13.12 Mortgage Credit Limited Review

A. In cases where the Borrower has not requested a mortgage increase, the HUD staff will:

1. Review form HUD-92330, Borrower’s Certificate of Actual Cost. Adjust for items paid out of working capital and costs reflected on the income statement.

2. Review the reporting of:

   • Net income earned before the start of amortization. Report all income earned from the beginning of marketing and rent-up activities to the cut-off date for new construction projects and unoccupied substantial rehabilitation projects. For substantial rehabilitation projects where occupancy is continuous, report all income from the date of initial endorsement or, for insurance upon completion cases, the start of construction to the cut-off date. Make adjustments for ineligible reported expenses, such as depreciation.

All grants/loans received for replacement cost items.

3. Complete form HUD-92580 (Maximum Insurable Mortgage) using the figures from Column C (Total) of form HUD-92330. Complete the forms based on the most current instructions, except for the following changes:

Line 2 - Reflect the amount indicated in Column C of form HUD-92330.

• Line 3 - Explain any adjustments made to the net income or grant/loan amounts reported on form HUD-92330.

NOTE: If adjustments are made to items other than net income and grants/loans, form HUD92331A, Cost Certification Review Worksheet should be completed.

MAP Guide, March 2021 Go to beginning of Chapter 13

Bookmarked Version Go to Acronym and Abbreviation List, Glossary, Index

Chapter 13 Page 13-15

To return to this page after clicking a link, press ALT + Back Arrow

Chapter 13 Cost Certification 13.13 Mortgage Credit Detailed Review

Go to Table of Contents

4. When the Borrower and the contractor submit their individual certificates of actual costs for review, they should have already agreed to the amount due the contractor. The amount due the contractor is reported on the certificates of actual costs and there should be no disagreement because all “to be paid items” will be listed on form HUD-92580, Determination of Maximum Insurable Mortgage, schedule 1, item by item. Form HUD-92023, Request for Final Endorsement of Credit Instrument, must match the Maximum Insurable Mortgage, form HUD-92580 minus whatever was paid in the interim. As Mortgage Credit performs the cost certification and prepares form HUD-92580, consider the following when reconciling the certified costs:

   • After completion of form HUD-92580, the Regional Center or Satellite Office notifies the Lender/owner/General Contractor of the balance in the line item for the General Contractor. If there are issues, the Field will not move forward with the cost certification until all pending “to be paid items” are resolved.

• The General Contractor’s cost certification must balance with the items remaining to be paid.

• Mortgage Credit must reconcile these numbers at cost certification. If there is a dispute, all releases freeze until HUD/Lender/General Contractor come to agreement on who is owed what.

5. Report anything suspicious in the submission (e.g., liabilities not disclosed during firm processing or before initial endorsement) to the Regional Center Director, who has the authority to request that a full cost certification review be completed. For such cases, complete forms HUD-92331-A, and HUD92580 based on the instructions in the MAP Forms Book and Section 13.14 below. Also, if an accountant’s work is consistently deficient, warn the accountant that Borrowers using their services will be advised that HUD will perform a detailed cost certification review.