Multifamily Accelerated Processing (MAP) Guide, HUD Handbook 4430.G REV-3 (2020 MAP Guide), Glossary
HUD / FHA Multifamily · HUD's Multifamily Accelerated Processing (MAP) Guide, Handbook 4430.G REV-3 (the 2020 MAP Guide), its Glossary. It is not the Single Family Housing Policy Handbook 4000.1. Effective 2021-03-18.
Multifamily Accelerated Processing (MAP) Guide, HUD Handbook 4430.G REV-3 (2020 MAP Guide), Glossary: definitions of the Guide's terms, verbatim, in blocks of whole entries (about a page each), substring-verified against snapshot 783cba41d40f3768.
Verbatim regulatory text
Verbatim provisions from Multifamily Accelerated Processing (MAP) Guide, HUD Handbook 4430.G REV-3 (2020 MAP Guide), Glossary — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — 50%/75% Rule – Accessible units - sensory (pp. 896-897)
Glossary Term Definition 50%/75% Rule No General Contractor’s fee (general overhead and profit) will be allowed when: a. More than 50% of the contract sum in the form HUD-92442M, Construction Contract–Cost Plus, is subcontracted to one subcontractor, material supplier, or equipment lessor; or b. 75% or more of the contract sum in form HUD-92442M is subcontracted with three or fewer subcontractors, material suppliers, and equipment lessors. NOTE: If two or more subcontractors have any common ownership, they are considered as one subcontractor. Absorption The average number of units rented each month during the absorption period, which is the time necessary for a newly constructed or renovated project to achieve stabilized occupancy. Accessible Fair Housing Amendments Act: When used with respect to the public and common use areas of a building containing covered multifamily dwellings, means that then public or common use areas of the building can be approached, entered, and used by individuals with physical impairments (handicaps). The phrase readily accessible to, and usable by, is synonymous with accessible. A public or common use area that complies with the appropriate requirements of *ICC/ANSI A117.1-2003, ICC/ANSI A117.1- 1998, CABO/ANSI A117.1-1992,* ANSI A117.1-1986 or a comparable standard is accessible within the meaning of this paragraph. [24 CFR 100.201] Section 504: When used with respect to the design, construction, or alteration of a facility or a portion of a facility other than an individual dwelling unit, means that the facility or portion of the facility, when designed, constructed, or altered, can be approached, entered, and used by individuals with a physical impairment (handicaps). The phrase accessible to, and usable by, is synonymous with accessible. [24 CFR 8.3] Accessible, when used with respect to the design, construction, or alteration of an individual dwelling unit, means that the unit is located on an accessible route and when designed, constructed, altered or adapted can be approached, entered, and used by individuals with a physical impairment (handicaps). A unit that is on an accessible route and is adaptable and otherwise in compliance with the standards set forth in 24 CFR 8.32 is accessible within the meaning of this paragraph. When a unit in an existing facility which is being made accessible as a result of alterations is intended for use by a specific qualified person with a disability (handicaps) (e.g., a current occupant of such unit or of another unit under the control of the same recipient, or an applicant on a waiting list), the unit will be deemed Term Definition accessible if it meets the requirements of applicable standards that address the particular disability or impairment of such person. [24 CFR 8.3] Accessible routes Fair Housing Amendments Act: A continuous unobstructed path connecting accessible elements and spaces in a building or within a site that can be negotiated by a person with a severe disability using a wheelchair and that is also safe for and usable by people with other disabilities. Interior accessible routes may include corridors, floors, ramps, elevators, and lifts. Exterior accessible routes may include parking access aisles, curb ramps, walks, ramps, and lifts. A route that complies with the appropriate requirements of *ICC/ANSI A117.1-2003, ICC/ANSI A117.1-1998, CABO/ANSI A117.1-1992,* ANSI A117.1-1986 or a comparable standard is an accessible route. [24 CFR 100.201] Section 504: A continuous unobstructed path connecting accessible elements and spaces in a building or facility that complies with the space and reach requirements of applicable standards prescribed by 24 CFR 8.32. An accessible route that serves only accessible units occupied by persons with hearing or vision impairments need not comply with those requirements intended to effect accessibility for persons with mobility impairments. [24 CFR 8.3] Accessible units - mobility A mobility accessible unit is one that is located on an accessible route, and can be approached, entered, and used by individuals with physical disabilities, including those who use wheelchairs consistent with the detailed specifications for accessible units defined in the Uniform Federal Accessibility Standard (UFAS). Accessible units - sensory A sensory accessible unit is one that is equipped with warning, signaling, way-finding and related features necessary for persons with sensory - i.e., hearing or visual disabilities, consistent with the detailed specification for accessible units defined in the Uniform Federal Accessibility Standard (UFAS).
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — Adaptive design – As-built survey (pp. 897-899)
Adaptive design Dwellings [that] contain the following features of adaptive design: a. An accessible route into and through the dwelling; b. light switches, electrical outlets, thermostats, and other environmental controls in accessible locations; c. reinforcements in bathroom walls to allow later installation of grab bars; and d. usable kitchens and bathrooms such that an individual in a wheelchair can maneuver about the space. Administrative completion date The Regional Center Director may advance the completion date to prevent unnecessary accumulation of soft costs when projects that are nearly complete face unnecessary delay. Term Definition The administrative completion date is the effective date for cost certification except that all soft costs up to 60 days beyond this date may be included at the option of the Borrower. Age Restricted Property A property with an established policy and practice of restricting occupancy to persons of a certain age and sometimes also family status, i.e., not renting to families with children or persons under the age of 55. Only certain age and family status restrictions are permitted in properties with HUD insured mortgages See Chapter 3, Section 3.11. Aggregate cost Aggregate Cost means the total costs of all the proposed construction work at the property, including General Contractor fees and Project Architect fees. The Aggregate Cost will also include the amounts spent from the contingency reserve and assurance of completion escrows at the end of construction, as well as any cost increases through change orders. AIA Standard Form of Agreement American Institute of Architects (AIA) form B108 for new construction and substantial rehabilitation, or AIA B104 for repairs and alterations in refinance transactions, though in a refinance loan the B108 may be used when repairs and alterations are extensive. Air Rights (Survey) The right to undisturbed use and control of designated air space above a specific land area within stated elevations. ALTA/NSPS Land Title Survey The American Land Title Association and the National Society of Professional Surveyors maintain minimum standards for land surveys acceptable for commercial real estate transactions. These standards are integrated with standard title policy insurance forms and are required for use in conjunction with HUD Form 93071M Surveyors Report and Certification. The ALTA/NSPS Land Title Survey requirements are updated on a five year calendar with the most recent revision going into effect on February 23, 2021. Americans with Disabilities Act (ADA) Means the Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et seq.) which applies accessibility standards to all places of public accommodation, including those privately owned (Title III) and requires all state and local government entities to apply accessibility standards to their programs and properties, including housing programs. For applicability to insured mortgage programs see Appendix 5, Section A.5.2.5. Annual Deposit The sum estimated as the annual contribution to the reserve for replacement escrow. Area of potential effect Typically the site boundary of a project but occasionally the block on which the site is located or the immediate site environs. As-Built Drawings Also known as record drawings and red-line drawings, as-builts drawings are revised or annotated plans showing changes to the initially approved drawings and specifications in place at the beginning of construction. As- builts are a “revised set of drawings submitted by a contractor upon completion of a project or a particular job. They reflect all changes made in Term Definition the specifications and working drawings during the construction process, and show the exact dimensions, geometry and location of all elements of the work completed under the contract.” As-built survey The As-Built Survey is an update of the original ALTA/NSPS survey completed prior to initial closing and construction start with an new HUD form 91073M Surveyor's Report and Certification completed not more than 120 days prior to final endorsement bringing all survey matters up to date consistent with completed construction work.
