HM CHM C

HMAC ANNUAL CONFERENCE October 25-26, 2018

ComingSoon:NewSec.on232Documents

Moderator: JimLevine-BakerDonelson,ShareholderPanelist: RitchieDickey-LancasterPollard,VP,UnderwriterPanelist: NikkiHoffpauir-Krooth&Altman,PartnerPanelist: JimShoup-LancasterPollard,SeniorVP,DirectorofAsset ManagementPanelist: JohnHartung-HUD/ORCF–Director:Policy,Risk

AnalysisandLenderRela.onsDivision

HM CHM C

HMAC ANNUAL CONFERENCE October 25-26, 2018

Underwri.ngandProduc.onDocuments

RitchieDickey

HM CHM C

1.Borrower'sCer.ficateofActualCost

• RemovesAMPOandprofitandrisklines

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2.ConsolidatedCer.fica.on–Borrower

•  Dropdownmenuaddedforprogramname•  Addedques.onaboutcountryandstateoforiginforborrowerandprincipals

•  Clarifyinglanguageregardingcountry/stateoforiginrequirements•  Addeddetailsregardingpreviouspar.cipa.oneligibility•  Addedlanguageabout223(d)eligibility•  DefinesCommonControlforpurposesofcer.fyingastomul.pleprojects(i.e.,porYolio)for232

•  ListofaZachmentsnowincludesorgchartandmovedlistof“otherpar.es”toanaZachment

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3.ConsolidatedCer.fica.on–Contractor

• Addedan.discrimina.onlanguageforapplicantoremployeebecauseemployeeinquiredaboutordiscussedcompensa.on

• Removed“CertainHUDMortgageInsuranceProgramRequirements”Sec.on

• AddedByrdAmendmentlanguage•  ListofaZachmentsnowincludesorgchartandmoveslistof“otherpar.es”toanaZachment

•  SimilarchangestolistofaZachments

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4.ConsolidatedCer.fica.on–Lenders

• Addedlanguagethatlenderhasevaluatedinsuranceinaccordancew/HUDrequirements

• Addedlanguageaboutverifyingborrower’scountry/stateofregistra.on

• Addedthatlenderreviewedanydelinquentfederaldebtandincludedreasonforrecommenda.onoftheapplicantintheLenderNarra.ve

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5.ConsolidatedCer.fica.on–ManagementAgent

•  Similartoborrowerchangesw/r/tPreviousPar.cipa.on• Addedprincipalsandaffiliatesofmanagementagenttocer.fica.onregardingFairHousingAct

•  SimilarchangestolistofaZachments

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6.ConsolidatedCer.fica.on–Operator

• Added:istheoperator,parentcompany,affiliatesorsubsidiariesthesubjectofanongoinginves.ga.onorjudicialoradministra.veac.oninvolvinganyfederal,state,municipal,and/orotherregulatoryauthority,whichthatcouldhaveadetrimentalimpactontheoperator’sfinancialcondi.onormayjeopardizetheoperator’slicenseand/oritsprovideragreements?

• Addedsimilarlanguageaboutpreviouspar.cipa.on• Addedsamean.discrimina.onlanguagesimilartocontractorcert•  SimilarchangestolistofaZachments

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7.ConsolidatedCer.fica.on–ParentofOperator

• Addednoteaboutcommoncontrolinrela.ontoother232apps• Added“Inthepast10years”toSupplementaltoUnderwri.ngAnalysisques.ons

•  Similaraddi.onstoOperatorCert

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8.ConsolidatedCer.fica.on–PrincipaloftheBorrower

• Addques.onaboutcountryoforigin• AddedlanguageregardingunderstandingandcompliancewithHUDrequirements,integrityandaccuracyofexhibitsprovidetolender,andan.-discrimina.on

• Clarifyinglanguageregardingcountry/stateoforiginrequirements•  Similarchangestoothercertsw/r/tpreviouspar.cipa.onandcommoncontrol

