[Code of Federal Regulations]

[Title 7, Volume 15]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 7CFR3560.72]



[Page 496-497]

 

                          TITLE 7--AGRICULTURE

 

     CHAPTER XXXV--RURAL HOUSING SERVICE, DEPARTMENT OF AGRICULTURE

 

PART 3560_DIRECT MULTI-FAMILY HOUSING LOANS AND GRANTS--Table of Contents

 

               Subpart B_Direct Loan and Grant Origination

 

Sec. 3560.72  Loan closing.



    (a) Requirements. Loans will be closed in accordance with 7 CFR part 

1927, subpart B and any state supplements. In all cases, the borrower 

must:

    (1) Provide evidence that an Agency-approved accounting system is in 

place;

    (2) Execute a restrictive-use contract acceptable to the Agency that 

establishes the borrower's obligation to operate the housing for program 

purposes for the term of the Agency loan;

    (i) For all section 514 loans, except as provided in Sec. 3560.621, 

made pursuant to a contract entered into on or after the effective date 

of this regulation, the following language will be included in the 

mortgage and deed of trust: ``The borrower and any successors in 

interest agree to use the housing for the purpose of housing people 

eligible for occupancy as provided in sections 514 and 516 of title V of 

the Housing Act of 1949, and Rural Housing Service regulations then in 

effect. The restrictions are applicable for a term of 20 years from the 

date on which the last loan was closed.



[[Page 497]]



No eligible person occupying the housing will be required to vacate nor 

any eligible person denied occupancy for housing prior to the close of 

such period because of a prohibited change in the use of the housing. A 

tenant or person wishing to occupy the housing may seek enforcement of 

this provision as well as the Government.''

    (ii) All other loans are subject to restrictive-use provisions as 

outlined in subpart N of this part.

    (3) Provide evidence that construction financing arrangements are 

adequate when interim financing is going to be used;

    (4) Provide evidence that all the funds from other sources as 

proposed in the application are available and that there have been no 

changes in the Sources and Uses Comprehensive Evaluation (SAUCE).

    (5) Provide evidence of the title to all security required by the 

Agency;

    (6) Provide a certification that all construction in the case of 

interim financing has been or, in the case of multiple advances, will be 

paid;

    (7) Provide, in the case of interim financing, a dated and signed 

statement from the owner's architect certifying to substantial 

completion of the housing project;

    (8) Provide a certification that all construction in the case of 

interim financing has been or, in the case of multiple advances, will be 

in accordance with the plans and specifications concurred in by the 

Agency;

    (9) Provide evidence, if applicable, that the conditions of the 

interim financing letter have been met; and

    (10) Attend a pre-occupancy conference with the Agency.

    (b) Cost certification. In all cases, the borrower must report 

actual construction costs. Whenever the State Director determines it 

appropriate, and in all situations where there is an identity of 

interest as defined in 7 CFR 1924.4 (i), the borrower, contractor and 

any subcontractor, material supplier, or equipment lessor having an 

identity of interest must each provide certification as to the actual 

cost of the work performed in connection with the construction contract 

in accordance with 7 CFR part 1924, subpart A. The construction costs 

must also be audited in accordance with Governmental Auditing Standards, 

by a Certified Public Accountant (CPA). In some cases, the Agency will 

contract directly with a CPA for the cost certification. Funds that were 

included in the loan for cost certification and which are ultimately not 

needed because Agency contracts for the cost certification will be 

returned on the loan. Agency personnel will utilize exhibit M of 7 CFR 

part 1924, subpart A to assist in the evaluation of the cost 

certification process.

    (c) Notification of loan cancellation. Loans may be canceled after 

approval and before loan closing. The Agency will notify all parties of 

the cancellation and the reasons for the cancellation in accordance with 

7 CFR part 1927, subpart B.