TABLE OF CONTENTS
Tribal Legal And Administrative Framework
Eligible Activities And Properties
Loan Processing And The Firm Commitment
Loan Closing And Endorsement
Administering Construction Loans
Alaska Processing Guidelines For Construction
Chapter 7: Administering Construction Loans
|7.2 Loan Terms And Requirements
|7.3 Costs Eligible For Inclusion In Mortgage
|7.4 Mortgages That Include Acquisition And Rehabilitation Financing
|7.5 Construction/Rehabilitation Period
|7.6 Construction/Rehabilitation Process Requirements
|7.7 Submission At Completion Of Construction
|7.8 Foreclosure Of Construction Loans
Only one closing is used in the Section 184 Program. In the case
of loans that include construction or rehabilitation, an estimate
of construction and rehabilitation costs, including a contingency
allowance, are included in the loan. At the time of loan closing
the amount allocated for construction or rehabilitation is placed
in an escrow account and is drawn down as the construction proceeds.
The escrow account may also include funds to cover up to six mortgage
payments (PITI) to assist the borrower in making monthly payments
during the construction/rehabilitation period. The building period
is limited to six months, unless the Program ONAP approves an extension.
If lenders elect to offer separate construction and permanent
loans, only the permanent loan may be guaranteed under Section
184. In such cases, the loan is treated as an acquisition of an
existing structure after construction has been completed. Lenders
may, however, request a commitment for the borrower, prior to making
the construction loan.
back to top
LOAN TERMS AND REQUIREMENTS
- Firm Commitment Requirements. As specified in Chapters
4 and 5, lenders must submit plans and specifications for the
construction or the rehabilitation work.
- Timing. Loan closing must occur after the receipt of
a firm commitment and prior to the start of construction or rehabilitation.
- Interest Rate. The interest rate on the loan must remain
fixed throughout the term of the loan. Since the loan is fully
guaranteed, the interest should reflect current market rates
for permanent, rather than construction financing.
- Compliance. Investing (secondary) mortgage lenders
are encouraged to be bonded, and require lenders who hold the
escrow account to be bonded to ensure compliance with their responsibility
to borrowers, employees and the general public.
back to top
COSTS ELIGIBLE FOR INCLUSION IN MORTGAGE
- Lender Fees. Lenders may charge borrowers for typical,
reasonable, and necessary costs to the lender associated with
administering a construction loan. This includes charging the
borrower for the cost of construction and rehabilitation inspections.
These are eligible closing costs that may be financed in the
mortgage up to the LTV and the borrower’s debt-to-income
ratio. In addition, lenders may charge a loan origination fee
of up to two and one-half (2-1/2) percent of the mortgage amount
for mortgages that include construction draws. This loan origination
fee may be included in the mortgage, up to the borrower’s
ability to pay and the loan to value ratio.
- Contingency Reserve. The contingency reserve is intended
to be held for unforeseen circumstances during the construction
period. A 10 percent contingency reserve is required on all rehabilitation
and new construction loans except under the following conditions:
- A 5 percent contingency (at the discretion of the lender
and borrower) is acceptable on new construction loans for manufactured
housing and modular housing.
- If the borrower and lender agree the scope of work is well
defined and/or uncomplicated and foresee no use of contingency
reserve funds AND the rehabilitation cost is less than $7,500,
the lender may waive the requirement for a contingency reserve.
If the contingency reserve is waived, the Waiver of Contingency
Reserve (Appendix 4) must be executed by the borrower, lender
and construction/rehabilitation contractor (if applicable).
In all other instances, the 10% contingency reserve can be held
in one of the following manners:
- The contingency reserve funds are used in the computation
of the maximum mortgage amount (reference the Maximum Mortgage
Calculation Worksheet in Appendix
4): and are included in the
construction escrow account. Upon completion of the construction/rehabilitation
and the Final Release Notice executed by the Program ONAP,
the remaining contingency funds must be used to pay down the
unpaid principal balance.
- The contingency reserve funds are not included in the mortgage.
Funds for the contingency reserve may come from the borrower
or from any acceptable gift source (i.e., IHA/TDHE, Tribe,
TDHE, relative, etc.) The eligibility of the donor and transfer
of funds must be documented by the lender. The contingency
reserve funds are placed into a separate escrow account that
is specifically held for unforeseen circumstances during the
construction period. Upon completion of the construction/rehabilitation
and the Final Release Notice executed by the Program ONAP,
remaining funds in the contingency reserve account may be returned
to the borrower and/or gift donor.
