every effort to complete the closing promptly, and we ask that other participants do the same.
- Changes to Documents Submitted at Closing. After the HUD Underwriter and HUD Closing Attorney have reviewed and accepted a document, Lender's Attorney must provide a certification at closing that no changes have been made to any of the documents previously submitted to and approved by HUD. If there are changes to any of the documents, then these must affirmatively be brought to the attention of the HUD Closing Attorney conducting the closing.
Suggestions for a Smooth Closing
- Ensure the legal descriptions on the title policy and survey match.
- Provide copies of all Title Exception documents.
- Ensure that easements described in Schedule B of the Title Policy are plotted on the survey and all survey items are noted on Schedule B.
- Provide all supporting documentation/exhibits for special agreements between the owner and other parties. In order to determine whether or not these conditions may cause difficulties, a review of the appropriate document(s) is necessary.
- Ensure that no liens are described in Schedule B of the Title Policy. We cannot proceed with endorsement with identified liens.
- Provide cost certification on Initial/Final Endorsement for Section 223(f) projects prior to closing package submission.
- Request all amendments to the Firm Commitment prior to the closing package submission.
- Use HUD prescribed forms and language.
- Provide all utility and zoning letters.
- Provide the Construction Progress Schedule and ensure it matches the contract.
- Provide correct Secondary Financing documents.
- Expect to schedule a closing upon completion of the review of the closing documents.