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — ASHRAE energy audit – BTU (pp. 899-900)
ASHRAE energy audit The American Society of Heating Refrigeration and Air Conditioning Engineers (ASHRAE) publishes standards for heating and air conditioning measurement and construction. Among the standards ASHRAE has issued is the required scope of work and procedures for energy audits at three levels, I through III. Only Level II and III audits are referenced in HUD insured mortgage work. Key features of Level II audits include: a. benchmarking existing use; b. identifying specific components, assemblies, appliances, equipment or systems that use, move or transmit energy; c. allocating benchmarked usage to these same items; d. recommending specific repairs, replacements and alterations to these items likely to reduce energy consumption; e. estimating per item and total cost of such items together with the per item and total reduction in energy use and cost resulting from the recommendation. In addition, a Level II Energy Audit should calculate the number of years required for the estimated annual energy savings to equal or exceed the cost of the recommendation for each item (the payback period). Level III audits provide an investment grade report that adds the following: a. whole building computer simulation (modeling) calibrated with field data; b. modeling of conservation measures and corresponding changes in energy consumption; and c. bid-level construction cost estimating. ASHRAE standard 90.1 The American Society of Heating, Refrigeration and Air Conditioning Engineers (ASHRAE) publishes Standard 90.1 which is the recognized guide for design, modeling, construction, testing, of heating, ventilating and air conditioning systems of most buildings, except low-rise residential buildings. It offers, in detail, the minimum energy-efficiency requirements for design and construction of new buildings and their systems, new portions of buildings and their systems, and new systems and equipment in existing buildings, as well as criteria for determining compliance with these requirements. Appendices to the Standard provide detailed guidance and procedures for various calculating, equipment sizing, and related techniques Term Definition including modeling system performance in advance of construction so as to improve designs or to achieve specified minimum performance levels. Assisted housing “Federal financial assistance” is broadly defined to include, among many things, grants, loans, contracts, or other arrangements which may take the form of funds, services from Federal personnel, community development grants, and the use of real or personal property (24 CFR 8.3). A few but not exhaustive examples of Assisted Housing include: a. HUD funded Section 811 or Section 202 developments and any developments that have project based rental certificates or vouchers (i.e., rent supplement, rental assistance program, Section 8 project-based assistance). b. A HUD mortgagor receiving a subsidy through the Section 221(d)(3) Below Market Interest Rate Program or the 236 Rental Housing Program. c. Any project assisted with Community Development Block Grant (CDBG), Neighborhood Stabilization Program (NSP), HOME, or HOPWA (Housing Opportunities for Persons With AIDS) funds or any contribution of Federal land or services. d. As of 2009, the American Recovery and Reinvestment Act (ARRA) and the Tax Credit Assistance Program (TCAP). Once assisted a property remains assisted even if the term and/or the conditions of assistance have ended. This use of "federal financial assistance" determines the applicability of accessibility requirements to assisted housing. See Appendix 5, Section A.5.2.4.1 and 24 CFR 8.3 for more detail. Assurance of completion An assurance of completion of construction in the form of a Combined Performance Payment Bond or cash or a Letter of Credit in an amount approved by HUD. Base per dwelling unit limit HUD set the Base per Dwelling Unit Limit (Base Limit) at $15,000 per unit in 2016 and has annually adjusted it for inflation based on the percentage change published by the Bureau of Labor Statistics of the Department of Labor or other inflation cost index. This figure is used to establish the maximum cost of repairs and alterations eligible in a Section 223(f) insured refinance or acquisition loan. Construction costs exceeding the maximum cost of repairs and alterations constitute substantial rehabilitation, an eligible activity only in HUD insured mortgages that permit substantial rehabilitation. BTU A British thermal unit (BTU) is a measure of the heat content of fuels or energy sources. It is the quantity of heat required to raise the temperature of one pound of liquid water by 1 degree Fahrenheit at the temperature that water has its greatest density (approximately 39 degrees Fahrenheit).
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — Builder's and Sponsor's Profit and Risk Allowance (BSPRA) – Closing docket (p. 901)
Builder's and Sponsor's Profit and Risk Allowance (BSPRA) BSPRA is a presumed profit for development and construction of a multifamily project. It is unique to applications for new construction or substantial rehabilitation under HUD’s “cost-based” programs (Sections 220 and 221(d)(4)) when an identity of interest exists between the Borrower and the General Contractor. Capital Needs Assessment (CNA) A Capital Needs Assessment (CNA) is a due diligence report describing the physical inventory of multifamily property and characterizing the condition and expected durability of that inventory for the purpose of budgeting future capital repairs and replacements. A CNA includes a financial plan or annual schedule of anticipated capital costs and corresponding funding needed to meet expected capital expenses. Capture Rate Renter Capture Rate is defined as the percentage of qualified potential renter households in the PMA that the property must capture to fill the units and achieve stabilized occupancy. Cash flow The amount, typically annual, remaining after debt service payments are subtracted from net operating income. Certificate of Occupancy Certificate usually granted by a jurisdiction's building department certifying a specified premise has satisfactorily complied with all zoning and building ordinances. This certification is a prerequisite for occupancy for its designated use and often the transfer of title at a sale. Change Orders Construction contract changes to the scope of contract work, contract price or contract time. choice limiting actions See 24 CFR § 58.22 - Limitations on activities pending clearance, which states " a. Neither a recipient nor any participant in the development process, including public or private nonprofit or for-profit entities, or any of their contractors, may commit HUD assistance under a program listed in § 58.1 b. on an activity or project until HUD or the state has approved the recipient's RROF and the related certification from the responsible entity. In addition, until the RROF and the related certification have been approved, neither a recipient nor any participant in the development process may commit non-HUD funds on or undertake an activity or project under a program listed in § 58.1(b) if the activity or project would have an adverse environmental impact or limit the choice of reasonable alternatives." Classification of work (class of work) Class of Work (i.e., Repair, Level 1, 2, or 3 Alterations) describes the level of construction activity involved for the proposed repair work to be completed. Closing Coordinator Assigned by HUD to the transaction to facilitate communication between the lender and HUD housing and Office of General Counsel (OGC) staff and to provide instructions and guidance on the closing process. Closing docket All documents required for closing.
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — CNA e-Tool – Construction Loan Administrator (p. 902)
CNA e-Tool An electronic application that automates and standardizes the initiation, preparation, submission, review, and approval of a capital needs assessment for the Office of Multifamily Housing. See Appendix 5, Section A.5.7.1.2. Code of Federal Regulations The Code of Federal Regulations (CFR) is the codification of the general and permanent rules published in the Federal Register by the executive departments and agencies of the federal government. It is divided into 50 titles that represent broad areas subject to federal regulation. Each volume of the CFR is updated once each calendar year and is issued on a quarterly basis. Commercial Use/Space Any space or facility permitted and acceptable for "Nonresidential Use" from which income is derived or anticipated. Concentrated Risk Review A review conducted by HUD related to identifying and mitigating risks posed to the FHA Insurance fund associated with increasing levels of insured loan balances of entities and their identified Key Principals. See also "Prior Credit Approval" in Chapter 8, Section 8.6 and Appendix 8, Section A.8.3. Concept Meeting An initial meeting required for all new applications that provides an opportunity for participants to describe and discuss key issues involved with a property and its application. Conflict of interest A conflict of interest is any personal or family relationship, business interest, or financial investment or relationship which would give the appearance of influencing or actually influence a participant in an insured mortgage transaction to act in a manner that would undermine the integrity of underwriting and executing HUD insured transactions consistent with program requirements. See detailed discussion in Chapter 2, Section 2.6. Consolidated Certifications Form HUD-91070M, to be used for transactions where HUD issued a firm commitment on or after May 1, 2019, which consolidates numerous certifications HUD requires a borrower to execute in connection with an application for project mortgage insurance. Construction Analyst A qualified Construction Analyst with experience in multifamily construction hired by the lender to review the drawings and specifications prepared by the Project Architect and any related contracts for design and construction services. Construction Documents Documents that define a construction project and establish the tasks and responsibilities of the design and construction participants including the owner and/or the owner's representative, the project architect, the professional engineer if any, the general contractor and sub-contractors. Documents typically include the owner/architect agreement(s), the plans and specifications, the general contract and prime sub-contracts. Construction Loan Administrator A person responsible for management of the Lender’s responsibilities during the construction period.
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — Contingency – Criterion 5 (p. 903)
Contingency In construction, contingency refers to a percentage of money reserved to cover unanticipated additional project costs or anticipated costs that cannot be quantified absent excavation, demolition or similar effort not possible prior to construction start. Cost Certification Cost certification establishes the Borrower's actual costs, including contractor's cost, and establishes the "maximum insurable mortgage" for Final Endorsement of the insured mortgage. Cost Not Attributable (to Dwelling Space) Cost Not Attributable to dwelling use is the construction cost estimate of spaces or features of a project not directly used for residential dwellings. Cost Not Attributable is used to adjust the statutory limited mortgage amount to add costs that may be excluded from the statutory limit. It is calculated only for properties where Criterion 4 is the determining criterion. See Criterion 4. cost-plus construction contract A form of construction contract in which the contractor is provided a specified percentage profit over and above the actual costs of construction. See also "Lump sum contract." Covered multifamily dwellings Defined at 42 U.S.C. 3604(f)(7) and 24 C.F.R. 100.201 and means all units in buildings consisting of 4 or more dwelling units if such buildings have one or more elevators; and ground floor units in other buildings consisting of 4 or more units. A “ground floor” is a floor of a building with a building entrance on an accessible route. A building may have more than one ground floor. Buildings consisting of 1, 2 or 3 units do not contain any “covered multifamily dwellings.” Criterion 3 The maximum loan amount based on a percentage of replacement cost (i.e., loan to cost ratio, for construction loans) or a percentage of appraised value (i.e. loan to value ratio), for refinance loans. Criterion 3 is calculated on the HUD Form 92264A Supplement to Project Analysis under Section I, criterion number 3. Criterion 4 The statutory limit per unit is set periodically by Congress and adjusted by HUD for changes in cost over time and among regions. The permitted percentage adjustments are established by location and are commonly referred to as the "high-cost factors". They are published annually as a Mortgagee Letter and a Federal Register Notice. The calculated statutory limit may also be augmented to account for costs or value not attributable to residential use. See "cost not attributable." Criterion 4 is calculated on the HUD Form 92264A Supplement to Project Analysis under Section I, criterion number 4. Criterion 5 The maximum loan amount based on a minimum debt service coverage ratio where the ratio is Net Operating Income (NOI) divided by debt service or the inverse where the loan amount is based on debt service as a maximum percentage of NOI. Criterion 5 is calculated on the HUD Form 92264A Supplement to Project Analysis under Section I, criterion number 5.