- If the lender believes that a contingency reserve of more
than 10 percent is needed, the lender must request an exception
to this policy from the Program ONAP and clearly justify the
reasons for the exception. Under no circumstances will HUD
approve a contingency reserve of more than 20 percent of the
- Costs in excess of the contingency reserve must be paid
by the borrower outside of the mortgage agreement.
- The borrower may use excess contingency reserve funds to
make additional improvements to the building when (1) it is
unlikely that any deficiency that may affect the health and
safety of the property will be discovered; and (2) the project
is at least 90% complete. Prior to doing the work, a
request for use of the remaining contingency reserve funds
shall be made via the Change Order Request (Form HUD 92577).
The Program ONAP must approve the work.
- Funds remaining in the contingency reserve at the time of
the Final Release Notice will be used to pay down the principal
balance of the mortgage. However, all or a portion of such
funds may be used to reimburse the borrower if unforeseen change
orders required the borrower to place additional monies into
the escrow account.
- Mortgage Costs During Construction Period. An allowance
for mortgage payments for up to six months may be included in
the construction escrow to enable the borrower to make payments
during the construction period if the house is not habitable
during construction/rehabilitation. If payments are not placed
in the escrow account, the lender must document borrower’s
ability to make the mortgage payments during the construction
period and borrower must sign a statement acknowledging the requirement
to make mortgage payments during the construction period.
- Mortgage payments may be withdrawn by the lender on a monthly
- If the construction period extends beyond six months, the
borrower must make mortgage payments from non-escrowed funds.
- The mortgage must begin to fully amortize with the first
monthly payment, whether or not the construction has actually
- Rehabilitation Inspection Fees. For each draw request,
the lender is required to obtain the inspector’s signature
stating that the work for that draw has been satisfactorily completed.
- Inspection fees should be placed in the interest bearing
- Inspection fees cannot exceed what is reasonable and customary
for the area.
- Any unused inspection fees (escrowed) will be used to
pay down the principal once the rehabilitation is complete;
or they can be used for additional improvements.
- If the inspection fees exceed the amount of the escrow,
the borrower will be responsible for payment outside the
- An inspector may charge for mileage. The fee for mileage
should be reasonable and customary for assignments, which
require 30 or more round trip miles from the inspector’s
place of business to the subject property. The mileage charge
applies only to mileage in excess of 30 miles round trip.
- Title Update Fees. In order to ensure that the mortgage
position remains in tact on the title, a lien waiver or title
update is required.
- Title update fees cannot exceed what is reasonable and
customary for the area.
- Any unused title fees (escrowed) will be used to pay down
the principal once the rehabilitation is complete.
- If the title updates exceed the amount of the escrow,
the borrower will be responsible for payment outside the
back to top
MORTGAGES THAT INCLUDE ACQUISITION AND REHABILITATION FINANCING
When purchasing a house in need of repair or modernization, the
homebuyer usually has to obtain financing first to purchase the
dwelling; additional financing to do the rehabilitation construction;
and a permanent mortgage when the work is completed to pay off
the interim loans with a permanent mortgage. With the 184 loan
program, the borrower can get one loan, at a long-term fixed rate
to finance both the acquisition and the rehabilitation of the property.
The amount of acquisition and rehabilitation must not exceed
the value of the property once the work has been completed. An
appraiser will arrive at a value by reviewing the current value
with the proposed changes (i.e., the specification of repairs worksheet
that has been approved by the lender and the borrower) and arrive
at an after improved value.
- Rehabilitation Loans. For loans that include acquisition
and rehabilitation costs, the borrower completes a Loan Application
and submits copy of the contract to purchase. Using the Specification
of Repair Form (or other comparable worksheet), the borrower
and the contractor complete the work write up and arrive at a
cost breakdown of all the work to be done on the property. Estimates
must include labor and material sufficient to complete the work
if it were to be done by a licensed contractor. The cost of improvement(s)
should be transferred to the Draw Request Form. The lender reviews
the work write-up to ensure that the work is acceptable. An appraisal
is ordered. The appraiser must arrive at an after improved value
based on the existing property and the completed specifications
- Eligible Improvements. A minimum of $2,500.00 in repairs
must be required in order to include rehabilitation expenses
in the financing of a 184 loan. Minor or cosmetic repairs by
themselves are impractical and unacceptable.
