HUD 221(d)(4) Loan Process
Once LSG Lending starts working with a potential client the process for a HUD 221(d)(4) loan can take as little as 6 to 8 months for a substantial rehabilitation of an affordable property and 10 to 12 months for a 221(d)(4) new construction loan. Depending on the experience of the borrower and other factors, the pre-application process may be bypassed and the application can be submitted for a Firm Commitment. If the developer or management company has prior experience and fits the HUD/FHA 221(d)(4) guidelines LSG Lending can work with you to gather the information needed for one of the MAP Approved Lenders that they have relationships with to provide a Term Sheet and Loan Analysis for you that details the costs, estimated interest rate, and maximum loan size based on Loan to Cost for your project. LSG Lending Advisors will set up a conference call with a top representative from the Lender as well as a Chief Underwriter that specializes in the transaction type to make sure that all of the information is correct to provide the most accurate analysis. LSG Lending Advisors will be available to answer any questions or concerns during the entire process from the Engagement, to the closing, as well as any servicing questions after the transaction has closed. LSG Lending Advisors will provide checklists, detail of FHA costs and fees associated with your transaction, and a typical loan timetable based on the variables.
If the loan qualifies and the pre-application process is required, the Lender will order a limited appraisal, environmental reports, and a market study. The pre-application will be submitted to HUD usually within 90 days.
Once the pre-application is approved, HUD issues a Letter to Proceed, at which time the architectural and engineering report will be ordered, and have a full appraisal completed for the Lender. Once the Lender receives the information back, they will prepare the Firm Application and submit to HUD for approval. Upon receipt of a Firm Commitment, the Lender will work with you to lock your interest rate, and work with your attorney on finalizing title documentation. The Lender will work with HUD and the attorneys of the borrower to schedule a closing date for the transaction.