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — critical habitat – Effective age (pp. 904-905)
critical habitat A term defined and used in the Endangered Species Act. It is specific geographic areas that contain features essential to the conservation of an endangered or threatened species and that may require special management and protection. Critical habitat may also include areas that are not currently occupied by the species but will be needed for its recovery. Critical repair Critical and Non-Critical repairs are identified by the needs assessor who prepares a capital needs assessment for an existing property. Critical repairs are of two types, Life Safety and Accessibility. Critical repairs identified as Life Safety are remedies to conditions that are immediate risks endangering the life, health or safety of tenants. Critical repairs identified as Accessibility are remedies to violations of statutes or regulations requiring properties be accessible to persons with disabilities. See Appendix 5, Section A.5.7.2.2 for discussion of critical and non-critical repairs as well as Appendix 5, Section A.5.2 for full description of statutory and regulatory requirement for accessibility. Data Collection Plan Plan for collecting valid energy consumption data for each month and correctly entering this data in Portfolio Manager. Davis-Bacon Act, Labor Standards (DBLS), Wage Decision The Davis-Bacon Act of 1931 established a requirement to pay the local prevailing wage to workers on federally funded or financed construction projects. The National Housing Act requires that HUD multifamily mortgage programs authorized under certain sections of the Act conform to the requirements of the Davis-Bacon Act. Generally these are the sections that authorize mortgage insurance for loans that finance new construction or substantial rehabilitation activities. HUD’s Office of Labor Relations oversees Davis-Bacon compliance and provides written guidance applying Davis Bacon Act requirements and Department of Labor, Bureau of Labor Standards rules to construction projects financed with HUD insured mortgages. A key aspect of this oversight is the selection of the appropriate "wage decision" (or sometimes multiple "wage decisions") for a project depending on its location and the content of the work. The Department of Labor periodically publishes prevailing wage rates in regional labor markets for trades workers engaged in "residential, heavy, or heavy highway construction." A wage decision determines wage rates for trades in each of these classes of construction. Typically multifamily properties are classified as "residential" and must adhere only to a single wage decision, but exceptions exist for projects with more intense construction activity. Debt service mortgage, Debt Service Coverage Ratio See "Criterion 5. Deeming Notice See HUD’s Alternative Accessibility Standard set forth in HUD's notice at 79 Fed. Reg. 29,671 (May 23, 2014) (“Deeming Notice”), permitting HUD recipients of Federal financial assistance to use an alternative standard for purposes of complying with Section 504 and HUD’s implementing regulation Term Definition at 24 CFR part 8. The Deeming Notice provides HUD recipients the option of using the 2010 ADA Standards (with certain exceptions) as an alternative to UFAS for new construction or alterations commencing on or after May 23, 2014. Deficiency Letters A deficiency letter is issued to a lender during application processing in response to the missing, incomplete, or inaccurate exhibits or certifications or inadequate disclosures. Domestic Principal A Domestic Principal is an individual that acts on behalf of the partnership in cases where the remaining principals in the partnership are Passive foreign nationals. Draws (e.g. Initial, Final, Interim) A draw is a periodic advance of funds from a construction lender to an owner or developer. For an FHA insured loan this is called an "insured advance." An interim draw is one that takes place during the construction period before substantial completion. A final draw is processed at completion of work. Early Start Construction work performed after receipt by HUD of the initial application but before initial endorsement. Early starts are permitted only with HUD approval following a Firm Commitment. But some minor work may be deemed not an early start and allowable prior to the Firm Commitment subject to completion of HUD's environmental review and after approval of the Regional Director. See Chapter 5, Section 5.8.6. Easements The right, privilege, or interest that one party has in the use of the land of another. Typically used to reserve rights to cross or access portions of another's land for uses such as driveways, utility lines or storm drainage. Effective age The apparent age of the improvements to the real property, which may vary from its actual or chronological age.
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — Effective Demand – ENERGY STAR® (pp. 905-906)
Effective Demand The estimate of "effective demand" is the pool of households with sufficient income and/or applicable household size that would be expected to demand housing of given size and quality during the Market Study forecast period, including the income levels and rent- to-income ratio(s) assumed in the study. Encroachments A building, a part of a building, or an obstruction that physically intrudes upon, overlaps, or trespasses upon the property of another. Encumbrance Any limitation or restriction of rights to or interests in land that affects its value. Includes outstanding mortgage loans, unpaid taxes, easements, deed restrictions. Endorsement / Closing (i.e. Initial, Final) Endorsement and Closing are always simultaneous in insured mortgage practice. HUD practitioners use the term "Endorsement" because when the lender and borrower close their loan HUD also "endorses" the loan for mortgage insurance. Absent HUD insurance, when a lender and borrower execute their agreed upon transaction, the event is generally called a "closing" or a "loan settlement." Insured mortgages for acquisition or Term Definition refinancing of properties have no construction period and have a single Endorsement. For construction projects with insured advances, the initial endorsement of the mortgage occurs prior to the start of construction. (Except See "Early Start.") A second or "Final Endorsement" occurs at the conclusion of construction upon completion of the cost certification procedure. The terms of the mortgage note may be modified at this time as a result of certified eligible construction cost. Upon endorsement projects are subject to the Regulatory Agreement and HUD program requirements and become part of the HUD-insured portfolio. Energy Benchmarking Benchmarking is the practice of comparing the measured performance of a device, process, facility, or organization to itself over time, to its peers, or to established norms, with the goal of informing and motivating performance improvement. When applied to building energy use, benchmarking serves as a method to measure energy performance of buildings at a fixed point in time allowing comparisons to similar measurements taken at other times, or at other buildings or to alternative versions (designs) of the same building. See Chapter 6, Section 6.4.5 and Section 6.6.3.A.2 for uses of benchmarking in insured mortgage programs. Water use as well as energy may be benchmarked and in that event the term "utility benchmarking" may be used. Energy Conservation Measure (ECM) 42 U.S.C. § 8287c(3). The term “energy conservation measures” is defined by statute as: [M]easures that are applied to a Federal building that improve energy efficiency and are life cycle cost effective and that involve energy conservation, cogeneration facilities, renewable energy sources, improvements in operations and maintenance, or retrofit activities. In HUD insured mortgage practice these same measures are employed in privately owned multifamily properties. Energy Modeling (Building Energy Modeling) Modeling or simulation of expected building performance is a common technique for estimating and comparing utility use results achievable with alternative designs or construction methods, as well as for estimating the performance of a completed design or combination of proposed energy conservation measures. Energy Professional Energy professionals participating in insured mortgage programs must be persons with not less than three years work experience evaluating utility consumption in multifamily buildings and employing energy modeling and benchmarking software, including specifically EPA’s Portfolio Manager and related ENERGY STAR® resources and products. Energy professionals must have professional certifications or credentials appropriate for analyzing multifamily properties. See Chapter 6, Section 6.5.3 for more detailed description of tasks and professional certifications ENERGY STAR® ENERGY STAR® is the Environmental Protection Agency's registered trademark for its program of recognizing energy efficient products and procedures, providing simple, credible, and unbiased information that consumers and businesses rely on to make well-informed decisions.
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — ENERGY STAR® Score – Escrow (p. 907)
ENERGY STAR® Score Specifically the Multifamily ENERGY STAR Score is an EPA trademarked metric that indexes a benchmarked property's Energy Intensity Score to a fixed sample of similarly benchmarked properties adjusting for variable property characteristics and local climate resulting in a 1 to 100 score suggesting the property's relative energy efficiency ranking measured against the sample. One of the requirements to qualify for a green MIP rate for an insured mortgage is that a property must be able to achieve and sustain a score of 75 or higher during the life of the mortgage. The Energy Intensity Score is the property's energy consumption per square foot with energy measured in British Thermal Units (BTUs), that is, BTUs/s.f. Energy Verifier As part of the certification process, a building owner or manager is required to have a licensed professional - an energy verifier - who can certify that a building's application for ENERGY STAR® certification is accurate and complete before it’s submitted to EPA. engineering control An Engineering Control is a physical measure that reduces or eliminates exposure to contamination. Environmental Report The Lender must provide information in HEROS regarding compliance with NEPA, the laws and authorities listed at 24 CFR 50.4, and the HUD-specific requirements described herein, as applicable, as well as any issues that might affect the acceptability of the project, including any issues of compliance with state environmental laws. The HEROS submission and uploaded documentation constitutes the Environmental Report. Environmental Review An environmental reviewis the process of reviewing a project and its potential environmental impacts to determine whether it meets federal, state, and local environmental standards. EPA WaterSense WaterSense, a voluntary partnership program sponsored by the U.S. Environmental Protection Agency (EPA), is both a label for water-efficient products and a resource for helping Americans save water. EPA’s Portfolio Manager A web-based utility benchmarking application. Equity syndicator Tax credit equity syndicators or investors make bridge loans to fund required equity contributions for LIHTC, Historic or New Market Tax Credits during the construction or substantial rehabilitation period as described in Chapter 14, Section 14.14. Escrow An escrow is a designated account for the deposit of cash or cash equivalents set-aside for specifically identified purposes associated with an insured mortgage. Cash or cash equivalents provided by the borrower or from mortgage proceeds are deposited in the custody of a third party, typically the lender, subject to the lender's fiduciary responsibilities and a written escrow agreement. Funds in escrow are released for the specified purposes or upon termination of the escrow agreement in accordance with its terms.
