92453 Commitment to Insure Upon Completion

Commitment to Insure
Upon Completion
Section 232

U.S. Department of Housing
and Urban Development
Office of Housing
Federal Housing Commissioner

OMB No. 2502­0602 (Exp. 05/31/2015)

To:
Mortgagee

Project Number

Street

Name of Mortgagor

City and State

City, County, and State

We understand that you, as Mortgagee, have agreed to make a loan to _____________________________________________________
_____________________________________________________________________________(hereinafter called the “Mortgagor”),
in an amount not exceeding the sum of _________________________________________Dollars (
)
to be secured by a credit instrument and security instrument (hereinafter jointly called the “Mortgage”) covering real property situated
in the ____________________________ of __________________________________ and State of _________________________,
at _________________________________________________________ , as shown on the survey or plat and legal description of the
property attached hereto and marked “Exhibit A,” upon which property there is to be erected a certain Nursing Home (hereinafter called
the “Project”), in accordance with certain Drawings and Specifications prepared by _______________________________________ ,
Architect(s), and entitled __________________________________________________________, which Drawings and Specifications
have been identified by the signature and initials of the Mortgagor, Mortgagee, and the Department of Housing and Urban Development,
and by the Architect(s); and
That upon the completion of the Project it is your intention to present the said Mortgage to HUD for mortgage insurance under the
provisions of Section 232 of the National Housing Act, as amended, and the HUD Regulations thereunder in effect on the date hereof.
The Federal Housing Commissioner (hereinafter referred to as “HUD”) hereby agrees to so insure said Mortgage under the provisions
of said Act and said HUD Regulations upon the following conditions:
1.

(a) There has been filed with HUD a “Master Set” of the
aforesaid Drawings and Specifications of the Project
together with the general conditions of the contract for
the construction of buildings in the standard form of the
American Institute of Architects, current edition, and
Supplementary General Conditions, which said Master
Set shall remain on file with HUD and be the controlling
factor with respect to any matters which may arise as to
the language, provisions, and contents of said “Drawings
and Specifications.” In addition thereto HUD shall be
furnished with three duplicate sets of said Drawings and
Specifications at the time of issuance of this commitment.
(b) Upon endorsement of the Mortgage for insurance, the
Project shall have been completed strictly in accordance
with the requirements of said Drawings and Specifications except as they may have been modified by changes
formally approved in writing by HUD before the changes
are made. All requests for changes in the Drawings and
Specifications must be in writing signed by the Mortgagee and the Mortgagor and shall be conditioned upon
the approval of HUD, which approval may be subject to
such conditions and qualifications as HUD in its discretion may prescribe, it being understood that HUD at all
times has the right to require compliance with the original Drawings and Specifications.

Replaces form FHA-2453-NH which is obsolete

2.

During the course of construction HUD shall at all times have
access to the property and the right to inspect progress of
construction, and HUD will require payment of
$____________________________ to cover cost of said
inspection. If the Project is not completed or is otherwise
ineligible for mortgage insurance within the term of this
commitment, HUD, prior to endorsement of the Mortgage for
insurance, may require the payment of an additional sum to
cover the estimated cost of further inspection required by
reason of the delay. In addition, if required by HUD, the
Mortgagor will furnish at the Project site all necessary facilities for the use of HUD's inspector such as office space, use
of a telephone, typewriter, etc. The inspection of construction by representative or representatives of HUD shall be for
the benefit and protection of HUD only. The duty of compliance with the Drawings and Specifications shall be solely
upon the Mortgagor, but HUD will endeavor to notify the
Mortgagor, Mortgagee, and the Contractor promptly of observed deviations, unsatisfactory workmanship, or defective
materials. If such deviations from the Drawings and Specifications or such unsatisfactory workmanship or defective
materials are not corrected to the satisfaction of HUD prior to
completion of construction, the Mortgage will not be considered eligible for insurance. The HUD inspectors are authorized to notify all parties of observed deviations or defective
workmanship or materials but have no authority to approve
changes, alterations or additions or to waive strict compliance with the Drawings and Specifications, such authority
being reserved solely to the undersigned.

Page 1 of 4

form HUD-92453-NH­OHF (11/93)
ref Handbook 4600.1

3.

