| (a) Requests for Subordination Agreements, HUD Amendments
to Restrictive Covenants or HUD Riders to Restrictive Covenants from
the Department must be reviewed and approved by the Department's Asset
Management Division and Legal Division prior to execution. The Development
Owner must demonstrate that the Development will remain feasible with
the proposed new debt. For HTC Developments seeking to refinance within
two years from the issuance of the IRS Form(s) 8609, a review of the
Development's cost certification will be conducted to determine if
the change in the financing structure would have affected the credit
award. If it is determined that the change to the financing structure,
net of additional costs associated with the refinance, would have
resulted in over sourcing the Development, thereby resulting in an
adjustment to the credit award, the Development Owner may be required
to fund a Special Reserve Account in accordance with §10.404
of this subchapter (relating to Reserve Accounts). Approval from the
Board will be required for loan amounts that would cause the Developments
to be over-sourced after accounting for the additional costs associated
with the refinance and the deposit into the Special Reserve Account.
Subordinations or re-subordinations of Developments with Direct Loans
from the Department are also subject to the requirements under §13.13(c)(2)
of this title (relating to Multifamily Direct Loan Rule) and Chapter
11, Subchapter D of this title (relating to Underwriting and Loan
Policy), including but not limited to §11.302(g)(4).
(b) All requests must include:
(1) Requested document on Department approved template,
if available, and completed with the Development specific information;
(2) Documentation such as a loan commitment or application
that identifies the proposed loan amount and terms;
(3) If the proposed legal description is different
from the legal description in the Department's regulatory agreement,
a survey, title commitment, or recorded plat that agrees with the
legal description in the requested document. Changes to the Development
Site may be subject to further review and approval under §10.405
of this subchapter (relating to Amendments and Extensions); and
(4) Development's most recent 12-month trailing operating
statement. If the financial statement indicates that the proposed
new debt cannot be supported by the Development, the Development Owner
must submit an operating pro forma and a written explanation for the
differences from the actual performance of the Development.
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