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

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

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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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 . . . .”

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 . . . “

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.
 

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

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. 

This term has been corrected in the document posted on HUDclips. 
 

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

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

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

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

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.

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

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Should the term "displaced persons or families" in Section 29(b) of the Regulatory Agreement be capitalized so as to correspond with the definition of "Displaced Persons or Families" in Section 1(f)? 

Yes, the term “displaced persons or families” as used in Section 29(b) is intended to be the defined term set forth in Section 1(f).  This is a scrivener’s error in the initial published document that has now been corrected in the 2014 Regulatory Agreement in HUDClips.  Thank you for letting us know about this needed edit.

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34. 2/13/2015