WIXLIB

LEGAL DEPARTMENT PRESENTATION OVERVIEWLoan closing processDue diligence highlights (including keyforms and resources)Common causes for delaysTips to expedite the process

LOAN / TAX CREDITCLOSING PROCESS STEP 1: FIRM SUBMISSION RECEIPT &REVIEW; MHDC ATTORNEY ASSIGNED. STEP 2: ONGOING COMMUNICATION WITHMHDC LEGAL DEPARTMENT ANDCONTINUED SUBMISSION AND REVIEW OFDUE DILIGENCE. STEP 3: FIRM COMMITMENT ISSUED BYMHDC UNDERWRITER.

LOAN / TAX CREDITCLOSING PROCESS (cont.) STEP 4: LOAN/TAX CREDIT DOCUMENTSDRAFTED AND CIRCULATED, CLOSINGDATE ESTABLISHED (NOTE: THIS ISSUBSEQUENT TO THE ISSUANCE OF THEFIRM. PLEASE DO NOT ASK FORCLOSING DATE BEFORE YOU HAVE AFIRM COMMITMENT!) STEP 5: CLOSING (AND FUNDING IF MHDCIS PROVIDING A LOAN).

PERMANENT LOAN & TAXCREDIT ONLY CLOSINGS MHDC must still be involved in the constructionloan closing process, even where MHDC is notproviding construction financing. MHDC must review and approve the LPA/OA,Construction Contract, Owner-Architect Agreement,Developer Agreement, etc., prior to the closing ofthe construction loan. Tax Credit LURA must be executed and recordedahead of the construction loan documents.

Closing LogisticsDuring the COVID-19 emergency, closing logisticscontinue to take a little longer. We have no ideahow much longer this will last, so please continueto allow extra time to get documents signed,compiled, and sent for recording.

CLOSING/CONVERSIONCHECKLISTS ALL due diligence items shown on checklistmust be sent to the appropriate MHDC legaldepartment contact. Once you have a checklist, ALWAYS send to thelegal department contact so that person knowsthe item has been sent to MHDC. All checklist items must be received ANDapproved prior to pre-closing/conversion, unlessspecifically approved as a post-closing item. Donot assume.

TITLE INSURANCEREQUIREMENTS Each title policy must comply with all MHDCrequirements, including MHDC required endorsements(see resources on our website—be sure to review FY2021 requirements once posted). Share the MHDC requirements with your title companyearly in the process. This should be before you obtainyour title commitment to submit to MHDC with your firmsubmission.

SURVEY AND SURVEYOR’SREPORT REQUIREMENTSEach survey and surveyor’s report must comply with allMHDC requirements (see resources on our website).– Share the MHDC survey and survey reportrequirements with your surveyor up front.– Submit surveys and reports in hard copy (includingconversion surveys!)– Multi-lot developments should be captured on a singlesurvey if at all possible.

LIMITED PARTNERSHIP/OPERATING AGREEMENT MHDC Legal and Underwriting staff thoroughlyreview each LPA/OA to ensure it accuratelyrepresents the transaction as approved byMHDC and all applicable MHDC policies andrequirements. MHDC reserves the right to make comments onany provisions in the LPA/OA. The LPA/OA should be in final executable format least three days prior to closing.

OWNER-ARCHITECTAGREEMENTS The Owner-Architect Agreement must be on theAIA B108-2009 form. The MHDC B108 Amendment must be fullycompleted, signed, witnessed, and attached. Amendments to the AIA form must beconspicuously reflected within the contract itselfand not reflected in footnotes or a changesummary following the document.

CONSTRUCTIONCONTRACTS When MHDC is the first position lender, the MHDCconstruction contract must be used (MHDC will draft andcirculate this with the MHDC loan documents). When MHDC is a subordinate lender, the AIA A1022017 is required. If there is HUD financing, the HUDform may be used.

COMPLETION ASSURANCEREQUIREMENTS All developments receiving construction loans from MHDC mustprovide completion assurance regardless of lien position. Can take the form of cash, letter of credit, or performance andpayment bond.CAUTION: Just because you have complied with another lender orinvestor’s completion assurance requirements (if any), doesn’t meanyou’ve satisfied MHDC’s requirements.ALWAYS VERIFY, DON’T ASSUME.

PERFORMANCE &PAYMENT BONDS If you elect to use a performance and payment bond, youneed to be aware of the following and share the same withyour contractor and the surety:– If MHDC is the first lender, MHDC will draft the bondon its form and deliver that form to the closingtable. No additional obligees or riders of any kindare allowed.– If MHDC is a subordinate lender, an AIA form of bondmay be used. MHDC must be listed as an obligee on amulti-obligee rider.– Surety must have an AM Best rating of “A-” or higher.

Review of Non-MHDC Debt MHDC reviews all other loan documents, includingsubordinate debt. MHDC has specific language that must be added tosubordinate loan documents. You should let lendersknow this in advance. MHDC underwriting needs to know about all debt toproperly underwrite the loan.

Conversion Be sure to start the process early. Reserves (a conversion checklist item)must be funded for conversion to occur. MHDC will not issue 8609s until all MHDCfinancing has converted and all conversionchecklist items are approved.

FOUR PRIMARY CAUSESFOR DELAYS Failure to get MHDC’s legal departmentinvolved in the transaction early on andkeep it informed throughout the process. Failure to submit due diligence in a timelymanner (including the LPA/OA). Failure to resolve comments to submitteddue diligence in a timely manner. Failure to provide timely comments toMHDC’s loan documents.

Early submission is encouraged.(Anybody notice a trend?)Please note that the legal staff will reviewdocuments as received and will prioritizedevelopments for closing based on whichdevelopments are furthest along in satisfying duediligence requirements.Help us help you!

Fair Housing MHDC is fully committed to affirmatively furthering fair housing bytaking meaningful actions to promote fair housing choice, overcomepatterns of segregation, and eliminate disparities in access toopportunity. As part of MHDC’s obligations under the Fair Housing Act, MHDCprohibits its partners from discriminating on the basis of race, color,national origin, sex, religion, disability, or familial status.

What does this mean for me?You have an affirmative duty to comply with all local, state, and federalfair housing laws, including: The federal Fair Housing Act, www.justice.gov/crt/fair-housing-act-2 The State of Missouri Human Rights statutes (RSMo § 213.040.1 etseq.), ml You should also determine if any additional local rules, regulations,ordinances, or laws exist related to fair housing and are applicableto the project.

Questions regarding fair housing or your obligations may be directed to the followingorganizations: Kansas City Regional Office (HUD):400 State Avenue, Room 200Kansas City, KS 66101-2406Phone: (913) 551-5462 St. Louis Regional Office (HUD):1222 Spruce Street, Suite 3.203St. Louis, MO 63103-2836Phone: (314) 418-5400 Missouri Commission on Human Rights3315 W. Truman Blvd., Rm 212P.O. Box 1129Jefferson City, MO 65102-1129Phone: 573-751-3325mchr@labor.mo.gov

Contact InformationAnne Powell – (314) 877-1373, apowell@mhdc.comScott Rosiere – (816) 648-0536, scott.rosiere@mhdc.comSabrina Smith – (816) 759-6833, ssmith@mhdc.comLiz Cooper – (816) 800-8894, elizabeth.cooper@mhdc.com

loan / tax credit closing process (cont.) step 4: loan/tax credit documents drafted and circulated, closing date established (note: this is subsequent to the issuance of the firm. please do not ask for closing date before you have a firm commitment!) step 5: closing (and funding if mhdc is providing a loan).