The rehabilitation must include one or more of the items
listed below, with a cumulative total of $2,500.00 or more.
- Structural alterations and reconstruction (i.e., additions
to the structure, finished attics, repair of termite damage
and the treatment against termite infestation, etc.).
- Changes for improved functions and modernization (i.e.,
remodeled kitchens and bathrooms).
- Elimination of health and safety hazards (including the
resolution of defective paint surfaces and/or lead based
paint problems on homes built prior to 1978).
- Changes for aesthetic appeal and elimination of obsolescence
(i.e., new exterior siding).
- Reconditioning or replacement of plumbing (including connecting
to public water and/or sewer system), heating, air conditioning
and electrical systems.
- Roofing, gutters and downspouts.
- Flooring, tiling and carpeting.
- Energy conservation improvements (i.e., new double pane
windows, insulation, solar domestic hot water systems, etc.).
- Major landscape work and site improvement, patios and
terraces that improve the value of the property equal to
the dollar amount spent on the improvements or required to
preserve the property from erosion.
- Improvements for accessibility to the handicapped.
When basic improvements (above) are involved, the following
costs can be included in addition to the minimum $2,500 requirement
for the existing structure:
- New cooking ranges, refrigerators, and other appurtenances
(used appliances are not eligible).
- Interior or exterior painting.
- Unacceptable Rehabilitation/Repair Items. Luxury items
and improvements that do not become a permanent part of the real
property are not eligible as a cost rehabilitation. The following
items are examples of items that
are NOT acceptable repairs: barbecue pits; bathhouses; dumbwaiters;
exterior hot tubs; saunas; spas and whirlpool baths; outdoor
fireplaces or hearths; photo murals; swimming pools; television
antennas and satellite dishes; tennis courts; tree surgery. etc.
- Calculating the Maximum Mortgage Amount for an Acquisition
and Rehabilitation Loan. The Mortgage Credit Analysis Worksheet
(MCAW) does not allow the originating lender to calculate the
maximum mortgage for loans that require the financing of acquisition
and rehabilitation, and single close new construction. Accordingly,
the Rehabilitation and Single Close Maximum Worksheet (Appendix
4) is designed to assist the lender when calculating the mortgage
amount for single close construction or rehabilitation loans.
The worksheet totals are transferable to the MCAW.
back to top
- Length of Construction/Rehabilitation Period. The construction
period begins when the mortgage loan is closed. The length of
the construction period will be no longer than six months. On
a property using modular construction that is built in the factory
and moved to the site, the construction period will also be no
longer than six months.
- Extensions. If the work is not completed within six
months, the borrower and builder must request an extension of
time on Change Order Request Form (HUD–92577), and provide
adequate reasons to justify the extension. Extensions may be
granted by the Program ONAP for up to six months. Such extensions
will not affect the term of the mortgage. The mortgage cannot
be increased to cover any cost over-runs associated with the
If the work is not completed within the specified time period,
the lender should verify the status of the work, order a compliance
inspection of the property, and notify HUD. The Program ONAP
must approve time extensions (over the initial six-month period).
Requests must be submitted and approved on a Change Order Request
Form. An extension can be granted only if the loan is current.
back to top
CONSTRUCTION/REHABILiTATION PROCESS REQUIREMENTS
- Architectural Exhibits.The borrower must provide the
lender with documents, which clearly describe the scope of work
and construction schedule. The list of recommended exhibits are
contained in Chapter 4, Paragraph 4.8.
- Construction Loan Agreement. A construction/rehabilitation
loan agreement must be executed between the lender and the borrower
(see Appendix 4). This agreement sets the conditions of the construction
advances as well as other terms of the loan.
- Construction Loan Rider. The Section 184 Construction
Loan Rider must be executed (see Appendix
4). This Rider amends
the Deed of Trust, security deed or general mortgage and further
describes the terms of the loan.
- Builder Insurance During Construction. The builder
must have builder’s risk insurance in an amount equal to
or greater than the total mortgage amount. In addition, the builder
must have liability coverage against injury or death to others
who may enter onto the job site and workmen’s compensation,
which at a minimum will provide liability coverage for any persons
working on the job site. Once the improvements have been fully
completed or the borrower occupies the property (whichever comes
first), the borrower must have in place hazard insurance (see
Paragraph 6.6c). When these required policies go into effect,
the builder’s risk may be cancelled.
