92441 Building Loan Agreement

Multifamily Project Construction Contract, Building Loan Agreement, & Construction Change Request

92441

Multifamily Project Construction Contract, Building Loan Agreement, & Construction Change Request

OMB: 2502-0011

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Building Loan Agreement

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

OMB Approval No. 2502-0011 (Exp. 11/30/2016)

Public Reporting Burden for this collection is estimated to average 1 hour per response, including the time for reviewing, searching existing data sour ces,
gathering and maintaining the data needed, and compiling and reviewing the collection of information. Send comments regarding this burden estimate or any other
aspect of this collection of information, including suggestions for reducing this burden, to the Reports Management Officer, Paperwork Reduction Project (2502-0011),
U.S. Department of Housing and Urban Development, 451 7 th Street SW, Washington, DC 20410-3600.
The Department of Housing and Urban Development (HUD) is authorized to collect this information by provisions set forth in Article I.E of the National Housing Act
(Public Law 479, 48 Stat. 1246, 12 U.S.C. 1701 et. seq.) This information is provided to the FHA-Commissioner to obtain approval by contractors, mortgagors and
mortgagees for changes in the drawings and specifications or any terms of the contract documents, or order for extra work, or changes by altering or adding to the
work, or which will change the design concept. The information is used by HUD to ensure that viable projects are developed. Furnishing of this information is
mandatory, and failure to provide it may result in your not receiving your benefits.
Privacy Act Notice. The United States Department of Housing and Urban Development, Federal Housing Administration, is authorized to solicit the inf ormation
requested in this form by virtue of Title 12, United States Code, Section 1701 et seq., and regulations promulgated thereunder at Title 12, Code of Federal Regulations.
While no assurances of confidentiality is pledged to respondents, HUD generally discloses this data only in response to a Freedom of Information request. This
agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless that collection displays a valid OMB control number

This Agreement, made the __________________ day of _______________________ , by and between
_______________________________________________________________________________________________________________ ,
a corporation organized and existing under the laws of _________________________________________________________________ ,
with an office and place of business in _____________________________ , County of ___________________________________ ,
and State of ___________________________________ (hereinafter called the “Borrower”), and
______________________________________________________________________________________, a corporation organized
and existing under the laws of ______________________ , having an office and place of business in
____________________________________________________________________ , County of __________________________ ,
and State of ____________________ (hereinafter called the “Lender”).
(mm/dd/yyyy) ____________________ , shall be payable
in monthly installments, and shall have a maturity date of
(Mm/dd/yyyy) _____________________________ . Said
Note shall be executed by the Borrower and payable to the
Lender, or order, and shall be secured by a ____________
_____________________________________________
( hereinafter called the “Mortgage“), of even date, on the
property described in Exhibit “A”. The Mortgage shall
constitute a valid first lien on said property and the
improvements to be erected thereon, and the only lien
thereon except for liens for taxes and assessments not yet
payable and other liens acceptable to the Lender and the
Commissioner.

Whereas, the Borrower as the owner in fee simple of, or the
owner of the leasehold estate in, the property described in Exhibit
“A”, attached hereto and made a part hereof, has applied to the
Lender for a mortgage loan of ____________________________
___________________ Dollars ($
)
to aid the Borrower in the construction on said property of a
project (identified as HUD Project No. ___________________ )
in accordance with Drawings and Specifications hereinafter referred to; and
Whereas, The Borrower understands that the Lender has received a commitment from the Federal Housing Commissioner
(hereinafter called the “Commissioner”) for insurance of said
loan under the provisions of the National Housing Act and intends
upon execution of the hereinafter-mentioned Note and Mortgage
to have said Note endorsed for insurance by the Commissioner.
Now, Therefore, in consideration of the mutual promises hereinafter set out and of other valuable considerations, the undersigned
agree as follows:
(1)

The Lender shall make and the Borrower shall take a
building loan in the principal sum of __________________
___________ Dollars ($
),
to be advanced as hereinafter provided, and to bear interest
from the date of each advance at the rate of _____________
percent (
%) per annum. Said loans shall be evidenced
by a credit instrument (hereinafter called the “Note”) dated

Previous editions are obsolete

Page 1 of 4

(2)

The Borrower shall complete on the aforesaid property, by
_____________________________________________ ,
a project in accordance with Drawings and Specifications
filed with the Commissioner and designated HUD Project
No. ________________________, dated (mm/dd/yyyy)
___________________.
Such Drawings and
Specifications, which include “General Conditions of the
Contract for Construction” (AIA Document A201) and
“Supplementary Conditions of the Contract for
Construction” (form HUD-2554), have been identified by
the Borrower, the Design Architect, the Architect
administering the Construction Contract (hereinafter called
the “Architect”), the Contractor and the Contractor's
Surety.
form HUD-92441 (11/00)
ref Handbook 4470.1 & 4435.1

