67-58.070. Credit Underwriting

The credit underwriting review shall include a comprehensive analysis of the Applicant; the real estate; the economic viability of the Project; the ability of the Applicant and the Project team to proceed; the evidence of need for Workforce Housing, in order to determine that the Project meets the Program requirements; and the determination of a recommended CWHIP loan amount.

(1) After the rankings are approved by the Board, the Corporation shall offer all Applicants within the funding range an invitation to enter credit underwriting. The Corporation shall select the Credit Underwriter for each Project.

(2) The invitation to enter credit underwriting constitutes a preliminary commitment.

(3) A response to the invitation to enter credit underwriting must be received by the Corporation and the Credit Underwriter no later than seven (7) Calendar Days after the date of the letter of invitation.

(4) If the invitation to enter credit underwriting is accepted:

(a) The Applicant shall submit the credit underwriting fee to the Credit Underwriter within 30 Calendar Days of the date of the letter of invitation.

(b) Failure to submit the required credit underwriting fee by the specified deadline shall result in withdrawal of the invitation.

(5) If an Applicant fails to submit the fee(s) as required, the Corporation will select additional Application(s) in the priority approved by the Board.

(6) The Applicant has 14 months from the date of the acceptance of the letter of invitation to complete credit underwriting and receive Board approval unless an extension of up to 10 months is approved by the Board. All extension requests must be submitted in writing to the program administrator and contain the specific reasons for requesting an extension and detail the timeframe to close the loan. The written request will then be submitted to the Corporation’s Board for consideration. The Corporation shall charge an extension fee of 1 percent of the CWHIP loan amount if the Board approves the extension request.

(7) The Credit Underwriter shall verify all information in the Application, including information relative to the Applicant, Developer, General Contractor, and other members of the Project team.

(8) The Credit Underwriter shall report any inconsistencies, discrepancies or changes made to the Applicant’s Application during credit underwriting.

(9) The Applicant shall be responsible for all fees in connection with the documentation submitted to the Credit Underwriter.

(10) If the Credit Underwriter determines that special expertise is required to review information submitted to the Credit Underwriter which is beyond the scope of the Credit Underwriter’s expertise, the fee for such services shall be borne by the Applicant.

(11) A full or self-contained appraisal per the Uniform Standards of Professional Appraisal Practice, which shall include a separate appraisal for each model and typical lot being offered for sale, and a market study shall be ordered by the Credit Underwriter at the Applicant’s expense from an appraiser qualified for the geographic area and product type not later than completion of credit underwriting. The Credit Underwriter shall review the appraisal to properly evaluate the proposed Project’s financial feasibility. Appraisals which have been ordered and submitted by a third party lender which meet the above requirements and are acceptable to the Credit Underwriter may be used instead of the appraisal referenced above. The Credit Underwriter shall review and consider the market study, the Project’s financial impact on developments in the area previously funded by the Corporation, and other documentation when making its recommendation. The Credit Underwriter shall also 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.

(12) The Corporation’s assigned Credit Underwriter shall require a guaranteed maximum price or stipulated sum construction contract, which may include change orders for changes in cost or changes in the scope of work. The Credit Underwriter shall review the Project’s costs and if it is determined that a pre-construction analysis or a physical needs assessment for Rehabilitation is required, the fee for such analysis shall be borne by the Applicant.

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

(a) From the Applicant and general partners, audited financial statements or financial statements for the most recent fiscal year ended; credit check, banking and trade references; and deposit verifications compiled or reviewed in accordance with SSARS. If audited financial statements or financial statements compiled or reviewed in accordance with SSARS are not available, unaudited financial statements prepared within the last 90 days and reviewed by the Credit Underwriter and the two (2) most recent years tax returns. 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; and,

(b) From the General Contractor:

1. Verification that the General Contractor has the requisite knowledge and experience to complete the proposed Project,

2. Narrative regarding experience with residential construction; and,

3. Audited financial statements or financial statements compiled or reviewed by a licensed Certified Public Accountant for the most recent fiscal year ended; credit check, banking and trade references; and deposit verifications. The audited or compiled statements may be waived if a payment and performance bond equal to 100 percent of the total construction cost is issued in the name of the General Contractor by a company rated at least “A-” by AMBest & Co.

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

(a) Liquidity of the guarantor;

(b) Developer and General Contractor’s history successfully completing projects comparable in size and scope;

(c) Problems encountered previously with Developer or contractor; and,

(d) Exposure of Corporation funds compared to Total Project Cost.

At a minimum, the Credit Underwriter shall require a personal guarantee for completion of construction from the principal individual or the corporate general partner of the borrowing entity. In addition, a letter of credit or payment and performance bond will be required if the Credit Underwriter determines after evaluation of paragraphs (a)-(d), in this subsection, that additional surety is needed.

(15) The Developer fee shall be limited to 16 percent of the Project Cost exclusive of the land cost. A Developer fee on the building acquisition cost shall be limited to 12 percent of the cost of the building exclusive of the land cost.

(16) The General Contractor’s fee shall be limited to a maximum of 14 percent of the actual construction cost.

(17) The General Contractor must secure building permits issued in the name of the General Contractor.

(18) The Credit Underwriter shall 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 development of each proposed Corporation-funded Project.

(19) All items required by the Credit Underwriter must be provided. If the Credit Underwriter requires additional clarifying materials in the course of the underwriting process, the Credit Underwriter shall request same from the Applicant and shall specify deadlines for the submission of same. Failure to submit required information by the specified deadline, unless an extension of time has been approved by the Corporation, shall result in withdrawal of the Application. If the Application is withdrawn, the Corporation will select additional Application(s) in the priority approved by the Board.

(20) The Credit Underwriter shall complete its analysis and submit a written draft report and recommendation to the Corporation. Upon receipt, the Corporation shall provide to the Applicant the written draft report. The Applicant shall review and provide written comments to the Corporation and Credit Underwriter. The Corporation shall provide to the Credit Underwriter comments on the draft report and, as applicable, on the Applicant’s comments. Then, the Credit Underwriter shall review and incorporate, if deemed appropriate, the Corporation’s and Applicant’s comments and release the revised report to the Corporation and the Applicant. Any additional comments from the Applicant shall be submitted to the Corporation and the Credit Underwriter. The Credit Underwriter shall provide a final report, which will address comments made by the Applicant, to the Corporation.

(21) The Credit Underwriter’s recommendations shall be sent to the Board for approval.

(22) After approval of the Credit Underwriter’s recommendation for funding by the Board, the Corporation shall issue a CWHIP loan commitment.

(23) The CWHIP loan and other mortgage loans related to the Project must close within 90 days of the date of the CWHIP loan commitment unless an extension is approved by the Board. All extension requests must be submitted in writing to the program administrator and contain the specific reasons for requesting an extension and detail the timeframe to close the loan. The written request will then be submitted to the Corporation’s Board for consideration. The Corporation shall charge an extension fee of 1 percent of the CWHIP loan amount if the Board approves the request to extend the commitment beyond the period outlined in this rule chapter.

(24) Prior to any CWHIP 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 funds and Draw schedule.

Rulemaking Authority 420.5095 FS. Law Implemented 420.5095 FS. History–New 12-17-06, Amended 12-23-07.