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — Estimated Useful Life – Floodproof(ing, ed) (p. 908)
Estimated Useful Life The expected operating life of a building component or site improvement established in HUD's Estimated Useful Life Table. See https://www.hud.gov/sites/documents/EUL_FOR_CNA_E_TOOL.PDF Excess Proceeds (Cashout) Cases where the mortgage amount exceeds the costs of refinancing and all required costs, including repairs. Fair Housing Act Title VIII of the Civil Rights Act, 42 U.S.C. 3601. The Fair Housing Act is a broad statute that prohibits discrimination based upon race, color, religion, sex, national origin, disability, or familial status in most housing and housing-related transactions. HUD's regulations implementing the Act are found at 24 CFR Part 100. Federal nexus The submission of either a pre-application or firm commitment application to HUD. federal undertakings A Federal undertaking is a project, activity, or program either funded, permitted, licensed, or approved by a Federal Agency. Undertakings may take place either on or off federally controlled property and include new and continuing projects, activities, or programs and any of their elements not previously considered under Section 106 of the National Historic Preservation Act. Fee simple An ownership interest in land that is the broadest property interest allowed by law, extending beneath the soil to the air above, and which endures until the last holder dies without heirs. FHA Number (FHA Project Number) Unique 10-digit number assigned to a loan through Case Number Assignment on the FHA Connection. Final Closing The process of completing a financial transaction. For mortgage loans, the process of signing mortgage documents, disbursing funds, and, if applicable, transferring ownership of the property. In some jurisdictions, closing is referred to as “escrow,” a process by which a buyer and seller deliver legal documents to a third party who completes the transaction in accordance with their instructions. Final distribution (final advance) Final advance refers to any remaining balance of mortgage proceeds at final endorsement and takes into consideration funds necessary to set up the escrows for “Items of Delayed Completion” and “To Be Paid in Cash Items”. Financial factors Financial factors refers to the key economic assumptions that need to be specified when developing the long-term funding plan for the reserve for replacement (RfR) accounts, such as inflation rates, interest rates on the balances and the rate of deposit amounts. See Appendix 5, Section A.5.7.4.3. Floodproof(ing, ed) [A requirement for] structures to be watertight with walls substantially impermeable to the passage of water and with structural components having the capability of resisting hydrostatic loads, hydrodynamic loads, the effects of buoyancy, or higher standards required by the FEMA National Flood Insurance Program as well as state and locally adopted codes.
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — Formerly Used Defense Site – Identity of Interest (IOI) (pp. 909-910)
Formerly Used Defense Site Properties that were formerly owned by, leased to or otherwise possessed by the United States and under the jurisdiction of the Secretary of Defense prior to October 1986. Friable material Friable material is a material that is easily crumbled or powdered by moderate (hand) pressure, typically used to describe the condition of hazardous materials such as asbestos. Government Sponsored Enterprise Transaction Loans originated for purchase under procedures established by certain Federally chartered and initiated corporations established for the purpose of supporting mortgage credit for housing and now regulated by the Federal Housing Finance Board. Commonly abbreviated as "GSEs" the term refers to the Federal National Mortgage Corporation (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) Green Building Certification Multiple organizations sponsor and maintain green building certifications. These organizations, (sometimes also referred to as “standard-keepers”), and their certification programs vary widely in the types of projects that can be certified, the jurisdictions in which the certification is available, and the methods used to verify green building features and compliance. The general purpose is to certify that certain prescribed construction materials and methods are used and/or that certain levels of building energy performance are achieved. Green MIP rate A favorable HUD-FHA mortgage insurance premium rate only available to owners of green building certified properties. See Chapter 6, Section 6.1.2, Section 6.2, and Section 6.3. ground disturbance Ground disturbance is defined as any activity that compacts or disturbs the ground within a project area. Ground lease A ground lease is an agreement between a landowner and a tenant establishing a tenant's right of possession of the land subject to terms and conditions such as the amount and method of tenant's payment of rent and tenant's permitted uses of the land and the term or duration of the lease. Upon expiration of the Lease term, all rights to possess and use the land revert back to the owner. GSE loans See "Government Sponsored Enterprise Transaction". HAP Contracts HUD provides Section 8 rental subsidies to the owners of certain multifamily properties pursuant to a Housing Assistance Payments (HAP) Contract. The entity responsible for the administration of the Section 8 assistance pursuant to a particular HAP Contract is the designated "Contract Administrator". See "Section 8". High Cost Factor(s) See "Criterion 4". High risk transactions High Risk transactions include, for example, most New Construction Projects and projects that meet large loan underwriting criteria as set forth in Term Definition Chapter 3, Section 3.10. Also includes transactions with leasehold (versus fee simple) ownership interests. historic district A geographically definable area, urban or rural, possessing a significant concentration, linkage, or continuity of sites, buildings, structures, or objects united by past events or aesthetically by plan or physical development. A district may also comprise individual elements separated geographically but linked by association or history. historic property Any prehistoric or historic district, site, building, structure, or object included in, or eligible for inclusion on the National Register, including artifacts, records, and material remains related to such a property or resource. Home Investment Partnership (HOME) program The Home Investment Partnership (HOME) Program provides formula grants to states and localities that communities use — often in partnership with local nonprofit groups — to fund a wide range of activities that build, buy, and/or rehabilitate affordable housing for rent or homeownership, or to provide direct rental assistance to low-income people. HOPWA The Housing Opportunities for Persons with AIDS (HOPWA Program) Provides housing assistance and supportive services to low-income people with HIV/AIDS and their families. HOPWA funds may also be used for health care and mental health services, chemical dependency treatment, nutritional services, case management, assistance with daily living, and other supportive services. Housing directive waiver A waiver of a program directive (e.g., a programmatic requirement found in other chapters of this MAP Guide). Identity of Interest (IOI) (See also "Conflict of Interest.") Identity of interest means any relationship (generally based on family ties or financial interests) between: a. the seller and purchaser (prospective owner), b. the owner and/or general contractor and the subcontractor, material supplier or equipment lessor, or c. the owner and the lender, which would reasonably give rise to a presumption that the parties to the transaction may operate in collusion in establishing the purchase price of the property, the cost of the rehabilitation work, or the terms of the financing.
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — Industrialized housing – In-Unit Garage (pp. 910-912)
Industrialized housing Industrialized Housing refers to a wide variety of component assemblies or portions or entire units of housing manufactured in a factory setting away from the permanent housing site. The typical antonym is "stick built" housing which is assembly of raw materials (lumber, fasteners, adhesives, etc.) cut, fitted and fastened at the permanent housing site. See Chapter 5, Section 5.7.4. Initial Deposit The initial deposit is the lump sum amount of money put into the reserve for replacement (RfR) account at the time of endorsement or at the beginning of the Estimate Period to ensure adequate annual balances in the future. For Term Definition existing properties any remaining balance from a prior or existing RfR account may be carried forward into a new or updated RfR account as an initial deposit (e.g. in an 10-year update CNA or refinancing of an existing insured property). Initial Operating Deficit Escrow An operating deficit escrow (also known as the Initial Operating Deficit Escrow (IOD) for construction loans) is required on all applications for new construction and many applications for substantial rehabilitation to provide funding for operating expenses and debt service when net income is not available during the initial lease up and stabilization period. institutional control An Institutional Control is a non-engineered instrument, such as administrative and legal control. ICs typically limit land and/or resource use or provide information that helps modify or guide human behavior at a site. Insurable value, Property The term "insurable value" concerns casualty insurance (fire, storm, etc.) and is referenced in various HUD documents. It is the replacement cost of the building(s), i.e., the cost to rebuild the building(s) should it suffer a complete and total loss due to fire or other perils. The insurable value is required for each structure in a property and is reported on HUD Form 92329, Schedule of Insurable Values which form is now an automated output of the CNA e-Tool. Insurance of advances Insurance of advances refers to the periodic release of insured mortgage funds and other funds necessary for the construction, acquisition and/or refinancing of the project. Insurance upon completion Insurance Upon Completion (IUC) involves new construction or substantial rehabilitation where FHA insurance is not provided until the project’s construction is completed – there are no insured advances during the construction period. Consequently, many requirements are different than a typical 221(d)(4) Initial Closing with insurance of advances. FHA may insure a loan under Sections 220, 221(d)(4) and 231 of the NHA as an Insurance Upon Completion (IUC) loan once Certificates of Occupancy have been issued for all units in the Project. A HUD Firm Commitment to insure the loan must be issued prior to the start of construction and HUD procedures for Davis Bacon wage and hour compliance and inspections of construction in progress must be followed. interim income Income generated during the construction period. International Energy Conservation Code (IECC) The International Code Council is the leading global source of model codes and standards and building safety solutions that include product evaluation, accreditation, technology, training, and certification. The International Energy Conservation Code addresses assemblies, materials and construction methods and procedures that conserve energy. A version of the IECC is required for construction in HUD insured mortgage transactions. See Chapter 6, Section 6.1. Intrusive examination (testing) An “intrusive test” ...describes an examination appropriate to observed circumstances and relying upon standard diagnostic techniques, tools, Term Definition probes, thermal imagery, and other equipment commonly used by relevant construction trades to evaluate the condition and serviceability of particular building components. The term specifically contrasts with the phrase "non- intrusive" as used in the ASTM Standard 2018-15 for capital needs assessments. HUD requires intrusive testing over and above the ASTM Standard to assure that the needs assessor is not obligated to report that a building condition could not be determined because it could not be observed in a "non-intrusive" manner. See Appendix 5, Section A.5.7.4.2.A.10. In-Unit Garage An “In-Unit Garage” is a garage that is an integral part of a unit, providing parking spaces only accessible to that unit’s occupants.