•  SimilarchangestolistofaZachments

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9.ConsolidatedCer.fica.on–ControllingPar.cipant

• NewdocumentusedwhenControllingPar.cipantisnotcoveredbyotherConsolidatedCerts

•  SimilarlanguagetoPOBCert• OnlyaZachmentsareOrgChartandPreviousPar.cipa.on

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10.LenderCertforNewConstruc.onCost

Certs

• AddsY/Nques.onifpartofbuildingissharedwithotherHUD-insuredornon-HUDinsuredprojectandcostswereallocated

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11.Ini.alOpera.ngDeficitEscrow

Calcula.onTemplate

• Newdocumentusedwhenafacilityisreleasedfromamasterlease

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12.LenderNarra.ve–NewConstruc.on–

SingleStage

• Addslistofpar.essubjecttoSec.on38oftheRA• Addsques.onifborrowerisnon-profit•  Sensi.vityaddedforMedicaidrateandcensuschanges• AddsmorecompletelistofescrowsandhascellforFrontMoneyEscrowinExecSummaryandaddsques.on,“Cashrequirementwillbemetby”

• Addsreviewofprincipals’networthandliquidity• AddsMMEbudgettosec.onregardingcontracts.

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12.LenderNarra.ve–NewConstruc.on–

SingleStage(con.nued)

•  Tookoutguidancenotes• Added“sharedcosts/expenses”withotherfacili.esandsharedwalls/floorstolistofatypicalunderwri.ngconsidera.ons

• AddedseveralmoreProgramEligibilityques.ons–notnewcriteria,butarenowdirectlyaddressedintheLenderNarra.ve.

• AddsspecificlanguageregardingKeyscompliance• RiskfactorsaddsseveralitemsrelatedtoStateRiskGrid• RemovedHousingConsultantsec.on

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12.LenderNarra.ve–NewConstruc.on–

SingleStage(con.nued)

•  InProjectDescrip.onaddsProximitytoHospitalsandServices• Addssec.onstodiscussemergencycallsystemand“Security,Networking,andotherITSystems”

• Addsseveralques.onsregardingconclusionsofarchandcostreview.• Addsmoreenvironmentalques.ons• Addssec.onforradonmi.ga.on• Addsnoteinoperatorsec.onifagedARisgreaterthan2%ofEGI.Howwillprojecthandledelays,ifARfinancingisn’tplanned?

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12.LenderNarra.ve–NewConstruc.on–

SingleStage(con.nued)

• AddsspecificRiskManagementProgramsub-sec.ontoOpera.onofFacilitysec.on

•  RiskTieriden.fica.on•  Internallyorexternallyadministeredprogram•  Descrip.onofprogram

•  Real-.meincidentrepor.ngandtrackingthatinformsseniormanagement•  Experienceofstaff•  Training•  Con.nuousImprovement

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12.LenderNarra.ve–NewConstruc.on–

SingleStage(con.nued)

• Addsnoteabout.mingtosubmitARdocsfornewconstruc.ondeal,sinceARlinewon’tbesetupun.lclosertooccupancy

• Addsseveralques.onsabouttheICA• AddsguidanceonwhentosubmitPLIpolicytermsfornewconstruc.onproject

• Addssec.onforcommercialGLinsurance• Newsec.onontaxcredits

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13.LenderNarra.ve223f

•  Alotofthesamechangesastotheconstruc.onLenderNarra.ve•  Addsques.oniflenderwilladministernon-cri.calrepairs•  Addssec.ondealingwithporYolios(CCRsummary,porYoliomatrix)•  Addsguidanceinenvironmentalsec.onaboutsitework,grounddisturbanceordigging(i.e.,contactLEANThinkinginadvancetokickofftribalno.fica.on)

•  Addsdebtseasoningmatrix•  Forprojectswithlesstwo-yearseasoning,addstabletodemonstratestabilizedNOI