4.

Prior to endorsement of the Mortgage for insurance, the
Mortgagor shall present to HUD a title policy or title evidence in conformity with HUD Regulations above mentioned
which shall show that title to the property on the date of
endorsement of the mortgage for insurance is vested in the
Mortgagor free of all encumbrances other than said Mortgage
and all reservations of title (either junior or prior to said
Mortgage) except such as are specifically waived by HUD.
The Mortgagor shall also furnish satisfactory proof that there
exists no unpaid obligations contracted in connection with
the Mortgage transaction, the purchase of the mortgaged
property or the construction of the improvements, except
such obligations as may be approved by HUD. If such title
evidence is in the form of a title insurance policy, it shall by
its terms inure to the benefit of the Mortgagee and/or HUD,
as interest may appear. If under the laws of the jurisdiction in
which the Project is located the chattels and personal property of the Mortgagor required in the operation of the Project
are not covered by and subject to the terms of the Mortgage,
the Mortgagee must require and receive from the Mortgagor
a chattel mortgage or such other security instrument as may
be necessary covering such personal property and chattels.
Where approved by HUD such chattel mortgage may be
subject to a lien for purchase money.

6.

The Mortgagor must possess the powers necessary for and
incidental to the purpose of providing skilled nursing care
and related medical services. In addition, if the Mortgagor is
a corporation its charter must be amended or drawn so as to
subject its operations of the insured nursing home to the
provisions of the Regulatory Agreement between the Mortgagor and HUD. (form HUD-92466). There shall be filed
with HUD prior to the endorsement of the mortgage for
insurance three copies of the aforesaid Regulatory Agreement. HUD shall also be furnished with certified copies of the
minutes of all meetings of incorporators, stockholders and
directors (if applicable) or other proceedings required by the
laws of the applicable jurisdiction as necessary to validate the
loan. The Regulatory Agreement shall provide, among other
things, for the establishment and maintenance of a “Fund for
Replacements” of $ _________________________ per
annum to be accumulated monthly under control of the
Mortgagee, commencing on the date of the first payment to
principal as established in the insured mortgage unless a later
date is agreed to by HUD.

7.

Prior to the endorsement of the Mortgage for insurance,
evidence satisfactory to HUD shall be submitted showing
that adequate sewer, water, gas and electric facilities have
been fully installed and that necessary public streets, sidewalks, and curbing outside the Project site have been completed. All off-site facilities or utilities as may be required by
the special conditions of this commitment shall be included
in such evidence.

8.

The Mortgage will not be endorsed for insurance unless there
is filed with the request for such endorsement a certificate or
certificates in the form required by HUD, executed by the
General Contractor, certifying that the laborers and mechanics employed in the construction of the Project have been
paid not less than the wages prevailing in the locality in
which the work was performed for the corresponding classes
of laborers and mechanics employed on construction of a
similar character, as determined by the Secretary of Labor
with respect to the above-captioned Project, in accordance
with Section 212 of the National Housing Act.

(Insert appropriate payment provision based upon amortization
plan applicable to this Mortgage.)

In addition to the payments required by the terms of the
Mortgage, the Mortgagor shall make such advance amortization payments as may be required under procedures in effect
as on the date of this Commitment.
5.

Any contract or subcontract executed for the performance of
construction of the project shall contain the provision that
there shall be no discrimination against any employee, or
applicant for employment, because of race, color, creed, or
national origin.

The credit instrument and the security instrument (“Mortgage”) to be insured shall be in the form prescribed by HUD
for use in connection with the aforesaid Section 232 in the
locality in which the property is situated.
The mortgage shall contain a provision as follows:
“The Regulatory Agreement of even date herewith executed by the Mortgagors (Grantors) herein, which is
being recorded simultaneously herewith, is incorporated
in and made a part of this mortgage deed (deed of trust).
A default under said Regulatory Agreement shall be a
default under this mortgage deed (deed of trust) and upon
such default under the Regulatory Agreement, the Mortgagee, at its option, may declare this mortgage (deed of
trust) in default and may declare the whole of the indebtedness secured hereby to be due and payable.”

