© Housing Assistance Council, 1999

Permission is granted ONLY to nonprofit community-based organizations to reproduce and/or adapt this document, and only for their own use.

ISBN 1-58064-049-4

VII.  LOAN CLOSING AND POST CLOSING

The loan closing is usually attended by Rural Development, the applicant, the applicant’s attorney, and an attorney or representative of a title insurance company.  At the loan closing:

1. The mortgage is signed and filed on record.  A provision will be included prohibiting prepayment or removal from use for low-income occupants for 20 years from the closing date.

2. The promissory note is executed.

3. The appropriate loan and/or grant resolution is executed (Exhibit C, E, or F of 1944-D).  Among other covenants, the borrower agrees not to discriminate and to refinance if other credit at reasonable rates and terms becomes available.  This is subject to the prepayment provisions cited in 1 above.

4. The borrower provides proof that the required insurance policies and contracts have been obtained, including worker’s compensation, surety bonding (1924-A) for contracts in excess of $100,000, and fidelity bonding coverage of the official in charge of funds.

5. If land or other real estate is to be purchased, evidence of clear title is presented by the borrower.

6. A check for the estimated amount needed for initial disbursements is delivered to the borrower at closing.  Additional funds are requested for disbursement as work progresses.  Where interim financing is utilized, all funds can usually be disbursed at one time.

When the loan closing transactions are completed and the Rural Development representative gives her/his authorization, construction may proceed.  (Even if construction financing was provided prior to loan closing, construction cannot begin without authorization from RHS/Rural Development.)

Go to the Next Section

Return to Previous Section

Return to Table of Contents