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14.AppraisalSockets

• NewExceltemplatetoreplaceDecisionCircuit•  Everythingisononeworksheet•  Toaccompanyappraisalforrefinanceprojects•  Lender’sresponsibilitytoensuredataiscorrect(obviously)

•  Itemsthatneedclarifica.oncanbeexplainedon“LenderNotes”tab

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15.RefundRequest

• Madeformmorebroadlyapplicable(i.e.,notspecifictotypeofrefund)

HM CHM C

HMAC ANNUAL CONFERENCE October 25-26, 2018

LegalDocumentsPanelist:NikkiHoffpauir

HM CHM C

1.HealthcareFacilityNote

• Addsprovisionforaddi.onalinterestratechargetocoverdifferencebetweenthepermanentrateandtheconstruc.onratewhenfinalendorsementhasnotoccurredbythecommencementofamor.za.on

• RemovesSec.on38signatorynames• NewprovisionallowingLenderstonotacceptprepaymentwithoutHUDconsentandsa.sfac.onofcondi.onsrela.ngtoconsent

• Deletesredundantinforma.onattheendofthe223(a)(7)languageintheendorsementpanel

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2.HealthcareRegulatoryAgreement–Borrower

• Addressespoten.alfuturemasterleases• ClarifiesPCNAdate• MakestheManagementAgreementAddendummandatoryandremovesspecificrequirementsthatotherwisewouldhavetogoin

• RequiresBorrower/MasterTenanttoenforceleaserightstoavoidaclaim

• MakesSec.on38signatoryanaddendum• Broadensprovisionsagainstdiscrimina.on

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3.HealthcareRegulatoryAgreement–Operator

• Addressespoten.alfuturemasterleases• AddsHIPAAprotec.onsforoperatorinforma.onsubmissions• MakestheManagementAgreementAddendummandatoryandremovesspecificrequirementsthatotherwisewouldhavetogoin

• Prohibitspetfeesagainstserviceanimals• Broadensprovisionsagainstdiscrimina.on

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4.ManagementAgreementAddendum

• ReconcilesdiscrepanciesbetweenupdatedHandbook,punchlistandAddendum

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5.OperatorSecurityAgreement

• RemovesAssignmentofLeasesandRentsasanaZachmentandnotesitasaseparatedocument

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6.Subordina.onAgreement–Financing

• Notesthatpriortopaymentonthenote,BorrowermustcalculateSurplusCashbeforedistribu.onismadeandapplythe75%limitpriortopaymentonthesubordinatenote

•  Limitof75%ofthenetproceedsofasaleortransfertobeappliedtoreducethesubordinateloan

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7.SurplusCashNote

•  SurplusCashmustbecalculatedpriortoadistribu.on,showposi.veSurplusCash,then75%ofthedistribu.onmustbeusedtopaydownthenote-differentfromRegulatoryAgreementprovisions

• Addsanaffirma.ve“noclaimagainstmortgagedproperty,proceeds,etc.”clause

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8.SurveyInstruc.ons&Cer.fica.on

• Updatesto2016standards• Notesthatthecer.fica.onworksforanynon-120daysurvey;however,acaveatwasaddedthatthelastupdateonthesurveymusthavebeenwithinoneyearofclosingtousethecer.fica.on

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9.Construc.onContract

• Deletesthepages/number/.tledescrip.onfortheindexofplansandspecsthatnooneknewwhattodowith

• Addsaddendaasanexhibit• Removesearlycommencementofworkop.ons• AddsreferencetoallpaymentsduetoContractorbeingmadebeforenextpaymentcanbeauthorized

• Addsanincen.vefeecomputa.onaddendumforCostPlusContracts

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10.DesignArchitectCer.fica.on