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — Invitation for Firm Application (Letter of invitation) – Low-Income Housing Tax Credit program (LIHTC) (pp. 912-913)
Invitation for Firm Application (Letter of invitation) An invitation letter is issued by HUD, whereby the lender must advise HUD in writing within 30 calendar days if it plans to submit a Firm Commitment application. If it fails to notify HUD, the invitation letter will expire, and the lender will be required to repeat the Pre-Application process. Letters of invitation are issued and effective for 120 calendar days during which period the Lender must deliver the application. Lenders may request and are sometimes allowed an extension in this time period. Lead-based paint abatement Any set of measures designed to permanently eliminate lead-based paint or lead-based paint hazards (see definition of “permanent”). Abatement includes: 1. The removal of lead-based paint and dust-lead hazards, the permanent enclosure or encapsulation of lead-based paint, the replacement of components or fixtures painted with lead-based paint, and the removal or permanent covering of soil-lead hazards; and 2. All preparation, cleanup, disposal, and post abatement clearance testing activities associated with such measures. Lead-based paint interim controls A set of measures designed to reduce temporarily human exposure or likely exposure to lead-based paint hazards. Interim controls include, but are not limited to, repairs, painting, temporary containment, specialized cleaning, clearance, ongoing lead-based paint maintenance activities, and the establishment and operation of management and resident education programs. Leased fee A Landlord’s interest and rights to the leased property, including the right to receive rental income and a right to possess the property at the end of the lease. See Chapter 7, Section 7.15.1.C. Leasehold A Tenant’s possessory interest in land for a term of years granted to the Tenant pursuant to a lease agreement. Upon expiration of the Lease term, all rights to possess and use the land revert back to the Landlord (Fee Simple owner) and the leasehold estate terminates. A leasehold interest can be in the land only (ground lease) or the land and building and improvements. Level 1 Alterations Level 1 Alterations: “…include the removal and replacement or the covering of existing materials, elements, equipment, or fixtures using new materials, elements, equipment, or fixtures that serve the same purpose.” [IEBC Section Term Definition 503.1]. Examples include removing and replacing an existing flooring or wall finish, etc. Level 2 Alterations Level 2 Alterations: “…include the reconfiguration of space, the addition or elimination of any [exterior] door or window, the reconfiguration or extension of any system, or the installation of any additional equipment.” [IEBC Section 504.1] Examples include: 1. adding or demolishing interior walls (partition or loadbearing) to reconfigure dwelling unit layout; 2. adding another bathroom inside a unit; 3. relocating the kitchen within a unit; 4. adding a new air conditioning system that was not previously present to the existing buildings and/or units; 5. adding an elevator to the building, etc. Level 3 Alterations Level 3 Alterations: “…apply where the work area consisting of all reconfigured spaces exceeds 50% of the building area.” [IEBC Section 505.1] level annuity monthly payment plan (LAMP) A monthly payment plan through which all HUD insured mortgages must fully amortize with equal monthly payments of principal and interest. Fully amortize means that the entire principal amount of the loan is repaid. Liquidated damages Liquidated damages…[are] funds to pay for overruns in interest, taxes, MIP and insurance (soft costs) that are due to construction delays that are the General Contractor's fault. The funds are provided by the General Contractor, most often by means of a reduction in amounts otherwise due to the General Contractor consistent with the General Contract. Loan Consultant The term applies to an individual or firm actively engaged in the mortgage origination business and acting as an intermediary with or on behalf of the MAP Lender but who is not a MAP-approved Lender themselves and is not an employee of a MAP Lender or of an affiliate of the Lender. Under MAP, the consultant’s sole role is to refer new business to a MAP Lender including information supplied by the proposed borrower/sponsor. Aside from referring a Borrower/Sponsor for a MAP loan, a consultant may not have any additional role in underwriting the transaction. Loan-to-Value Ratio See "Criterion 3". Low-Income Housing Tax Credit program (LIHTC) A tax incentive intended to increase the availability of low-income housing. The program provides an income tax credit to owners of newly constructed or substantially rehabilitated low-income rental housing projects.
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — Lump Sum Construction Contract (p. 913)
Lump Sum Construction Contract A lump sum contract is a construction agreement in which the contractor agrees to complete the project for a fixed price. This is one of only two options for construction contracts in HUD insured mortgage transactions. See also "Cost-Plus Contract".
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — Management Entity Profile – Monthly Requisition (p. 914)
Management Entity Profile HUD form HUD-9832 Management Entity Profile for the Agent provides detailed information regarding the organization, operation, and experience of the proposed management agent. MAP Lender Includes the Lender’s officers, directors, partners, principals, stockholders, affiliates, affiliate’s officers, affiliate’s principals or any contract employees working on a particular affiliate’s or principal’s MAP application and, unless otherwise specified, includes the FHA-approved MAP Lender, its parent company, subsidiaries, affiliates and any other related entities, and any officers, directors, partners, members or employees of the MAP Lender, its affiliates and other related parties. Market Study A market study assures that there is enough sustainable demand for additional units without adversely impacting the existing supply, so as to maintain a balanced overall market. The focus of the market study is on the overall demand within a defined market area, and of the proposed project’s ability to capture and sustain a share of the total (incremental demand). Market studies estimate the number of renter households with sufficient incomes to afford the type of housing at the rents proposed at present, as well as any expected changes in rental housing demand in the foreseeable future (typically the next 3 to 5 years). Master Lease Master leases are structured to permit a combination of investments by one or more investors under one or more tax credit programs in a single development project. Generally, the Master Lease structure involves the following parties, which often have total or partial identities of interest and common ownership: 1. FHA Borrower – the Single Asset Entity (the Lessor for the Master Lease); 2. Master Tenant – the lessee; and 3. Master Lease Sub-lessees for Residential units, and for Commercial space. Medium risk transactions Medium risk transactions include, for example, 223(f) projects where significant repairs may be required, RAD or Tax Credit projects as well as Substantial Rehabilitation projects where there is minimal tenant displacement. Merchant builder Merchant builders, also referred to as merchant developers, are firms whose business practice is to build properties, lease them to a point of sustaining occupancy, sometimes holding them for a short additional period of seasoning, and then selling them. Mezzanine financing Mezzanine financing is a loan usually secured by a pledge of ownership interests, rather than by a lien on the real estate or an obligation of the Single Asset Mortgagor Entity. Monthly Requisition For an insured mortgage with insured advances, a contractor’s monthly requisition (request for payment), which must be made on form HUD-92448.
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — Mortgage insurance premium (MIP) – Net operating income (NOI) (p. 915)
Mortgage insurance premium (MIP) For each FHA-insured mortgage loan, FHA charges an initial mortgage insurance premium at closing plus a monthly mortgage insurance premium. Mortgageable costs Mortgageable costs means the costs for acquisition of property, construction, repairs, organizational costs, legal counsel, financing costs, due diligence costs, recording costs and other costs typical of commercial real estate transactions. But for insured mortgage practice the MAP Guide provides specific guidance on the eligibility and measurement of costs and this guidance appears throughout the MAP Guide consistent with subject matter considered. The best characterization of mortgageable costs are found in Chapter 8, Section 8.10 through Section 8.15 summarizing how to determine mortgage amounts under the various sections of the act and possible circumstances. Additional detail on what is and is not an eligible cost may be found in Chapter 13, Section 13.14 and Section 13.15 describing review of the owner and contractor's certified costs. Named insured Any person, firm, or organization, or any of its members specifically designated by name as an insured(s) in an insurance policy, as distinguished from others that, although unnamed, fall within the policy definition of an "insured." National Housing Act The National Housing Act, aka "the Act," is a law passed by Congress and signed by the president in 1934 establishing the Federal Housing Administration (FHA) and authorizing it to operate certain mortgage insurance programs. Since 1934, Congress has repeatedly amended the Act adding and deleting Sections, establishing new or modifying existing authorizations and defining basic requirements. HUD mortgage insurance programs are typically known by the section of the Act in which the Congress authorized the particular insured mortgage activity, e.g., current programs, Sections 220, 221(d)(4), 223(f), 223(a)(7), 231, 241(a). Needs assessor A professional with education, professional credentials, and field experience appropriate to conduct a capital needs assessment of a property considering the age, size, type of building systems, construction methods, and location of the property. Net Demand An estimate of future demand for the specified forecast period, typically 36 months. The estimate of demand must be based on a calculation of incremental demand (i.e. demand for additional new units). Net Equity The term “Net Equity” is used in reference to Low Income Housing Tax Credit transactions and is defined in Chapter 14, Section 14.14. It is Total Equity less the initial 20% installment less “Delayed” Developer Fees for amounts due after the completion of repairs or construction and predetermined reserve amounts to be held by the investor for project uses after the time of the final pay-in. Net operating income (NOI) NOI is the income remaining after subtracting all operating expenses from rents and other income collected for a property for a given period, but before payment of debt service.
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — Non-critical repair – Permission to Occupy (pp. 916-917)
Non-critical repair Critical and Non-Critical repairs are identified by the needs assessor who prepares a capital needs assessment for an existing property. See Appendix 5, Section A.5.7.2.2 for discussion of critical and non-critical repairs. Non- critical repairs are repairs that are needed currently or within not more than two years following endorsement or repairs intended by the owner to upgrade or modernize a property. The completion of non-critical repairs may be deferred until after endorsement but should not require more than one year to complete. Non-profit Principal The term "Nonprofit Principal" is understood to mean “the Single Asset Entity (SAE) Borrower and its Board of Directors”. See Chapter 8, Section 8.3.4. Office of Lender Activities and Compliance The HUD Office that determines whether a lender is an FHA-approved mortgagee pursuant to 24 CFR Part 202. Offsite (off-site) Construction Offsite work is work adjacent to project boundaries including utilities, walks, curbs, gutters, streets, drainage structures, landscaping, etc., that extend away from the project site. These improvements are not included in the construction contract. See Chapter 5, Section 5.12.2.B.2. Operation and Maintenance Plan (O & M) An operation and maintenance plan (O&M) may be a written general plan for physical operation and maintenance of a property with schedules for routine maintenance tasks, etc. But in HUD insured mortgage practice an O&M plan means a plan for addressing ongoing hazards, physical risks, essential equipment, and testing and record-keeping to assure that an identified hazard is managed safely. HUD requires an O&M plan to address hazardous materials or environmental conditions which may continue in place safely as long as correct procedures are timely observed. The O&M plan describes the procedures. See Chapter 9, Section 9.6.21. Opportunity Zone An economically distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. Localities qualify as Qualified Opportunity Zones if they have been nominated for that designation by a state, the District of Columbia, or a U.S. territory and that nomination has been certified by the Secretary of the U.S. Treasury via his delegation of authority to the Internal Revenue Service (IRS). Owner's Representative The owner's representative must be a member of the Borrower entity, usually a general partner or managing member with authority to make decisions to fulfill owner's responsibilities during construction. Non-profit organizations may be represented by an executive officer or member of the Board of Directors. Partial Occupancy Refers to allowing some units to be occupied in a property before the property as a whole obtains a Certificate of Occupancy. Participants In the context of the MAP Guide, participants are those involved in the preparation, processing, and submission of applications for FHA multifamily Term Definition mortgage insurance, including HUD staff, Lenders, third party consultants, Borrowers, and others. Passive Principal “Passive Principals” are persons or entities who singly or with others have limited or no decision-making power or control over the Borrower but who have an ownership interest of 25% or more (10% for corporations) in the Borrower. Penetration Rate Penetration Rate is defined as the percentage of Qualified Renter Households in the PMA that the property and similar existing and proposed competing properties must capture to fill all units and achieve stabilized occupancy. The Penetration Rate is calculated by dividing the total number of units in the competitive inventory (including the subject property, current competitive properties, and proposed relevant competitive properties) by the total number of renter households that meet the applicable age and income eligibility band requirements. Performance and Payment Bond A performance bond is a surety bond that is issued by a bonding company or bank to guarantee satisfactory completion of a project by a contractor. It protects the owner in case the contractor fails to complete the contractual obligations. Payment bonds are a guarantee that the contractor will pay all laborers, material suppliers, and contractors per contractual obligations. Performance Based Contract Administrator (PBCA) The PBCA is an agency hired to assist HUD/OAMPO in the administration of Section 8 HAP contracts. Permission to Occupy Permission to rent or occupy specific living units, commercial, or other space in a building. Units and spaces should not be occupied prior to approval by HUD.
