CHAPTER 10: COMPLIANCE VIOLATIONS, DEFAULTS, AND ...

HB-3-3560
Agency receives comments from tenants that warrant a different decision from the one
made when the work-out agreement was conditionally approved, the Agency must inform
the borrower of these discoveries and make any needed adjustments to the conditionally
approved budget.
In reviewing these changes, the Loan Servicer must evaluate both short- and longterm
budget projections so as to establish whether the project is likely to achieve its
financial goals during the work-out period, and whether the project is likely to achieve
and maintain financial viability in the long term. The Loan Servicer must evaluate
whether projections show repayment ability after the work-out agreement objectives are
met based on realistic vacancy, rent rate, and/or reamortization assumption.
Any projected capital improvements shown in the budget must be accompanied by
statements that describe the work to be done, the estimated costs with supporting
material, the projected time frame for completing the work, and the source of funds to be
used for the improvements.
2. Occupancy Waivers
When a project is experiencing high vacancies and eligible tenants are not available,
the borrower may request to temporarily solve the problem by renting to ineligible
tenants. Ineligible tenants might be individuals whose incomes or family sizes are above
the maximum limits or who do not meet an occupancy requirement, such as an age limit.
A request to rent to ineligible tenants may be approved by the Loan Servicer based on
the following determinations:
• There are no eligible persons on the waiting list;
• The borrower has made a diligent but unsuccessful effort to rent any vacant units to
an eligible tenant; and
• The borrower will continue to seek eligible tenants and will submit the following to
the Field Office;
◊ Form RD 3560-29; and
◊ A report of efforts made to locate eligible tenants.
The borrower must agree to the following conditions:
• The units may be rented to ineligible tenants for no more than one year, following
which the lease must convert to a monthly lease. A statement to this effect must be
included in the lease;
• Tenants who are ineligible because their household income exceeds the maximum for
the project will be charged the Agency-approved SNR, if applicable; and
10-20