• Notesconstruc.onwillbeinconsistentwithHUD-approvedpermitsandapproveddrawings

• Updatesrequiredstandards

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11.HUDAmendmenttoB108

• NotesthatagreementistobebothfordesignandsupervisoryservicesunlessotherwisepermiZedbyHUD.AndifIOIexists,thencontractisfordesignservicesonly

• RequiresfixedamountsintheB108fordesignandsupervisionratherthanpercentageoftotalcosts

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12.RequestforEndorsement

•  Addscomple.onofsub-rehaborconstruc.oninaddi.ontorepairsotherthannon-cri.calrepairs

•  Removes“atlender’sop.on”fromaccelera.onofindebtednessintheeventHUDrequestssuchforRegulatoryAgreementdefault.

•  AddscheckboxforlenderdelegatedNon-Cri.calrepairescrow•  Deletesdollaramountoftherepairescrow•  Addsshortandlongtermdebtservicereserves•  Simplifiedlender’scer.fica.onsregardingfinancingcharges,reducingnumberofop.ons

•  Addsaclosingdocumentmemorandumtoiden.fychangestodocuments•  Addsacer.fica.onofnoli.ga.oninvolvingtheBorrower,PrincipalsoftheBorrower,theMasterTenant,PrincipalsoftheMasterTenant,theOperator,andPrincipalsoftheOperator,exceptasotherwisedisclosedonexhibit

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13.EscrowAgreementforOpera.ngDeficits

• Removesdebtservicereservecomponent•  ExpensesnotincludedintheIni.alOpera.ngDeficit(IOD)EscrowCalcula.onarenoteligibleforIODasreasonableopera.ngexpenses

•  IODEscrowCalcula.onisalsoanewform

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14.EscrowAgreementNon-Cri.calDeferred

Repairs

•  Iden.fiesborrower-electedasthesameasnon-cri.cal•  Iden.fiessourceofthecashfortherepairs(loanproceedsorcashfromborrower)

• NotesoverrunshavetobefundedbyBorrowerandnotReserveforReplacements

•  Latentdefectperiodnow15months•  Forrepairsover$1M,latentdefectdepositof2.5%• Addsdelegatedauthorityparagraph

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15.MinorMovableEscrow

• AddsnotethatHUDwilllooktolenderforcer.fica.onthatescrowrequirementsaremet

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16.EscrowAgreementforDebtServices

Reserves

• Canbeusedforlongtermorshorttermdebtservicereserve

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17. EscrowAgreementforOff-SiteFacili.es

• PreZymuchsameasMFform,butwithouttheLatentDefectsEscrowconcept

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18.WorkingCapitalEscrow

• ConsistentwithMFform,exceptremovesMIPaccrualsduringconstruc.on

• Releaseprovisions:12monthsaterFEandDSCof1.0for6consecu.vemonths

• DSCcalcula.onconsistentwithother232escrows

HM CHM C

19.LimitedGuarantyandSecurityAgreement

•  Tobeusedwhenyouhavecommonownershipbutamasterleasestructureisnotappropriate(i.e.,owner-operatordeals,notiden.calownershipofOperator,etc.)

• Pledgesownershipdistribu.onsmadetotheprincipalforaperiodof180daystocoverfundsdueLenderintheeventofadefault

•  TreatedasunsecuredloantoBorrowerthatcanberepaidoutofsurpluscash

• Canbeterminatedifcommonownershipgoesaway

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20.MasterTenantAssignmentofLeasesand

Rents

• MimicsOperatorassignmentofleasesandrentsinmanyways,assigningalltherightsunderthesubleases

• But,preservesanyotherassignmentofleasetosecuredpartyfor“othersubleases”forotherHUDloans

•  Ineventofadefault,LendercanstepinandexerciseMasterTenant’srightsunderthesubleases,includingtermina.ngorextending

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21.SubordinateCross-DefaultGuarantyof

Subtenants

• Usedwhenyouhavemul.plelendersinvolvedinaporYoliowithcommonownership,whereeachlenderhasitsownMasterLease

