In an effort to summarize the highlights of the LEAN Email Blasts that we receive, and rarely have time to review in a timely fashion, we at Pepper Hamilton are providing this quick synopsis of the latest LEAN update. Our aim is to provide pertinent information succinctly as a roadmap to the LEAN Email Blasts, not to replace the LEAN Email Blasts. We hope you find these summaries helpful. Here is a link to the complete February 29, 2016 Email Blast.

LEAN 241(a) Loans Back in Action

A June 24, 2015 Email Blast article addressed GNMA’s concerns regarding collateral modifications of loans in mortgage-backed securities that are included in GNMA REMIC Trusts.

In its December 30, 2015 All Participants Memorandum and again in its January 27, 2016 Multiclass Participants Memorandum, GNMA announced that it is ceasing this review, based on clarification the IRS provided through a “general information letter.” Therefore, ORCF is back to processing Section 241(a) loans and encourages new submissions.

Lender Narrative and Decision Circuit Must Be Consistent with the Owner’s Certified Operating Statements

ORCF would like to remind Lenders that the historical financial performance summarized in the Lender narrative and decision circuit must be supported by the owner’s certified operating statements.

Updated Lender’s Architectural Reviewer and Cost Analyst’s Statement of Work

The Lender’s Architectural Reviewer and Cost Analyst’s Statement of Work – New Construction, Substantial Rehabilitation, and 241(a) was updated on December 16, 2015 to include language regarding Aboveground Storage Tanks (ASTs). All Firm Commitment Applications must use the revised Statement of Work.

Updated Lender’s Pre-Construction Conference Agenda

The Lender’s Pre-Construction Conference Agenda has been revised.

Updated ORCF Clarification on Describing State Regulatory and Funding Risk and Mitigation

In the September 23, 2015 Email Blast, ORCF supplied the industry with the State Risk Summary Grid to provide suggestions on how to address and mitigate funding and regulatory risks. After working with Lenders since the release of the initial Grid, ORCF has updated the State Risk Summary Grid.

Risk Management Programs

Handbook 4232.1 and the current Operator Regulatory Agreement require Operators to implement and maintain a risk management program. While the current versions of the Lender Narratives do not require a description of the program, Lenders are encouraged to discuss facility risk management programs. Section II, Production, 2.5 General Requirements, GG. Risk Management Program as well as the Risk Management-Operator Regulatory Agreement Requirements Grid provide guidance on the requirements and evaluation of risk management programs.

Hard Copy of Production Applications Not Required

As a reminder, ORCF does not require, or encourage, the submission of hard copy files for the overall mortgage insurance application submissions.

New Optional Lender Submission Documents Posted to HUDClips

ORCF has added eight new documents to its Document Collection 2502-0605 that are not required but can be used by Lenders and their counsel. The eight new documents are further described in the LEAN Email Blast:

  1. HUD-90030-ORCF – Lender Narrative, Capital Improvements
  2. HUD-92071-ORCF – Management Agreement Addendum
  3. HUD-92266-ORCF – Application for Transfer of Physical Assets (and Lender Narrative)
  4. HUD-92266A-ORCF – Lender Narrative, Change of Operator/Lessee
  5. HUD-92266B-ORCF – Lender Narrative, Change of Management Agent
  6. HUD-92435-ORCF – Lender’s Certification, Insurance Coverage
  7. HUD-93334-ORCF – Servicer’s Notification to HUD of Risks to Healthcare Project and Action Plan for Remedy

New Standards for Surveys

HUD-91111-ORCF calls for surveys to be in compliance with Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys (Effective February 23, 2011). These standards have been replaced by Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys (Effective February 23, 2016). HUD will be revising the form to reflect the changes, and, in the interim, ORCF will accept surveys prepared to either standard. If using the new standard during the interim, the list of required “Table A - Optional Survey Responsibilities and Specifications” will remain the same except for the deletion of item 20a.

Guidance for Categorizing an Activity as Maintenance

Notice CPD-16-02, “Guidance for Categorizing an Activity as Maintenance for Compliance with HUD Environmental Regulations, 24 CFR Parts 50 and 58” was issued on February 8, 2016.

FROM THE CLOSING CORNER

Executed Firm Commitment To Be Sent to Closer Mailbox

An electronic copy of the executed Firm Commitments signed by the Lender/Borrower should now be sent to the Closer Mailbox at ORCFCloser@hud.gov. Originals should still be submitted with the closing package to the assigned HUD Closer.

Tool to Certify Insurance Coverage at Closing Now Available

ORCF now has a tool to assist Lenders in closing 232 loans. The HUD-92435-ORCF – Lender’s Certification, Insurance Coverage (See “New Optional Lender Submission Documents Posted to HUDClips” above) is now available to certify insurance coverage needed at closings without providing additional supporting material.