In one sentence
The agreement binding a HUD-insured borrower to program requirements on operations, distributions, reserves, and reporting for the life of the loan.
The longer version
The regulatory agreement is HUD's ongoing grip on the property: it governs replacement reserves, distributions, maintenance, and reporting, and it survives long after closing. Violations carry program consequences.
For servicing, the regulatory agreement generates recurring obligations that must be tracked, making it a document that matters far beyond the closing binder.
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