| (a) Closing Memo to Underwriting Report. Any changes
to the total development cost, expenses, income, and/or other sources
of funds from time of the publication of the initial Underwriting
Report at the time of award to the time of loan closing, if the type
or amount of the sources and uses have changed must be reevaluated
by the Real Estate Analysis division, which will typically publish
a Closing Memo to the Underwriting Report. The Report may recommend
changes to the principal amount and/or the repayment structure for
the Multifamily Direct Loan pursuant to §11.302 of this title
(relating to Underwriting Rules and Guidelines), except that the change
must have been an available option in the rule or NOFA (as applicable),
and may not be made to awards that were competitively scored to the
extent that change would have caused the Development to lose points.
This will allow the Department to uphold the competitive process,
mitigate any increased risk, and to ensure that the Development is
not oversubsidized. Where the Department determines such risk is not
adequately mitigated, the award may be terminated or reconsidered
by the Board. If the changes cause the total Debt Coverage Ratio (DCR)
to no longer comply with 10 TAC §11.302 of this title (relating
to Underwriting Rules and Guidelines), the award may be subject to
termination. The Department may require the Closing Memo to be completed
before providing a Contract to the Development Owner.
(b) Executive Approval Required Pre-Closing. The Executive
Director or authorized designee may approve amendments to loan terms
prior to closing as described in paragraphs (1) - (6) of this subsection.
Under no circumstances may an amendment cause the Department to violate
or be at risk of violating a federal requirement or deadline.
(1) Extensions to the loan closing date required in
10 TAC §13.11(c)(4) of this chapter (relating to Post-Award Requirements)
may be approved prior to closing. An Applicant must submit sufficient
evidence documenting good cause, including but not limited to, documented
delays caused by circumstances outside the control of the applicant
or constraints in arranging a multiple fund source closing.
(2) Changes to the construction term and/or loan maturity
date to accommodate the requirements of other lenders or to maintain
parity of term may be approved prior to closing.
(3) Extensions to the Construction Completion date
or date of receipt of a Closed Final Development Inspection Letter
required in 10 TAC §13.11(c)(8) of this chapter may be requested
but generally are not approved prior to initial loan closing. Extensions
under this paragraph are determined based on documentation that the
extension is necessary to complete construction and that there is
good cause for the extension.
(4) Only to the extent determined necessary by Real
Estate Analysis to maintain financial feasibility, changes to the
amortization period (not to exceed 40 years) or interest rate (to
not less than the minimum specified in rule or NOFA) may be approved
if such changes continue to meet all requirements of Chapter 11, Chapter
13, and the NOFA.
(5) Decreases in the Direct Loan amount, provided the
decrease does not jeopardize the financial viability of the Development
in the determination of Real Estate Analysis may be approved prior
to closing, though the Development Owner may be subject to penalties
as further described in 10 TAC §13.11 of this chapter (relating
to Post-Award Requirements). Increases will not be approved unless
the Applicant applies for the additional funding under an open NOFA.
(6) Changes to other loan terms or requirements that
would not require a waiver, as necessary to facilitate the loan closing
without exposing the Department to undue financial risk.
(c) Board Approval Required Pre-Closing. Board approval
is necessary for any other changes prior to closing.
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