(3)

(4)

Changes in the Drawings and Specifications, or changes by
altering or adding to the work contemplated, or orders for
extra work, or which change the design concept, may be
effected only with the prior written approval of the Lender
and the Commissioner and under such conditions as either
the Lender of the Commissioner may establish.
(a)The Borrower shall make monthly applications on form
HUD-92403 for advances of mortgage proceeds from the
Lender. Applications for advances with respect to
construction items shall be for amounts equal to (i) the
total value of classes of the work acceptably completed;
plus (ii) the value of materials and equipment not
incorporated i the work, but delivered to and suitably
stored at the site; plus (iii) the value of components stored
off-site in compliance with applicable HUD requirements;
less (iv) 10 percent (holdback) and less prior advances.
The “values” of both (i), (ii), and (iii) shall be computed
in accordance with the amounts assigned to classes of the
work in the “Contractor's and/or Mortgagor's Cost
Breakdown”, attached hereto as Exhibit “B”, and made a
part hereof. Each application shall be filed at least ______
days before the date the advance is desired, and the
Borrower shall be entitled thereon only to such amount as
may be approved by the Lender and the Commissioner.

(d)The Borrower covenants that it will hold in trust each
advance hereunder for application to the items for which
such advance was requested and approved.
(e)The Borrower agrees that the loan shall at all times remain
in balance. The Lender shall, in accordance with the
provisions of this agreement, continue to advance to the
Borrower funds out of the proceeds of the loan as long as
the loan remains in balance and the Borrower is not in
default hereunder or under the Note or Mortgage. The loan
shall be deemed to be in balance only when the
undistributed proceeds of the loan (after provision for
reserves, fees, expenses and other deposits required by the
Lender or the Commissioner) equal or exceed the amount
necessary (based on the Commissioner's estimate of the
cost of construction) to pay for all work completed and all
materials delivered, for which payment has not been
made, and the cost of completing construction of the
project in accordance with the Drawings and Specifications.
(5)

(b)Upon completion of the improvements, including all
landscape requirements and off-site utilities and streets,
the Borrower shall furnish to the Lender and the
Commissioner satisfactory evidence that all work
requiring inspection by municipal or other governmental
authorities having jurisdiction has been duly inspected
and approved by such authorities and by the rating or
inspection organization, bureau, association or office
having jurisdiction; and that all requisite certificates of
occupancy and the approvals have been issued. The
balance due the Borrower hereunder shall be payable at
such time after completion as the Commissioner
authorizes the release of the holdback. However, the
Lender may withhold final payment until after the
expiration of any period which mechanics and materialmen
may have for filing liens.
(c)The Borrower agrees that any funds required for the
completion of the Project over and above the proceeds of
the loan which have been deposited with the Lender for
that purpose shall be advanced by the Lender to the
Borrower prior to the advance of any proceeds of the loan
“(i) if any portion of these funds is to be provided through
a grant or loan from a Federal, State or local governmental
agency or instrumentality, mortgage proceeds may, with
the prior written approval of the Commissioner, be
advanced before the full disbursement of such grant or
loan funds, (ii) if all or part of the funds are provided
through a grant or loan from a Federal, State or local
governmental agency or instrumentality, the mortgagee
may accept, in lieu of the funds, an agreement which shall
be entered into by HUD, the governmental agency or
instrumentality, the mortgagor and the mortgagee.”

Previous editions are obsolete

The Lender shall advance to the Borrower out of the funds
referred to in (4)(c) above, or out of the proceeds of the loan,
amounts for application to the charges or items enumerated
below, but only to the extent that such charges have accrued,
or that the Borrower is otherwise entitled to payment on
account of such items.
(a) Interest during construction

$ _____________

(b) Real estate taxes during construction $ _____________

(6)

Page 2 of 4

(c) Insurance during construction

$ _____________

(d) FHA mortgage insurance premium

$ _____________

(e) FHA examination fee

$ _____________

(f) Initial service charge

$ _____________

(g) Title and recording expense

$ _____________

(h) Inspection fee

$ _____________

(i) ________________________

$ _____________

(j) ________________________

$ _____________

(k) ________________________

$ _____________

The Borrower shall cause either this instrument or the
construction contract under which the improvements are to
be erected to be filed in the public records, if the effect
thereof will be to relieve the mortgaged property from
mechanics' and materialmen's liens. Before any advance
hereunder, the Lender may require the Borrower to obtain
from the contractor and all subcontractors and materialmen
dealing directly with the principal contractor acknowledgments
of payment and releases of lien down to the date covered by
the last advance, and concurrently with the final payment for
the entire project. Such acknowledgments and releases shall
be in the form required by local lien laws and shall cover all
work done, labor performed and materials (including
equipment and fixtures) furnished for the project.