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — Phase I Environmental Site Assessment (ESA) – Pre-Construction Conference (p. 917)
Phase I Environmental Site Assessment (ESA) The Phase I Environmental Site Assessment (ESA) is required for most HUD mortgage insurance applications for new construction and substantial rehabilitation. See Chapter 9, Section 9.1.3.C.5. A Phase I ESA is a broad fact finding and analytical report as characterized in Chapter 9, Section 9.4.1 and Section 9.6.20, identifying environmental impacts of a proposed project, hazards that may exist, environmental features or significant artifacts the may require protection. The American Society for Testing and Materials (ASTM) has published standards for preparation of Phase I ESAs. Phase II Environmental Site Assessment (ESA) A Phase II Environmental Site Assessment (ESA) is a follow-on study to a Phase I ESA and is intended to address conditions observed or identified in a Phase I EIS. For detailed discussion see Chapter 9, Section 9.4.2. ASTM publishes standards for Phase II ESAs. Pre-Construction Conference A pre-construction conference conducted by the HUD Inspector or HUD CA is required for every new construction and substantial rehabilitation project and must precede the initial start of construction, including early start of construction.
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — Pre-Cost Certification Conference – REAC Score (pp. 918-919)
Pre-Cost Certification Conference A meeting that should be held before the project is 90% complete at which HUD staff will explain: substantial completion, administrative completion, and cut-off dates; documentation required for cost certification; responsibility of the borrower and accountant for computing the liquidated damages/ actual damages and incentive portions, if applicable, of the construction contract; necessity for a careful review and completeness of the documentation; and any problems with prevailing wage certifications or other labor issues. Prevailing wage rates (David-Bacon Wage Determination) All contractors engaged at job sites covered by the Davis-Bacon (i.e. all insured mortgage construction loans) must pay their laborers and mechanics the locally prevailing wages and fringe benefits for corresponding work on similar projects in the area. The Davis-Bacon Act directs the Department of Labor to determine such locally prevailing wage rates which determination is made for each project and is called a "wage decision." See "Davis-Bacon Act." Previous participation review Individuals and entities in control of a project are subject to a previous participation review as set forth in 24 C.F.R. Part 200, as the same may be amended from time to time, and must submit information regarding previous participation in governmental housing transactions either via the electronic Active Partner Participation System (APPS) or on form HUD-2530, or any successor system or form, for approval for participation in any mortgage insurance program. Primary Market Area (PMA) The Primary Market Area (PMA) is the geographic area in which units with similar characteristics (e.g., number of bedrooms and rents) are in equal competition. Prior Credit Approval Prior credit approval of a principal is a specialized review of a person or entity who is a repeat customer of HUD insured mortgage programs and whose aggregate unpaid insured loan balances exceed $500 million. This scale of HUD activity is a risk exposure for HUD that requires analysis of existing and proposed additional exposure before HUD will allow the person or entity to pursue additional insured multifamily debt. See also "Concentrated Risk" and Chapter 8, Section 8.6 and Appendix 8, Section A.8.3. Privacy Act The Privacy Act of 1974, as amended, 5 U.S.C. § 552a, establishes a code of fair information practices that governs the collection, maintenance, use, and dissemination of information about individuals that is maintained in systems of records by federal agencies. A system of records is a group of records under the control of an agency from which information is retrieved by the name of the individual or by some identifier assigned to the individual. Processing Refers to the processing of mortgage insurance applications by HUD. Program Obligation (Loan obligation) All applicable statutes and any regulations issued by the HUD Secretary that apply to the Project, including all amendments to such statutes and regulations, as they become effective. Also, all current requirements in HUD Term Definition handbooks and guides, notices, and mortgagee letters that apply to the Project, and all future updates, changes and amendments thereto, as they become effective. Progress Schedule Article 3.10.1 of the AIA General Conditions requires the General Contractor to prepare and submit an “estimated progress schedule for the work” to the Borrower and Project Architect. Prohibited Source Means any person who: a. is seeking official action by HUD, b. does business or seeks to do business with HUD, c. conducts activities regulated by HUD; d. has interests that may be substantially affected by performance or nonperformance of the HUD employee’s official duties, or e. is an organization a majority of whose members are described in a. through d. and also includes any people who have a family relationship with the prohibited sources. Project Based Section 8 Section 8 Rental Assistance subsidy is provided to the tenants of a particular privately owned/managed multifamily rental property in contract with HUD. The subsidy stays with the property and the tenant stops receiving subsidy when moved out from the property. Eligible tenants must pay the highest of 30 percent of adjusted income, 10 percent of gross income, or the portion of welfare assistance designated for housing or the minimum rent established by HUD. See "HAP Contract" and "Section 8." Quality Control Plan A plan HUD requires of MAP lenders that lays out their procedures and management controls. REAC Score HUD's Real Estate Assessment Center (REAC) provides a physical inspection score at the property level based on physical condition of the property. The score ranges from 0 to 100.
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — Reasonable accommodations – Retainage (pp. 919-921)
Reasonable accommodations A reasonable accommodation is a change, adaptation, or modification to a policy, program, service, or workplace which will allow a qualified person with a disability to participate fully in a program, take advantage of a service, or perform a job. Reasonable accommodations may include, for example, those which may be necessary in order for the person with a disability to use and enjoy a dwelling, including public and common use spaces. Since persons with disabilities may have unique needs due to their disabilities, in some cases, simply treating persons with disabilities exactly the same as others may not ensure that they have an equal opportunity to use and enjoy a dwelling. Recognized Environmental Condition Recognized environmental conditions are designations from a Phase 1 Environmental Site Assessment that indicate the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property: 1. due to any release to the environment; Term Definition 2. under conditions indicative of a release to the environment; or 3. under conditions that pose a material threat of a future release to the environment. Regulatory agreement Agreement between HUD and a Borrower laying out the Borrower's responsibilities to comply with the requirements of the National Housing Act, as amended in the ownership of a multifamily housing property with a HUD-insured mortgage. Remaining economic life The estimated period during which improvements will continue to contribute to project value and an estimate of the number of years remaining in the economic life of the structure or structural components as of the date of the appraisal. Remaining Useful Life Remaining Useful Life (RUL) is the result obtained by subtracting the actual age of a building component from its Estimated Useful life. Renter Households (Qualified Renter Households?) Qualified Renter Households is defined as households that meet any applicable age and household size restrictions and are within any limiting income eligibility band, such as LIHTC Income Limits, and who have sufficient minimum income to pay the proposed rent without being rent overburdened. REO Schedule An REO schedule lists all of the properties owned by a borrower, and is used to perform a mortgage debt analysis. repairs Repairs are defined as the reconstruction or renewal of any part of an existing building for the purpose of its maintenance or to correct damage. Repairs to site features (not buildings but otherwise similarly defined) are included in this class of work. This include the patching or restoration or replacement of damaged materials, elements, equipment or fixtures for the purpose of maintaining such existing components in good or sound condition with respect to existing loads or performance requirements. Repairs also include work on non-damaged components necessary for the required repair of damaged components. In addition, installation of items not previously present in a building or on a site but necessary to address safety, security, accessibility or communications needs are considered “Repairs” when such installation and related work do not require alterations. Replacement Cost limited mortgage See criterion 3. Reserve for Replacement (RfR) Replacement Reserves are funds set aside that provide for the periodic replacement of building components that wear out more rapidly than the building itself and therefore must be replaced during the building’s economic life (short lived items). Residual receipts rider “Residual receipts” refer to certain funds held by borrowers whose mortgages are insured or held by HUD. For mortgage insurance programs that provide for limited distributions, residual receipts is the term used for the surplus cash remaining after distributions are paid. Projects that are Term Definition subject to residual receipts requirements must attach a rider to the regulatory agreement. Residual receipts are required for non-profit owners engaged with other select HUD programs, including Section 8 and Section 202 Supportive Housing for the Elderly. Also see "Rider". Residual receipts, note Residual Receipts may be thought of as including: a. All "Surplus Cash" for non-profit projects. b. Cash remaining after all accrued distributions have been properly taken for limited dividend projects. Residual Receipts Notes may be permitted in order to recognize owning persons', sponsors', or management's advances made to cover operating expenses, taxes, or capital improvements after final endorsement/closing. Restricted excess mortgage proceeds Those excess mortgage proceeds determined not to be available to the Borrower during construction, i.e., the difference by which the HUD estimate exceeds contract amounts. Retainage A percentage of a construction contract price retained from a contractor as assurance that the job will be timely completed.
