The Three Stages Of The HUD 221(D)(4) Process

The first stage of a HUD 221(d)(4) loan is a concept meeting which details the planned development scope and developer experience. After HUD approves the concept meeting and any conditions, they requires a Pre Application within 120 days of a concept meeting invitation. Essentially the Pre Application is a validation of all the assumptions presented at concept via third party reports. Market study will review market demand, Phase 1 & environmental review will review any environmental issues, Appraisal will review underwritten rents and expenses, etc. It’s also where HUD does much of the HUD 221(d)(4) mortgage credit, borrower financial, and general contractor screening.

After Pre Application is reviewed by HUD, and approved the project completes a Firm Application. The firm application includes the delivery of the architectural docs, finalizing the construction budget, and third party reports. The two stage process is designed to limit cash outlay on the most expensive items until closer to closing.

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