form HUD-92441 (11/00)
ref Handbook 4470.1 & 4435.1

(7)

The Borrower shall, as a condition precedent to the first
advance hereunder, furnish the Lender with a certified,
current survey of the mortgaged property and a mortgagee's
title policy (or other evidence of title) in form, substance and
amount satisfactory to the Lender and the Commissioner.
Said policy (or other title evidence) shall be extended so as to
cover each and every advance of said loan at the time of
payment thereof and shall show no mechanics' or
materialmen's liens against the mortgaged property. The
Borrower shall furnish duplicate originals of said survey and
title policy (or title evidence) for the Commissioner.

(8)

The Borrower agrees that said project shall be constructed
strictly in accordance with all applicable ordinances and
statutes, and in accordance with the requirements of all
regulatory authorities, and any rating or inspection
organization, bureau, association or office having
jurisdiction. The Borrower further agrees that said project
shall be constructed entirely on the aforesaid property and
will not encroach upon any easement or right-of-way, or the
land of others; and that the buildings when erected shall be
wholly within the building restriction lines, however
established, and will not violate applicable use or other
restrictions contained in prior conveyances, zoning
ordinances or regulations. The Borrower shall furnish from
time to time such evidence with respect thereto as may be
required by the Lender or the Commissioner and, upon
completion of construction, shall furnish a survey, certified
by a registered surveyor, which shows the project to be
entirely on said property and to be free from any such
violations.

(9)

If the Borrower at any time prior to the completion of the
project abandons the same or ceases work thereon for a
period of more than 20 days or fails to complete the erection
of the project strictly in accordance with the Drawings and
Specifications, or makes changes in the Drawings and
Specifications without first securing the written approval
required by paragraph 3 hereof, or otherwise fails to comply
with the terms hereof, any such failure shall be a default
hereunder, and the Lender, at its option, may terminate this
agreement. If the Lender so elects to terminate this
agreement, it may use and apply any funds deposited with it
by the Borrower, regardless of the purpose for which such
funds were deposited, in such manner and for such purposes
as the Commissioner may prescribe. If the Lender elects not
to terminate this agreement, it may enter into possession of
the premises and perform any and all work and labor
necessary to complete the improvements substantially
according to the Drawings and Specifications, and employ
watchmen to protect the premises from injury. All sums so
expended by the Lender shall be deemed to have been paid to
the Borrower and secured by the Mortgage. For this purpose,
the Borrower hereby constitutes and appoints the Lender its
true and lawful attorney-in-fact, with full power of
substitution in the premises, to complete the project in the
name of the borrower. The Borrower hereby empowers said
attorney as follows: (a) To use any funds of the Borrower,
including any balance which may be held in escrow and any
funds which may remain unadvanced hereunder for the

Previous editions are obsolete

purpose of completing the project in the manner called for by
the Drawings and Specifications; (b) to make such additions,
changes and corrections in the Drawings and Specifications
as shall be necessary or desirable to complete the project in
substantially the manner contemplated by the Drawings and
Specifications; (c) to employ such contractors, subcontractors,
agents, architects and inspectors as shall be required for said
purposes; (d) to pay, settle or compromise all existing bills
and claims which may be liens against the mortgaged
property, or as may be necessary or desirable for the
completion of the project, or for clearance of title; (e) to
execute all applications and certificates in the name of the
Borrower which may be required by any of the contract
documents; (f) to prosecute and defend all actions or
proceedings in connection with the mortgaged premises or
the construction of the project and to take such action and
require such performance as he deems necessary under the
accepted guaranty of completion; and (g) to do any and every
act which the Borrower might do in its own behalf. It is
further understood and agreed that this power of attorney,
which shall be deemed to be a power coupled with an interest,
cannot be revoked. The Borrower hereby assigns and
quitclaims to the Lender all sums unadvanced under the
Mortgage and all sums due in escrow conditioned upon the
use of said sums for the completion of the project, such
assignment to become effective only in case of the
Borrower's default.
(10) The Borrower shall provide or cause to be provided
workmen's compensation insurance and public liability and
other insurance required by applicable law or by the general
conditions included in the Specifications. The Borrower
further agrees to purchase and maintain fire insurance and
extended coverage on the mortgaged property. All such
policies shall be issued by companies approved by the Lender
and shall be in form and amounts satisfactory to the Lender
and the Commissioner. Such policies shall be endorsed with
standard mortgagee clauses making loss payable to the
Lender or its assigns; and may be endorsed to make loss
during construction payable to the Contractor, as interest
may appear. The originals of such policies shall be deposited
with the Lender.
(11) The Lender and its agents and the Commissioner also have
the right to inspect building components stored offsite.
(12) The Borrower shall execute and deliver to the Lender, upon
completion of the project, a security agreement and financing
statement, or other similar instrument, covering all property
of any kind whatsoever purchased with mortgage proceeds
and concerning which there may be any doubt as to such
property's being subject to the lien of the Mortgage under the
laws of the state in which the project is situated.
(13) The Borrower shall furnish to the Lender assurance of
completion of the project in the form specified in the
applicable HUD Regulations in effect on the date of this
agreement. Such assurance of completion shall run to the
Lender as obligee and shall contain a provision granting to
the Lender the authority to assign all rights thereunder to the
Commissioner.

