3565.303—Issuance of loan guarantee.
(a) Preliminary feasibility review.
During the initial processing of a loan, the lender may request a preliminary feasibility review by the Agency when required loan documentation is submitted.
(b) Conditional commitment to guarantee a loan.
The Agency will issue a conditional commitment to guarantee a loan. This commitment will be good for such time frame as the Agency deems appropriate based on project requirements. The commitment to guarantee a loan, will specify any conditions necessary to obtain a determination by the Agency that all program requirements have been met. A conditional commitment can be issued, subject to the availability of funds, after :
(1)
Completion by the Agency of an environmental review in accordance with 7 CFR part 1940, subpart G or successor regulation, and the National Environmental Policy Act; and
(2)
Selection of the proposed project for funding by the Agency in accordance with ranking and selection criteria.
(c) Guarantee during construction.
For combination construction and permanent loans, the Agency will issue an initial guarantee to an approved construction lender.
(1)
This guarantee will be subject to the limits contained in subpart B of this part and in the loan closing documentation.
(2)
In all cases, the lender must obtain a payment and performance bond covering contract work or acceptable credit enhancement as discussed in § 3565.52(a).
(3)
The lender must verify amounts expended prior to each payment for completed work and certify that an independent inspector has inspected the property and found it to be in conformance with Agency standards. The lender must provide verification that all subcontractors have been paid and no liens have been filed against the property.
(d) Permanent loan guarantee.
The guarantee on the permanent loan will be issued once the following items have been submitted to and approved by the Agency.
(7)
A certification by the lender that the project has reached an acceptable minimum level occupancy;
(9)
The Lender certifies that it has approved the borrower's management plan and assures that the borrower is in compliance with Agency standards regarding property management, contained in subparts E and F of this part;
(e) Modification of guarantee amount after commitment.
The Agency may modify the guarantee amount or decline to issue a loan guarantee when a lender fails to honor obligations or to fulfill representations made under the guarantee commitment.