- Establishing an Escrow Account. When the guaranteed
loan is closed, the proceeds designated for construction/rehabilitation
(including the contingency reserve, mortgage payment reserve,
inspection fees and title update fees) are to be placed in an
interest bearing, trust, or escrow account insured by the Federal
Deposit Insurance Corporation (FDIC) or the National Credit Union
Administration (NCUA). Evidence of this escrow account must be
provided with the guarantee package. A copy of a deposit slip
or bank statement is acceptable evidence. This account is not
an escrow for the paying of insurance premiums, ground rents
or assessments, and is not to be treated as such. The construction
escrow account will cease paying interest to the borrower when
(1) the loan payments are delinquent for more than 30 days, or
(2) the completion date (or an approved extension) has expired.
If the borrowers cure the delinquent or default status, and/or
the completion date has not expired or an extension has been
approved, then the interest on the escrow account will begin.
- Interest Income. The interest income earned by the
Construction/Rehabilitation Escrow Account must be paid to the
borrower or applied to the unpaid principal loan amount as the
borrower has indicated on the Section 184 Applicant Acknowledgment
(see Appendix 4) signed at closing. The method of payment is
subject to agreement between the lender and the borrower.
- Release of Funds (Draws) from the Account. Under no
circumstances is a construction draw request to be approved for
work that is not completed (except as indicated in Paragraph
7.6h below regarding shipping). The lender may not release funds
for work from the Construction Escrow Account until the lender
has received a Compliance Inspection Report (Form HUD-92051)
and the Draw Request form, certifying that the work has been
completed in compliance with the accepted plans, specifications,
and architectural exhibits.
- Shipping and Material Costs. With prior HUD approval,
the lender may make one initial draw for building components
to be shipped and stored on site. A progress payment may be made
for up to 90 percent of the invoiced building materials value,
including shipping costs. The lender may disburse payments for
building materials or components to be shipped and stored on
site provided satisfactory evidence that:
- The borrower has acquired title to the material;
- The material is stored and protected from weather in a bonded-storage
yard or other suitable place as may be approved by the lender;
- The material is insured to cover its full value; and
- The material will be used for this contract.
Before any progress payment, the lender shall obtain such documentation
as required to ensure the protection of the borrower’s
interest in such materials. For approval, lenders must attach
original invoices to a listing of the materials on the Schedule
of Materials Stored, Form HUD-51003, which corresponds to the
arrangement established on the Schedule of Contract Payments,
Form HUD-51000. A Summary of Materials Stored, Form HUD-51004
is attached to Form HUD-51000 and used to summarize the value
of all material stored. Also, required documentation must include
a Bill of Lading verifying that the materials have been accepted
by the shipping agent, proof that transportation or marine insurance
is sufficient to cover any loss materials in transit and execution
of a Security Agreement and UCC-1 as necessary to perfect the
The lender must require an acknowledgement of payment and release
of liens from the contractor, all subcontractors and suppliers.
As security, the lender may make a first deed of trust on the
property. Only if the subject property is not available to use
as collateral may other real or personal property be considered
for use as collateral. The remaining 10 percent may be paid upon
arrival of materials, once inventoried on-site. Lenders, contractors,
and borrowers must ensure that the shipped materials are stored
safely on-site. Contractors are responsible for any materials
lost while stored at the building site and contractors must be
insured for such losses.
- Number of Draws. No more than six construction draws
should be made on the escrow account (four draws for manufactured
housing). However, if approval of a longer construction period
is given by HUD, additional draws are permitted. The schedule
for draws should be negotiated between the borrower, contractor,
lender, and HUD at the time the construction period is established
or extended. The lender or its agent will release escrowed funds
only upon satisfactory completion of the proposed construction,
pursuant to the Loan Agreement and a Draw Request.
- Initial Draw. The initial draw may be released one
day after loan closing. Allowable fees paid by the borrower,
or on borrower’s behalf, may be reimbursed provided they
are listed on a separate letter. A holdback of 10 percent will
be made on all draws. The total of all holdbacks may be released
only after the final inspection of the construction and issuance
of the final release notice.