Page 3 of 4

form HUD-92441 (11/00)
ref Handbook 4470.1 & 4435.1

(14) (a)The Borrower understands that the wages to be paid
laborers and mechanics employed in the construction of
the project are required by the provisions of Section
212(a) of the National Housing Act, as amended, to be not
less than the prevailing wage rates for corresponding
classes of laborers and mechanics employed on
construction of a similar character in the locality in which
the work is to be performed, as determined by the
Secretary of Labor with respect to this project. The
Borrower hereby states that it has read the aforesaid
determination by the Secretary of Labor and is fully
familiar with the same.
(b)The Borrower shall, as a condition precedent to any
advance hereunder, submit to the Lender (i) with each
application for advance prior to the final application,
certifications, in form approved by the Commissioner,
that all laborers and mechanics employed in the
construction of the project whose work is covered by that
or any previous application and who have been paid in
whole or in part on account of said employment, have been
paid at rates not less than the said prevailing wage rates;
and (ii) with the final application for advance,
certifications, in form satisfactory to the Commissioner,
that the project has been fully constructed in accordance
with the provisions of this agreement and that all laborers
and mechanics employed in the construction of the
completed project have been paid not less than the said
prevailing wage rates. The Secretary's prevailing wage
determination shall be construed to include every
amendment to or modification of the determination which
may be made prior to the beginning of construction.
(c)The Borrower agrees that should any advances hereunder
be ineligible for insurance under the National Housing Act
by reason of (i) the nonpayment of the said prevailing
wage rates, or (ii) violation of any of the applicable labor
standards provisions of the Regulations of the Secretary of
Labor, the Lender may withhold from the Borrower all
payments or advances payable to the Borrower hereunder

until the Borrower establishes to the satisfaction of the
Commissioner that all laborers and mechanics or other
persons employed in the construction of the project have
been paid said prevailing wage rates and that such
violation of the said Labor Standards provisions no longer
exists. The written statement of any officer of the Federal
Housing Administration or authorized agent of the
Commissioner declining to insure any advance of funds
hereunder by reason of such nonpayment or violation shall
be deemed conclusive proof that such advances are
ineligible for mortgage insurance.
(d)The Borrower shall insert the labor standards provisions
of the aforesaid Supplementary Conditions of the Contract
for Construction in any contract made by him for the
construction of the project, or any part thereof, and shall
require the Contractor to insert similar provisions in each
subcontract relating to the construction of the project.
(15) The Lender and the Borrower agree that the mortgage loan
shall be reduced by any amount required by the Agreement
and Certification (Form __________________ ) between
the parties hereto and the Commissioner, which agreement is
incorporated herein by reference to the same extent as if set
forth herein at length.
(16) The Borrower shall furnish such records, papers and
documents relating to the project as the Lender or the
Commissioner may reasonably require from time to time.
(17) The Borrower shall not transfer, assign or pledge any right or
interest in, or title to, any funds deposited by the Borrower
with the Lender, or reserved by the Lender for the Borrower,
without the prior written approval of the Lender and the
Commissioner.
(18) As used in this instrument, the term “Lender” shall be
deemed to include any person to whom the Note and
Mortgage referred to above shall be assigned with the
knowledge and consent of the Commissioner. This
instrument shall be binding upon the parties hereto and their
respective successors and assigns.

(Seal) Attest

Owner

Witness

By

Witness

Title

(Seal)

Lender

Witness

By

Witness

Title

Previous editions are obsolete

Page 4 of 4

form HUD-92441 (11/00)
ref Handbook 4470.1 & 4435.1


File Typeapplication/pdf
File Title92441
Subject92441
AuthorELK
File Modified2014-02-25
File Created2001-05-01

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