Replaces form FHA-2453-NH which is obsolete

The Mortgagor shall insert Provisions 9, 10, 11, 12, and 13 of
the FHA Supplementary General Conditions and Article 11
of form HUD-92442, Construction Contract, in any contract
made by it for the construction of the project or any part
thereof and shall require such contractor to insert similar
provisions in each of its subcontracts.
9.

Prior to the endorsement of the Mortgage for insurance,
evidence shall be submitted to HUD that the buildings,
including electric wiring, plumbing, gas, and other appliances therein have been inspected and approved by all departments, boards, or agencies of the municipality, county, or
State, or other governmental bureaus or departments having

Page 2 of 4

form HUD-92453-NH­OHF (11/93)
ref Handbook 4600.1

jurisdiction thereof, and by the Board of Fire Underwriters or
any bureau or body performing similar functions and that
such certification as may be required with respect to the
approval of the said buildings for occupancy and otherwise
as may be required by HUD have been issued to the Mortgagor, and neither the whole nor any part of the Project shall
be opened for occupancy without prior approval of HUD.
10. Prior to the endorsement of the Mortgage for insurance, HUD
shall be furnished with a survey duly certified to by a
registered surveyor satisfactory to HUD showing that there
are no easements or enroachments upon the subject property
except those approved by HUD and that the improvements of
the Project have been constructed upon the land covered by
the Mortgage and within the building restriction lines, if any,
on said land and do not encroach upon or overhang any land
not covered by the Mortgage or beyond the said building
restriction lines, if any, nor upon any easement or right-of-way,
and showing the exact location of water, sewer, gas, and electric
mains, and all easements for such utilities then existing.
11. Upon endorsement of the Mortgage for insurance it must be
current with respect to all payments required to be made by its
terms, including all deposits required to be made with the
Mortgagee for mortgage insurance premiums, fire, and other
hazard insurance premiums, ground rents, water rates, taxes and
other assessments; and there shall be in full force and effect fire
and other hazard insurance as required by the insured Mortgage.
12. Upon the endorsement of the Mortgage, the Mortgagee shall
pay to HUD, in advance, a mortgage insurance premium
equal to one-half of one per centum of the principal amount
of the Mortgage insured to cover the first mortgage insurance
premium and shall continue to make payments thereafter as
required by the aforesaid HUD Regulations.
13. Upon completion of the Project the Mortgagor shall furnish
satisfactory evidence that the work of the Contractor is
covered by a guarantee, running for a period of at least 1 year,
against latent defects and faulty workmanship and defective
materials, which guarantee will be ensured by
(a) a valid surety bond in an amount not less than ten percent
(10%) of the cost of construction, running for a period of
not less than 2 years following substantial completion of
the Project, assignable to the Mortgagee and to HUD and
assigned to the Mortgagee prior to the endorsement of
the Mortgage for insurance;
(b) a sum equal to two and one-half percent (2-1/2%) of the
face amount of the Mortage retained in escrow and
subject to the control of the Mortgagee for a period of 1
year as an ensurance for the correction of latent defects,
faulty workmanship, and defective materials, which
sum, upon failure of the Mortgagor to make such corrections as are required by the Mortgagee or HUD within
said 1-year period, may be used by the Mortgagee, or its
assigns, for making such required corrections or, with
the consent of HUD, may be applied to the last maturing
installments of principal of the indebtedness evidenced
and secured by the Mortgage, or
Replaces form FHA-2453-NH which is obsolete