- Intermediate Draws. Intermediate draws are inspected
by the lender-selected inspector, who visits the site with
the approved architectural exhibits. A construction draw request
can occur only for each stage of construction as shown on the
form. It is the responsibility of the lender to obtain written
approval from the borrower before each draw payment is provided
to the builder. At the lender’s option, the holdback
is not required when a subcontractor is 100 percent complete
with a work item, the work completed is acceptable to the inspector,
and the subcontractor provides the necessary waivers.
Improvements must be satisfactorily completed in compliance
with industry standards, local practices, and to the satisfaction
of the inspector. If acceptable, the inspector completes a
Compliance Inspection Report and the Draw Request, and sends
it to the lender for review.
- Other Inspections. The lender or HUD may determine
that additional compliance inspections are required throughout
the construction period to ensure that the work is progressing
in a satisfactory manner.
- Inspector Qualifications. All construction inspections
must be performed by a State/local licensed and/or Program ONAP
approved and qualified inspector who is approved by the lender.
The inspector must be a disinterested third party and cannot
be personally or financially related to the builder, borrower,
or other interested party, as approved by the lender. IHA/TDHE
staff may do the construction inspections if they are qualified
and acceptable to the lender. As noted elsewhere in this guide,
IHA/TDHE inspectors may not charge the cost/time for Section
184 inspections to other HUD housing programs. Lenders that choose
to use staff inspectors must notify the Program ONAP. The Program
ONAP retains the right to reject inspectors based on poor quality
- Inspector fees may not exceed what is reasonable and customary
for the area per draw and may not exceed the maximum number
of draw requests. Payment of fees will be included with the
- Mechanics’ and Material Lien Waivers. Lenders
are responsible for ensuring the validity of the first lien on
the property. Lenders are advised to obtain legal counsel and
should obtain lien waivers at the time of any construction disbursement
of funds from the escrow account. All disbursements should be
made by check or money order, through the lender (or its agent).
The lien waivers acknowledge payment in full of any and all claims,
which the payee has and specifically releases all rights to claim
a mechanic’s lien for material furnished and/or labor performed
upon the property. Lenders may request a list of subcontractors
from the general contractor. At a minimum, lenders should perform
two updates, an initial and a final. The maximum number of updates
should not exceed the number of draws.
- Change Orders. The Change Order Request (form HUD 92577)
is prepared by the borrower or builder and is submitted to the
lender for acceptance and approval of the Program ONAP. Work
must be 100 percent complete on each change order item before
the release of any monies will be made to the borrower or builder.
If the change order results in an increase of costs above and
beyond the amount supported by the contingency reserve, the borrower
must place additional monies into the construction escrow account
for payment upon acceptance of the change. If a change order
results in a decrease of costs, the difference cannot be released
and will be applied to prepay the mortgage principal after completion
of the work. See Paragraph 6.3 for more information about post
commitment changes to the mortgage.
- Final Inspection. This step will be approved when all
work has been satisfactorily completed in compliance with industry
standards, local practices, and to the satisfaction of the fee
inspector. The borrower must provide a letter to the lender requesting
final inspection and indicating that the work is satisfactorily
complete (see Mortgagor’s Letter of Completion — Appendix
- Upon receipt of the borrower’s letter, the lender
will schedule an inspection with the inspector. The inspector
returns the report to the lender. The inspector visits the
site, makes the inspection to determine whether the construction
has been completed according to the accepted exhibits and completes
the Compliance Inspection Report and the Draw Request marked "final".
- The final inspection report must be accompanied with photos
representative of the work completed. Exterior photos showing
site work, all sides of the dwelling, and the interior are
- If the final inspection discloses any minor punch
list items that do not affect health/safety or livability and
occupancy of the dwelling, and circumstances such as weather
conditions prevent timely completion, the lender will be required
to retain escrow account funds equal to one and one-half (1-1/2)
times the amount estimated to complete the work and a Mortgagor’s
Assurance of Completion must be executed by the lender. Completion
of this work is normally limited to 90 days and may be verified
by video tape or photos.
- Final Release Notice. The Final Release Notice is issued
by the lender and approved by the Program ONAP after it reviews
the case file to ensure that all work has been completed (see
Post Endorsement Checklist in Appendix
4). If an occupancy permit
is required by the local jurisdiction, it must be provided prior
to the issuance of the final release notice. Acceptance of the
final inspection report will trigger the release of all monies
remaining in the Construction Escrow Account, including all holdbacks
from previous draws. However, the lender may retain the holdback
for a period not to exceed 35 days (or the same time period received
by law to file a lien, whichever is longer) to ensure compliance
with state lien waiver laws or other state requirements. A copy
of the final inspection report and Final Release Notice will
be given to the borrower.