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — Rider – Section 202 (p. 921)
Rider A rider is an additional attachment to a regulatory agreement that borrowers must execute under certain circumstances. routine maintenance Routine maintenance is a very limited level of repairs, which among other things does not require environmental review. See Chapter 5, Section 5.1.5.D and HUD's CPD Notice 2016-02 at https://www.hud.gov/sites/documents/16-02CPDN.PDF Sales comparison approach A method of deriving the value of a property by comparing similar properties that have recently sold. Schedule of insurable values (Property Insurance Schedule) The schedule of Insurable Values (HUD form 92329) is generated by the CNA e-Tool. This form includes a schedule of the estimated replacement cost by building as the insurable value of the property. Schedule of Values The itemized cost estimate for the proposed scope of construction work funded either from the Construction Escrow for new construction and substantial rehabilitation projects or from the Repair Escrow for Section 223(f) projects. Section 202 The Section 202 program was created in 1959 to provide direct government loans to nonprofits for the purpose of developing affordable rental housing for the elderly, and also for persons with disabilities under subsequent authorizations. The program currently provides interest-free capital advances to finance the construction, rehabilitation, or acquisition (with or without rehabilitation) of structures that will serve as supportive housing for very low-income elderly persons. The program also provides rental assistance subsidies for these properties.
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — Section 220 – Section 241(a) (p. 922)
Section 220 The section 220 program provides federally insured loans used to finance mortgages for housing in urban renewal areas, areas in which concentrated revitalization activities have been undertaken by local government, or to alter, repair, or improve housing in those areas. Section 221(d)(4) Section 221(d)(4) insures mortgage loans to facilitate the new construction or substantial rehabilitation of multifamily rental or cooperative housing for moderate-income families, elderly, and the handicapped. Single Room Occupancy (SRO) projects may also be insured under this section. Section 221(d)(4) insures lenders against loss on mortgage defaults. This program assists private industry in the construction or rehabilitation of rental and cooperative housing for moderate-income and displaced families by making capital more readily available. The program allows for long-term mortgages (up to 40 years) that can be financed with Government National Mortgage Association (GNMA) Mortgage Backed Securities. Section 223(a)(7) The Section 223(a)(7) program insures mortgage loans to facilitate the refinancing of certain mortgages currently insured by FHA and to HUD-held loans on projects subject to the Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA). A mortgage refinanced pursuant to Section 223(a)(7) is insured under the same section of the National Housing Act (NHA) as was the mortgage originally insured under that section of the act, for example, Section 221(d)(4) or Section 223(f). Section 223(f) The section 223(f) program insures mortgage loans to facilitate the purchase or refinancing of existing multifamily rental housing. These projects may have been financed originally with conventional or FHA insured mortgages. Properties requiring substantial rehabilitation are not eligible for mortgage insurance under this program. HUD requires completion of critical repairs before endorsement of the mortgage and permits the completion of non- critical repairs after the endorsement for mortgage insurance. Section 231 The Section 231 program insures mortgage loans to facilitate the construction and substantial rehabilitation of multifamily rental housing for elderly persons (62 or older) and/or persons with disabilities. Section 231 insures lenders against loss on mortgages. Section 231 was designed to increase the supply of rental housing specifically for the use and occupancy of elderly persons, and/or persons with disabilities. Section 241(a) The section 241(a) program insures mortgage loans to finance repairs, additions, and improvements to multifamily rental housing and health care facilities with FHA insured first mortgages or HUD-held mortgages. Section 241(a) insures lenders against loss on mortgage defaults. The program is intended to keep the project competitive, extend its economic life, and to finance the replacement of obsolete equipment. Insured mortgages finance repairs, additions, and improvements to multifamily projects, group practice facilities, hospitals, or nursing homes already insured by HUD or held by HUD.
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — Section 50 – Side agreement (p. 923)
Section 50 Section 50 and the Section 50 Addendum of the Regulatory Agreement relate to the non-recourse nature of the indebtedness and indicate certain matters for which the parties may be held personally liable; the Firm Commitment will identify the party(ies) to be inserted in the Section 50 Addendum. Section 504 Section 504 of the Rehabilitation Act of 1973 is a federal law, codified at 29 U.S.C. § 794, that prohibits discrimination on the basis of disability in federally-assisted programs or activities. An individual with a disability is defined. Section 8 A program authorized by Congress in the Housing and Community Development Act of 1974 as an amendment, Section 8, of the U.S. Housing Act of 1937 (42 U.S.C. 1437f). Section 8 authorized 8 rent subsidies for low- income families. The Section 8 low-income housing program is really two programs: the Housing Choice Voucher program and the project-based rental assistance program. Vouchers are portable subsidies that low-income families can use to lower their rents in the private market. Vouchers are administered at the local level by quasi-governmental public housing authorities (PHAs). Project-based rental assistance is a form of rental subsidy that is attached to a unit of privately owned housing in accordance with a Housing Assistance Payment Contract between HUD and the owner. See HAP Contract. Low-income families who move into the housing pay a reduced rent, on the basis of their incomes. Section 811 The Section 811 Supportive Housing for Persons with Disabilities program provides funding to develop and subsidize rental housing with the availability of supportive services for very low- and extremely low-income adults with disabilities. Seismic resistance standards Seismic resistance standards are building standards published by the American Society of Civil Engineers (ASCE) and its affiliate, the Structural Engineering Institute (ASCE/SEI) for the purpose of improving seismic safety in older buildings. The relevant standard is ASCE 41-13 Seismic Evaluation and Retrofit of Existing Buildings. Shell company (or entity) A Shell company or entity typically describes an entity that does not take actions themselves but only serves as legal vehicles through which the partners, members, or owners of such entity take actions are excluded. When applied to General Contractors, it describes a firm organized for the apparent purpose of acting as a General Contractor, but which in practice subcontracts the preponderance of its responsibility - measured both in the substance of the work as well as in monetary value - to one or more other de facto General Contractors, collecting a fee but performing little or no commensurate service. Side agreement Documents defining business agreements between identity of interest parties on transactions involving Builder’s and Sponsor’s Profit and Risk Allowance (BSPRA).
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — Single Asset Mortgagor Entity – Statement of Energy Design Intent (SEDI) (p. 924)
Single Asset Mortgagor Entity The mortgaged property must be the only asset of the Borrower entity, and there may not be more than one Borrower entity. Site improvements Alterations to the land that enhance the utility of any structure placed on the site. Common site improvements include, but are not limited to: ⚫ drainage ⚫ sewerage and other utilities ⚫ walks and drives ⚫ landscaping ⚫ fencing Site Wide Ready for Anticipated Use Site Wide Ready for Anticipated Use (SWRAU) is a designation given by the EPA to superfund sites indicating that the entire site is safe for the intended use and institutional and engineering controls are in place. Sites can be SWRAU for non-residential uses, so HUD must confirm that the SWRAU is for residential use. soft cap A soft cap is a type of engineering control used as a physical measure to reduce or eliminate exposure to a contamination that will remain on site. Soft caps are typically made of dirt and are distinct from hard caps, which are typically made of concrete. Specifications (as in, Drawings and Specification) According to the Dictionary of Architecture & Construction a specification is, “a written document describing in detail the scope of work, materials to be used, methods of installation, and quality of workmanship for a parcel of work to be placed under contract; usually utilized in conjunction with working (contract) drawings in building construction.” Sponsor "Sponsor” is an informal term use for persons or entities who may do one or more of the following: locate and control the site; assemble the development team, provide financial assistance to the project or provide development experience and expertise to the project in ways other than as a paid consultant. The Sponsor is not the single asset entity owner though they may also act as a Principal in the ownership entity. Sponsor’s Profit and Risk Allowance (SPRA) SPRA may be included in replacement cost where no identity of interest exists between the general contractor and borrower, or where there is an Identity of Interest, but the borrower and general contractor have agreed to a general contractor profit instead of BSPRA. SPRA is 10% of the total estimated cost of: architect's fees, carrying and financing charges, legal, organizational, and audit expenses. Standard keeper Organizations that sponsor and maintain green building certifications, such as LEED. Statement of Energy Design Intent (SEDI) A report generated by EPA's Portfolio Manager, a Statement of Energy Design Intent (SEDI) is based on projected utility consumption for each building to be built.