(c) an indemnity agreement in form and by obligors proposed
by the Mortgagee and satisfactory to HUD.
14. The Mortgagor shall establish to the satisfaction of HUD that,
in addition to the proceeds of the insured mortgage, the
Mortgagor has funds in the amount of $ ________________
or has made financial arrangements acceptable to HUD in
order to meet the expenses of the project for the period of
______ years and ___________ months as HUD estimates
necessary to establish a profitable operation. Any such funds
shall be deposited with and held by the mortgagee in a special
account or by an acceptable depository designated by the
mortgagee under an agreement approved by HUD.
15. The Mortgage shall not be eligible for insurance if subsequent to February 15, 1950, there has been filed of record
with respect to the property to be covered by said Mortgage
any restriction upon the sale or occupancy of the property on
the ground of race, color, or creed. The Mortgage to be
insured shall contain a covenant that until it has been paid in
full or the contract of mortgage insurance otherwise terminated the Mortgagor will not execute or file for record any
instrument which imposes any such restriction and such
covenant shall be binding upon the Mortgagor its successors
and assigns and will provide that upon violation thereof the
unpaid balance of said Mortgage shall be immediately due at
the option of the Mortgagee.
16. Construction shall commence upon the Project within 30
days from the date of this commitment and must be continued
thereafter diligently to completion. If construction is not
started within such time this commitment shall terminate
unless the time for commencement of construction is extended in writing by HUD.
17. The Mortgagor shall not be required to pay to the Mortgagee
an initial service charge in excess of 1-1/2 percent of the
original amount of the mortgage.
18. This commitment shall expire (mm/dd/yyyy) ___________ ,
unless duly extended in writing by HUD, and upon such
expiration all rights and obligations of the respective parties
shall cease.
19. Prior to the execution of any construction contracts relative
to the subject Project, the Agreement and Certification, form
HUD-3305-A, shall be executed by the Mortgagor, Mortgagee, and HUD and the Mortgagor shall be bound thereby
with respect to any subsequent contracts or subcontracts.
20. The commitment amount hereinabove is subject to appropriate reduction in accordance with the terms of the Agreement
and Certification.
21. For the purpose of ascertaining the applicable interest rate of
any debentures which may be issued in connection with the
Mortgage transaction under the provisions of this commitment, the term “rate in effect at the time the Mortgage is
insured” appearing in the Housing Act of 1954 shall be
construed to have reference to the going rate as of the date the
commitment was issued.

Page 3 of 4

form HUD-92453-NH­OHF (11/93)
ref Handbook 4600.1

22. This commitment is conditioned upon the payment of a
“Commitment Fee” of $ ____________________________
and of an “Inspection Fee” of $ _______________________
upon delivery of the commitment to the Mortgagee.

(b) Prior to the commencement of construction the Mortgagor shall deliver to the Commissioner a statement
executed by the General Contractor setting forth the
name of such con-tractor, together with the names of all
persons having a substantial interest therein, and the
names of any firm, corporation, partnership, or association engaged in any construction activity within the
scope of the Labor Standards Provisions of any of the
Acts listed in section 5.1 of the Regulations of the
Secretary of Labor, issued May 9, 1951, pursuant to
Reorganization Plan No. 14 of 1950, in which such
contractor or such persons have a substantial interest.

23. (a) Any contract or subcontract executed for the performance of the construction of the project shall comply
with all applicable Labor Standards and provisions of the
Regulations of the Secretary of Labor, issued May 9,
1951, pursuant to Reorganization Plan No. 14 of 1950.

(c) Prior to the commencement of construction the Mortgagor shall deliver to HUD Contractor's Certification of
Labor Standards and Prevailing Wage Requirements
executed by the General Contractor.

Public reporting burden for this collection of information is estimated to average 30 hours. This includes the time for collecting, reviewing, and reporting the data.
Response to this request for information is required in order to receive the benefits to be derived. Section 232 of the National Housing Act authorizes mortgage
insurance for the development of nursing homes and intermediate care facilities. This agency may not collect this information, and you are not required to
complete this form unless it displays a currently valid OMB control number. While no assurance of confidentiality is pledged to respondents, HUD generally
discloses this data only in response to a Freedom of Information Act request.

This commitment and exhibits referred to herein together with the applicable Regulations constitute the entire agreement between us, and
acceptance of the terms hereof is evidenced by the signature and seals of the Mortgagor and Mortgagee upon the lines provided therefor below.
Very truly yours,
Federal Housing Commissioner.
Dated (mm/dd/yyyy)

By (Authorized Agent)

The above commitment to insure is hereby acknowledged by the undersigned, and we hereby agree to be bound by the terms thereof.
Attest

Mortgagor

By

Attest

Mortgagee

By

Replaces form FHA-2453-NH which is obsolete

Page 4 of 4

form HUD-92453-NH­OHF (11/93)
ref Handbook 4600.1