- Excess Funds Remaining in Escrow Account. If there
are unused construction funds, inspection fees, mortgage payments,
contingency funds or title update fees in the account, the lender
must apply the funds to prepayment on the principal balance of
- Unforeseen Circumstances During Construction. In unusual
circumstances, unforeseen problems during construction can cause
the cost to complete the home to rise above the borrower’s
ability to pay. If the borrower cannot obtain the needed cash
to complete (i.e., from other sources, gifts from the tribe or
family members, sale of personal property, etc.), the lender
should contact the Program ONAP for further instructions.
back to top
SUBMISSION AT COMPLETION OF CONSTRUCTION
Within 30 days of completion of the construction or rehabilitation,
the lender must submit the following information to the Program
ONAP for inclusion in the case binder:
- Warranty of Substantial Completion (HUD 92544). Contractor’s
warranty of work and materials extended one year from the date
of acceptance for occupancy.
- Compliance Inspection Reports (HUD 92051). All reports
must be signed by the inspector. Include a copy of the Certificate
of Occupancy (if applicable) and all other approvals necessary
for occupancy by the local regulatory body, as applicable.
- Plans and Specifications. If changes to the original
plans and specifications were made and approved by HUD/lender
provide a set of plans and specifications showing all approved
- Draw Requests. Copies of all draw requests showing
the amount and to whom disbursements have been made and copies
of corresponding checks for disbursement. Copies of all change
order requests, if applicable.
- Final Pictures.Final pictures of the completed property.
- Mortgagor’s Letter of Completion (sample in Appendix
4). Borrower certification that construction has been completed
in a workman like manner in accordance with the plans and specifications
and approved change orders, if any.
- Final Release Notice (sample in Appendix
4 prepared for
HUD’s signature). Authorization for release of the
final draw and all holdbacks, including instructions on prepaying
the mortgage with any remaining escrowed funds.
- Contingency Release Notice (sample in Appendix
of all contingency releases, HUD authorized.
- Mortgagee’s Assurance of Completion (HUD 92300). Where
an escrow has been established for incomplete items.
- Specific conditions clearance documentation. Such as
any needed occupancy permits or termite inspections. The lender
may contact the Program ONAP to identify a contact person at
back to top
FORECLOSURE OF CONSTRUCTION LOANS
- Effective Date of the Guarantee. The guarantee is effective
as of the date of closing and upon receipt of the complete guarantee
package. If default occurs (as indicated in Chapter 8), the lender
must make and document a good faith effort to cure the default.
If the default cannot be cured, the lender should follow the
process described in Paragraphs 8.6. The lender may either foreclose
or assign to the department for 100 percent payment. See Chapter
8 for a description of the default process.
- Notice. In the event that a default occurs during the
construction period, in addition to the general default requirements
listed in Chapter 8, lenders must send a letter to the Program
ONAP. This letter should describe, in sufficient detail, the
events, which led to the default, balances owing and funds remaining
in the escrow account.
- Default. If work is not started within 30 days of closing,
or if work ceases for more than 30 days, or if work is not progressing
reasonably during the construction period, the lender may consider
the loan to be in default unless an approved extension has been
granted by the Program ONAP.
- Final Inspection. In the event of a default during
the construction period, lenders must request a final inspection
to compensate the contractor for all work completed through the
date of assignment.
The lender will assign an inspector to review the property.
The inspector will use the Compliance Inspection Report and the
Draw Request to document the amount of work that has been completed
since the start of construction. HUD will determine the value
of the completed work and authorize the release of escrowed funds.
Additionally, the inspector will itemize the work necessary to
complete construction and the estimated cost.
- Authorization of Payment. Using a similar format to
the Final Release, HUD will authorize release of payment for
completed work, as well as the release of holdbacks on advances
previously released. The lender is to submit a copy of the Final
Release Notice with the claim for loan guarantee benefits. If
funds remain in the construction escrow account, the amount of
the claim (the unpaid principal balance) must be reduced by the
unexpended funds remaining in the account.