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — Statement of Energy Performance (SEP) – Substantial rehabilitation (p. 925)
Statement of Energy Performance (SEP) A statement that provides an ENERGY STAR® Score indicating a building's continuing performance in energy efficiency. Statutory / Statute "Statutory" or "statute" refers to legal authority. Statutory authority for the implementation of insured mortgage programs. Authority for each of the programs covered in the MAP Guide, is the National Housing Act, 12 U.S.C. §§ 220, 221(d)(4), 231, 241(a), 223(a)(7), and 223(f). Additionally, Section 211 of the National Housing Act and Section 7(d) of the Department of HUD Act authorize the Secretary to make such rules and regulations as may be necessary to carry out the provisions of the National Housing Act. The FHA requirements listed in HUD regulations covering each MAP eligible program are included and more fully explained in the MAP Guide. Statutory Limit Amount See Criterion 4. straight to Firm (direct to firm, or one- step processing) For New Construction and Substantial Rehabilitation projects, the Lender may choose whether to submit the application Straight (Direct)-to-Firm or via the Two-Stage process. For acquisition or refinance, the Lender goes straight to the application for a Firm Commitment, bypassing the pre- application stage required in the Two-Stage process. Streamlined processing (Expedited Processing, Fast- track) Streamlined processing means that less than 100% complete plans and specifications (construction documents) may be submitted with the application for Firm Commitment. All LIHTC project applications are eligible for streamlined processing of design and construction documents. For other applicants to be considered qualified for streamlined processing the borrower/sponsor, the Project Architect, the General Contractor and due diligence providers must each have successful prior HUD project experience comparable in scope and scale to the scope of work proposed in the application. Subordination (of loans, notes) Subordination, in the context of the MAP Guide, is related to secondary financing. When an FHA-insured project has secondary financing, whether from a public or private source, the loan or note must be subordinate the FHA-insured mortgage. The FHA-insured mortgage must always be in the first lien position. Subordination agreement A promissory note that lays out the terms of the subordination, whether the secondary financing is from public or private sources. If the secondary financing is from a public source, form HUD 92420-M should be used. If the secondary financing is from a private source, depending upon how the note is secured, either form HUD-92223M, HUD-92908M, or HUD-92907 should be used. Substantial rehabilitation Substantial rehabilitation is work on existing buildings(s) including any additions for which the Aggregate Cost of construction (the Aggregate Cost) exceeds the Aggregate Cost Limit amount, as defined in Chapter 5, Section 5.1.2.A.
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — Subsurface exploration – Traditional Application Processing (TAP) (pp. 926-927)
Subsurface exploration Test borings or intrusive examinations made by a licensed professional/engineer to identify the nature of subsurface problems and recommend appropriate action. Superfund Site [+ National Priority List] EPA’s Superfund program is responsible for cleaning up some of the nation’s most contaminated land and responding to environmental emergencies, oil spills and natural disasters. The National Priorities List (NPL) is the list of sites of national priority among the known releases or threatened releases of hazardous substances, pollutants, or contaminants throughout the United States and its territories. The NPL is intended primarily to guide the EPA in determining which sites warrant further investigation. Supervisory Architect Describes the administrative role and responsibilities of the project architect during the construction period as described in Chapter 12, Section 12.4. A supervisory architect may be a separate and independent architect from the architect that provided the design (Design Architect) of the project. Surplus Cash The cash remaining after all necessary and reasonable expenses of the project have been paid or funds have been set aside for such payment and all reserve requirements have been met. Tax abatement Tax Abatement is a reduction of project taxes for a specified term by the taxing authority. Tax Credit Equity Pay- in Schedule FHA requires minimum Tax Credit equity contributions following an agreed pay-in schedule for all LIHTC transactions. This schedule, with actual total equity and net-equity amounts entered, is to be added as a special condition to the Firm Commitment for all LIHTC Projects. Tax Increment Financing Tax Increment Financing (TIF) is a public financing method that is used as a subsidy for redevelopment, infrastructure, and other community- improvement projects. States create districts to administer the program for communities to benefit from the TIF. TIF structures vary by municipality, state, or local authority. They may use future increases in taxes to subsidize current improvements. Some states sell bonds backed by a project development's future taxes, while the bond money helps pay the developer's construction costs. Third-party Beneficiary Agreement For purposes of the MAP Guide, an agreement with a privately owned entity of offsite water and sewerage systems evidencing that Construction of private water and sewer facilities will provide these services at reasonable rates including consideration of long-term capital needs and when such facilities are supported and supervised by state or local authorities with jurisdiction. Title II Title II of the Americans with Disabilities Act of 1990 obligates all state and local government organizations (including state and local housing and community development agencies) to make their programs and facilities, Term Definition including multifamily housing programs and facilities, accessible in accordance with certain regulatory and architectural requirements. Title III Title III of the ADA applies to any portion of an insured multifamily property that is a public accommodation, i.e., a portion of the facility owned, operated, or leased to or by a private entity for use by, and open to, the general public. This includes any leasing office or facility together with public restrooms and public lobbies. Title Insurance Policy The title evidence submitted with a conveyance of the property to the Commissioner shall be in the form of an owner's policy of title insurance, except that, if an abstract and attorney's opinion were accepted by the Commissioner at the time of insurance, the title evidence may be in such form. The title evidence shall be effective on or after the date of the recording of the conveyance to the Commissioner. For specific title policy requirement see Chapter 19, Section 19.4.7. Trades (Licensed Trades) Construction-related professionals holding licenses for specific trades and skills, including but not limited to, plumber, electrician, framer, mechanical (HVAC) systems. Traditional Application Processing (TAP) Traditional Application (TAP) may be used if a waiver is processed to allow it. Review of applications for TAP processing require more work and responsibility by HUD staff, and accordingly, a higher application fee may be charged. Projects not eligible for MAP, and which may be submitted under TAP, are: 1. Applications submitted by FHA approved multifamily Lenders who are not approved to submit MAP applications, 2. Applications where there is an identity of interest between the Lender and the Borrower or affiliates of either, or 3. Applications for mortgage insurance under Programs or Sections of the Act not covered by MAP (e.g., Cooperatives under Section 213).
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — Transfer of Physical Assets (TPA) – Two Stage application processing (p. 927)
Transfer of Physical Assets (TPA) HUD uses the term "transfer of physical assets" to mean a change in the ownership of a project on which there is a mortgage loan insured, coinsured or held by HUD. While TPAs usually involve the conveyance of title, TPAs can also be accomplished through other means such as conveyance of 100 percent of the beneficial interest in a passive trust which holds title to the project. In common parlance a TPA is an assumption of an existing mortgage by a purchaser or new owner of the property. Trip Reports Construction monitoring report by a HUD inspector on form HUD-95379. Two Stage application processing For New Construction and Substantial Rehabilitation projects, the Lender may choose whether to submit the application Direct-to-Firm or via the Two-Stage process. Under the two-stage application process, the lender first submits exhibits for a pre-application review by HUD. If satisfactory, HUD invites the Lender to apply for Firm Commitment.
MAP Guide (HUD Handbook 4430.G REV-3) Glossary — Underwriting (Loan Insurance) – Working capital (pp. 928-929)
Underwriting (Loan Insurance) Underwriting is the act of: ⚫ determining a borrower’s ability and willingness to repay a mortgage debt to limit the probability of default and collection actions, and ⚫ examining the property offered as security to determine if it is sufficient collateral. Underwriting multifamily projects is a process for evaluating the character, capacity and creditworthiness of the Sponsor, Borrower and its principals, the General Contractor, and in the instance of an identity of interest, the property management company, in order to reach specific conclusions resulting in the approval (with conditions, as appropriate) or denial of a mortgage insurance application. Uniform Federal Accessibility Standards (UFAS) The Uniform Federal Accessibility Standards (UFAS) were developed by the four federal agencies responsible for issuing standards under the Architectural Barriers Act of 1968. The Act requires that buildings and facilities designed, constructed, or altered with federal funds be accessible and these standards were developed to define what “accessible” means. Utility consumption benchmarking (Energy Benchmarking) Benchmarking is the practice of comparing the measured performance of a device, process, facility, or organization to itself, its peers, or established norms, with the goal of informing and motivating performance improvement. When applied to building energy use, benchmarking serves as a mechanism to measure energy performance of a single building over time, relative to other similar buildings, or to modeled simulations of a reference building built to a specific standard (such as an energy code). Valuation For purposes of the MAP Guide, valuation is the process of establishing a value for a project. A Valuation Analysis evaluates the existing or proposed project as collateral and security for a long-term mortgage. Depending on program requirements, this includes an estimation of the market value of the land and/or the property as well as an analysis of the project’s market need, location, residential and commercial rent and other income, and operating expenses. Vapor Encroachment Condition Presence or likely presence of “chemical of concern” vapors in the subsurface of the Target Property caused by the release of vapors from contaminated soil or groundwater or both either on or near the Target Property as identified by the Tier 1 or Tier 2 procedures, {ASTM E2600-10}. Vested title holder The entity that holds title to the Land per Schedule A of the Title Policy. HUD’s currently approved form of title insurance policy is the American Land Title Association (ALTA) 2006 Loan Policy of Title Insurance – Lender’s Policy, or state approved equivalent (Title Policy). Waiver In the context of the MAP Guide, a waiver is when HUD "waives" a particular provision. The Multifamily Regional Director may waive non-regulatory or non-statutory provisions of the MAP Guide, although Chapter 11 specifies several requirements that may not be waived without prior approval of HUD Term Definition Headquarters (HQ). If the Regional Center intends to waive any of the environmental requirements in Chapter 9, Section 9.3 that are not regulatory in nature, the Regional Office must obtain advice of the Departmental and/or Housing Environmental Officer, or the applicable Regional or Field Environmental Officer (REO/FEO) in whose district the project is located, before the waiver is granted. See Chapter 9, Section 9.3.I for details. Regulatory provisions may be waived only with approval of the Assistant Secretary for Housing - FHA Commissioner. Statutory provisions may not be waived. Warranty Inspection Inspections to ensure correction of latent defects (defective or nonconforming work not observed during construction) or to check any item of delayed completion. Washington Docket Dockets are files of important documents pertaining to the loan being serviced. HUD establishes these files at the initiation of the project. Additional documents are added to the dockets as the project moves through its operational life. Two dockets are made, the Washington Docket and the Field Office Docket. The Washington Docket is HUD's permanent legal file. Working capital Working capital is the difference between current assets and current liabilities and is the cash or liquidity that exists to purchase assets, pay off debt and make up deficits from operations or fund new activities or projects.
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