• PledgestheexcessrevenuesofOperatorsunderMasterLeaseAtoleasepaymentsduetoMasterTenantBfromrelatedOperators,andexcessrevenuesofOperatorsunderMasterLeaseBtoleasepaymentsduetoMasterTenantAfromrelatedOperators

•  Subordinatedtoloanobliga.ons,ARobliga.ons,paymentsforGoodsandServices;andtheCrossDefaultGuarantyrelatedtoitsownMasterLease

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22.AddendumtoOpera.ngLease–Ican’t

seemtofindthisdocument

• AllowsincreasestorentorotherpaymentsdueLessorwithoutHUDapproval

HM CHM C

HMAC ANNUAL CONFERENCE October 25-26, 2018

LegalDocumentsModerator:JimLevine

HM CHM C

1.GuideforOpinionofBorrower'sCounsel

• AddsFHACommitmenttolistof"LoanDocuments"• RequiresDocketSearchesinjurisdic.onofGPormanager• Modifiesassump.ons

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2.GuideforOpinionofOperator'sCounselandCer.fica.on

• Addsmaterialityqualifierto"nodefault"opinion

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3.ConsolidatedOperatorOpinionSingleState

• Consolidatesmul.pleoperatoropinionsintooneforaporYolio

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4.HealthcareRegulatoryAgreementMasterTenant

• Mandatesenforcementofleaseremediesifoperatordefaults• Prohibitscollec.onofdeposits/feesforserviceanimals

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5.MasterLeaseAddendum

• PermitsrentincreaseswithoutHUD/Lenderconsent

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6.MasterLeaseSNDA

• ProhibitsenforcementoflandlordlienrightsabsentconsentofHUDLender

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7.MasterTenantSecurityAgreement

• RemovesAssignmentofLeasesandRentsprovisions• ClarifiesnoDACArequirementfordownstreamaccounts•  StrengthensremediesofLender

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8.AmendmenttoHUDMasterLease(Par.alTermina.onandRelease)

• Newdocumentandamendsmasterleaseuponfacilityrelease

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9.Termina.onandReleaseofCross-DefaultGuarantyofSubtenants

• Newdocumentusedwhenafacilityisreleasedfromamasterlease

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10.IntercreditorAgreement

(forARFinancedProjects)

• Addsrepresenta.onsregardingcross-collateraliza.onofARloan• AcknowledgesARadvancesmaybeusedformanagementagents/consultants

• ModifieswaterfallprovisionsforuseofARAdvances

HM CHM C

HMAC ANNUAL CONFERENCE October 25-26, 2018

AssetManagementDocsPanelist:JimShoup

HM CHM C

1.LenderNarra.ve,ChangeofPar.cipants–TransferofPhysicalAssets

• AddsCOP–ChangeofPar.cipantstoterminology• ModifiedCOPisonForm92266C• Requests18monthlookbackandforwardforotherownershipTPA’s

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2.SurplusCashComputa.on

• Addi.onof60daygovernmentARisnolongerop.onalfornon-profits

• Residualreceiptsdepositin90days(nolonger60days)

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3.FundsAuthoriza.onsForm9250

• BorrowersubmitstoLenderonlyandretainsinvoicesfor3years

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4.LenderNarra.ve–ChangeofManagementAgent

• DonotuseifalsoChangeofOperator•  Specialcondi.onssec.onadded

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5.LenderNarra.ve–ChangeofOperator

• Disclosureofsharedexpenseswithotherfacili.es• AddedInsurancediscussionforGeneralLiability,Property,Officer’sLiability,Addi.onal,andAuto

•  Specialcondi.onssec.onadded

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6.AdvanceofEscrowedFunds

•  LatentdefectrefundgoestoReplacementReserveiforiginalfundingwasfromborrowedfunds

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7.ServicerNo.fica.on

• AddedNo.ceofMortgageAssignment(doesnotsupersedeMDDR)