Preparing for CDC/504 Closing

Frequently Asked Questions About 504 Closing Streamlining

1. Where can I find a copy of the new 504 documents?  The new documents including the Procedural Notice, SOP changes, 504 Debenture Closing Checklist, Borrower and Operating Company Certification, CDC Certification, Interim Lender Certification, Third Party Lender Certification, and Opinion of CDC Counsel are available on-line at www.sba.gov.

2. How can I obtain a copy of the power point presentation on Streamlining Closing?  Contact Bynum Rudisill at bynum.rudisill@sba.gov

3. How soon must CDCs begin to follow the new closing procedures? CDCs are required to use the new procedures for loan closings dated on or after August 1, 2007.

4. Can a CDC opt in to use the new procedures before August? Yes.  Contact bynum.rudisill@sba.gov and local District Counsel.

5. Can a CDC use the new forms immediately without opting in to the new procedures?  No. You may only use the new forms in conjunction with the new closing procedures.

6. Will the Sacramento Processing Center continue to send loan files to the District Office?  No. As of August 1, pursuant to the new streamlined closing procedures, the Sacramento Center will no longer send loan files to District Offices, but rather will electronically send District Counsel a copy of the Loan Authorization and all modifications.  CDCs must continue to notify Sacramento that a loan is ready for closing and request that the Center send the Authorization to the District for closing.  Rather than sending  a “Request for Ship” for each file, the CDCs must send Sacramento a list of loans (name and number)with the name of the office to which the Authorization and modifications should be shipped.

7. Can a CDC use the new procedures while continuing to use the old procedures for previously closed loans? Yes.  There is no need to redo closing documents prepared prior to August 1, 2007.

8. How should the closing package documents be transmitted to District Counsel? Consult with District Counsel.  Depending upon the volume of closings in the District,  documents may be faxed, e-mailed or sent in hard copy format.

9. If a CDC transmits the closing package to District Counsel electronically, is District Counsel required to print the documents and maintain a file? At the discretion of District Counsel, the documents can be reviewed in hard copy or on-line.  There is no need for District Counsel to maintain a file.

10. Must the Closing package contain the listed 12 or 25 items only if applicable to the project?  Yes, only if applicable.   

11. Must a CDC routinely provide copies of documents listed in the title policy or UCC search to District Counsel for review?  No. SBA Counsel can rely upon the title policy and/or UCC search and CDC Counsel’s opinion to confirm lien position. Additional documents may be required during the course of a file review.   

12. Will 327 actions continue to be approved at the District Office? All 327 actions must be approved at the Sacramento Center unless the loan file had previously been sent to the district.  The District Office will not maintain the loan file.  

13. Who submits the closing package to SBA– the CDC or Counsel for the CDC? The CDC or CDC Counsel may submit the package to SBA as directed by the CDC.

14. Are CDCs required to submit a list of loans or the number of packages to be submitted for sale 30 days prior to the district’s deadline? A listing of the loans will assist the District in tracking receipt of documents from the CDCs and from the Sacramento Center.  If the CDC discovers that a loan may be ready for closing after it submits the list, the District Office may still accept the loan.

15. Does the Third Party Lender Agreement have to be recorded? Yes, for loans with real estate if allowed by state law.

16. Can the Third Party Lender Agreement be modified? Yes, with SBA’s prior, written approval.

17. When should the Third Party Lender Agreement be recorded? At the time of loan closing.  Evidence of recording should be provided to District Counsel.

18. Will CDCs be required to maintain the original collateral documents? No, CDCs are required to create a collateral file for all loans closed under the streamlined closing procedures.  CDCs will transmit the collateral documents to the servicing center after funding of the debenture.

19. Will the Bank of New York return the debenture to the CDC or to SBA?  Yes.  Beginning with the September sale, they will forward the debenture and schedules to the CDCs.

20. Will forms be provided on-line that are fillable? SBA intends to provide fillable PDF files.

21. What should the District do with the copies of documents they have reviewed for closing? There is no need to retain them since the originals will be held in the Servicing Centers.

22. Will District Counsel notify the CDC that the package has been reviewed and is approved for debenture sale?  Yes.  District Counsel will notify the Central Servicing Agent (“CSA”)(currently  Colson Services)  by e-mail and will copy the CDC upon approval of the closing package.

23. Who should District Counsel notify at the CSA (currently Colson Services) that the package is approved? Send an e-mail to 504funding@colsonservices.com.

24. To whose attention should the closing package be sent at the CSA? Rich Ventura is currently the recipient.

25. What documents will the CDC need to submit as collateral to the Servicing Center?  The first 25 items listed on the closing checklist.

26. Should the CDC hold the collateral file until it receives the recorded documents? The CDC should send the collateral file to the Servicing Center within 30 days of closing. Trailing documents can be sent to the Center at a later date.

27. Will District Counsel review appraisals and environmental reports during the course of the Complete File Reviews? No. These documents are reviewed in the credit approval process and are not considered closing documents.

28. If a Designated Closing Attorney closes loans for several Priority CDCs, will SBA Counsel review only one of every ten loan files under the quality assurance review procedures?  Yes, Quality Assurance Reviews are tracked by Designated Counsel, not by CDC, and are conducted on a quarterly basis.

29. Are Complete File Reviews tracked in the same manner for Non-Priority CDCs?  No.  Complete File Reviews are tracked by CDC, not by Designated Counsel.  District Counsel must review one of every 20 loans submitted annually by each CDC following the Complete File Review procedures.

30. If SBA previously reviewed and approved a form Deed of Trust or Mortgage, must the document be submitted for review by District Counsel again? No, it is not necessary to obtain review for bar approved forms or documents previously approved for use by District Counsel unless the District Counsel notifies the CDC otherwise.

31. Who can I contact as additional questions arise? Write to Streamline_closing_504@sba.gov.