Summary of HUD’s LEAN 232 Program E-mail Blast: Office of Residential Care Facilities (ORCF), August 29, 2012

by Pepper Hamilton LLP
Contact

[authors: Christine Waldmann Carmody and Blair L. Schiff]

In an effort to summarize the highlights of the LEAN E-mail Blasts that we receive, and rarely have time to review in a timely fashion, we at Pepper Hamilton are providing this quick synopsis of the latest LEAN update. Our aim is to provide pertinent information succinctly as a roadmap to the LEAN E-mail Blasts, not to replace them. We hope you find these summaries helpful.

Mortgage Insurance Premium (MIP) Update

Effective October 1, 2012 (FY 2013), all firm commitments issued for 232 projects will have an increase in the annual Mortgage Insurance Premium (MIP). Firm commitment applications (“Applications”) that were in the queue prior to June 1, 2012, will be grandfathered under the previous (FY 2012) MIP rates. The new rate information is attached and available here: MIP Change for FY 2013 FR-5634-N-02.

ORCF still does not regulate the MIP collected by Lenders, and for refinances there is no change to the current MIP rates.

For new construction, rehabilitation, 241a and blended rate transactions, effective October 1, 2012, the lender must provide a check for one year of MIP at initial closing. Also, the MIP should be calculated on a per diem basis as required for cost certification. Lenders may request in writing funds from the Working Capital account to pay the year two MIP, if the project has not yet reached final endorsement.

Additional questions on MIP (including those regarding billing errors to borrowers) should be sent to Lean Thinking at LeanThinking@hud.gov.

Fixed Monthly Replacement Reserve Deposit

Due to concerns regarding a property’s ability to absorb increases in replacement reserve deposits in later years, for applications submitted on or after September 30, 2012, the replacement reserve schedule/analysis must use annual replacement reserve deposits that are fixed over the 15-year term of the replacement reserve schedule/analysis.

Guidance on Floodways

ORCF has been rejecting Applications for projects with floodways or coastal hazard areas located on a property’s site. The decisions were based on a prohibition against mortgage insurance in the situations cited in 24 CFR 55.1(c). Once an Application for a site containing a floodway has been submitted, the Application may not be accepted unless the floodway portion is excluded from the parcel or is deemed incidental to the site in accordance with exceptions noted in 24 CFR 55.12(c)(6).

The exception states that floodways may only be part of the insured site so long as all floodplain areas (including the 500-year floodplain for critical actions) are considered to be incidental portions of the site. Therefore, any proposed construction and landscaping cannot occupy or modify the relevant floodplain, appropriate provision must be made for site drainage, and a covenant must be placed of record. Due to the constraint that activities must “not occupy or modify” the floodplain, the floodplain cannot be utilized in the development or support of any project activity, except as passive open or green space. Open space is a portion of a development site that is permanently set aside for public or private use and will not be developed. Green space is considered to be undeveloped land or land restored to its natural state.

When invoking the “incidental portion” exception at 24 CFR 55.12(c)(6), a protective covenant, or comparable restriction, must be placed of record, to run with the land, and to provide for permanent preservation of the floodplain. A restriction that is contained in a document that would expire at the conclusion of the HUD-insured mortgage does not meet this requirement.

In considering the safety of the residents, offsite floodways and other flood hazards will be evaluated in terms of separation distance, elevation differences, and the nature of the hazard in question. Unacceptable proximity to hazards may result in rejection of the application. Pre-submission rulings can be requested through Lean Thinking at LeanThinking@hud.gov.

Site Visit Inspections by LEAN Approved Underwriter for 232/223(a)(7)s and 223(f)s

A LEAN approved underwriter, who is not the LEAN underwriter of record, is permitted to perform the site visit so long as the site inspection report is reviewed and certified/signed by the underwriter of record.

Where to Send Application Fees

Pre-Commitment Application fees are due to Mike Luke in Minneapolis:

    Mike Luke
    HUD Minneapolis Field Office
    920 2nd Ave S, Suite 1300
    Minneapolis, MN 55402

Any additional fees due after the Firm Commitment has been issued shall be sent to Mike Moe Lawassani in the San Francisco office:

    Mike Moe Lawassani
    U.S. Department of HUD - San Francisco Field Office
    600 Harrison Street, 3rd Floor
    San Francisco, CA 94107

Changes to the Legal Forms

Don’t change the forms without OHP and OGC approval! In the event changes are requested, redline comparisons to the forms and explanations as to the necessity of the change are required.

 

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Pepper Hamilton LLP | Attorney Advertising

Written by:

Pepper Hamilton LLP
Contact
more
less

Pepper Hamilton LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.