67-50.080. Credit Underwriting Procedures

(1) Each Applicant shall undergo credit underwriting to determine the financial stability, capacity and experience of the Applicant and the economic and financial feasibility of the Development. The Applicant will be subject to credit underwriting as prescribed by the Corporation’s Credit Underwriter.

(2) Applicants utilizing HLP funding for construction shall undergo an in-depth underwriting analysis consisting of items on the checklist provided by the Credit Underwriter.

(3) Applicants utilizing HLP funding for purchase assistance shall undergo an analytical review consisting of components on the checklist provided by the Credit Underwriter.

(4) The Applicant shall submit all the required information to the Credit Underwriter within sixty (60) days of the date of the notification letter. If an extension is needed, a written request substantiating the need for the extension must be provided to the Corporation prior to the sixty (60) day initial deadline, subject to approval by the Credit Underwriter and the Corporation. Applicants will be charged a penalty fee of $100 for each extension request, pursuant to Section 420.507(4), F.S., payable at the time of the request. In the event the time limitation expires, the Corporation will request that the Applicant relinquish the preliminary allocation and it will be made available to the next ranked Applicant.

(5) The Credit Underwriter shall verify all information in the Application, including information relative to the Applicant, Developer, Contractor and other members of the Development team. The Corporation shall provide the draft underwriting report to the Applicant for review and comment. The Credit Underwriter will provide a final report to the Corporation, which will address comments made by the Applicant, as deemed appropriate.

(6) The Credit Underwriter shall request the following information:

(a) For Principals and guarantors, audited financial statements or financial statements compiled or reviewed in accordance with Statement on Standards for Accounting and Review Services (SSARS) No. 1, which is adopted and incorporated herein by reference and which can be obtained from the Corporation, at 227 North Bronough Street, Suite 500, Tallahassee, Florida 32301-1329, for the most recent fiscal year ended, credit check, banking and trade references, and deposit verifications. If audited financial statements or financial statement compiled or reviewed in accordance with SSARS No. 1 are not available, unaudited financial statements prepared within the last 90 days and reviewed by the Credit Underwriter and the two most recent year’s tax returns.

(b) For the Applicant and general partner, audited financial statements or financial statements compiled or reviewed in accordance with SSARS No. 1, for the most recent fiscal year ended, credit check, banking and trade references, and deposit verifications. If the entities are newly formed (less than 18 months in existence as of the date that the credit underwriting information is requested), a copy of any and all tax returns with related supporting notes and schedules.

(7) The Credit Underwriter shall report any inconsistencies or discrepancies or changes made to the Applicant’s Application during credit underwriting. If at any time the Applicant’s Development or Development team is no longer the Development or Development team described in the Application, and the changes made are prejudicial to the Development or the market to be served by the Development or if any discrepancy or misrepresentation is found, the Application will be rejected.

(8) The Credit Underwriter shall use the following procedures during the underwriting evaluation:

(a) Review and determine if the number of loans and construction commitments of the Applicant and its Principals will impede its ability to proceed with the successful completion of each proposed Development.

(b) The Credit Underwriter shall consider the following when determining the need for construction completion guarantees:

1. Liquidity of the guarantor.

2. Developer and Contractor’s history in successfully completing Developments of similar nature.

3. Problems encountered previously with Developer.

4. Problems encountered previously with Contractor.

(c) Review the appraisal and other market documentation to determine if the market exists to support both the demographic and income restriction set-asides committed to within the Application.

(9) A full or self-contained appraisal, as defined by the Uniform Standards of Professional Appraisal Practice, must be received on each model and typical lot being offered for sale by the Applicant.

(10) A market study performed by an independent third party, licensed real estate professional, must be received that details the immediate development area and include:

(a) Analysis of area population;

(b) Availability of infrastructure and services (schools, transportation, employers, recreation, and medical facilities);

(c) Current employment market;

(d) Current housing sales trends; and,

(e) Community need for the proposed Development.

(11) The appraisal(s) and market study are due to the Credit Underwriter within sixty (60) days from the date of the notification letter. The costs associated with the production of these reports are the Applicant’s responsibility and should be included in the total development budget.

(12) If the Credit Underwriter requires additional clarifying materials, the Credit Underwriter shall request that the Applicant provide them and specify a deadline for submission. Failure to submit the required information by the specified deadline shall result in the Application being rejected, unless a written extension of time is approved by the Board.

(13) A pre-construction analysis and review of the Development’s costs shall be required prior to the closing of the HLP Construction Loan.

(14) The Applicant will bear the cost of all documentation submitted to the Credit Underwriter for review (i.e., appraisal, credit report, environmental study, etc.). The Applicant may reimburse itself for these costs with HLP funding from the first Draw.

(15) After the approval of the Credit Underwriter’s recommendation by the Board or a committee appointed by the Board, and pending resolution of any outstanding issues, the Corporation shall issue a HLP loan commitment.

(16) Once the Board has approved the final credit underwriting report, the Applicant will have ninety (90) days from the credit underwriting approval date to close the loan. If an extension is needed, a written request substantiating the need for the extension must be provided to the Corporation prior to the ninety (90) day initial deadline, subject to approval by the Board. However, the extension cannot exceed a period of sixty (60) days. Applicants will be charged a penalty fee of $100 for each extension request, pursuant to Section 420.507(4), F.S., payable at the time of the request. In the event the time limitation expires, the Corporation will request that the Applicant relinquish the preliminary allocation and it will be made available to the next ranked Applicant.

(17) The Applicant must submit a written request for any changes to the Development or it’s financing from the original Application. All requests must be submitted in writing to the program administrator and contain the specific reasons for requesting the change. The written request must be submitted to the Corporation for consideration.

(18) Prior to the loan closing:

(a) The Applicant must provide evidence of all necessary consents or required signatures from first mortgagees or subordinate mortgagees to the Corporation and its counsel; and,

(b) The Credit Underwriter must have received all items necessary to release its letter confirming that all closing contingencies have been met, including the finalized sources and uses of the funds and Draw schedule.

(19) All other financing commitments for the Development must close prior to or simultaneous with the HLP Construction Loan.

(20) The Applicant will be required to commence construction within ninety (90) days of the Loan Closing Date. If additional time is needed, an extension must be filed in writing prior to the ninety (90) day deadline, substantiating the need for the extension and must include a revised construction schedule, subject to approval by the Credit Underwriter and the Corporation. Applicants will be charged a penalty fee of $100 for each extension request, pursuant to Section 420.507(4), F.S., payable at the time of the request.

Rulemaking Authority 420.507(12), (23) FS. Law Implemented 420.507(23), 420.5088, 420.5089 FS. History–New 9-5-02, Amended 5-4-03, 12-28-04, 8-9-05.