13.18 Section 223(f) Modified Form of Cost Certification

A. HUD shall complete and submit a modified form of cost certification for review 15 days before the initial/final endorsement of the loan for insurance for all projects processed pursuant to Section 223(f), except those 207/223(f) refinancing transactions where 80% or less of value is the controlling criterion (in such cases, cost certification is not required.) Unlike other cost certification procedures, savings from one line item cannot offset cost overruns on another line item. HUD completes the cost certification, and if there is a cost savings, HUD must recalculate the maximum insurable mortgage. Refer to the instructions for form HUD-2205-A.

MAP Guide, March 2021 Go to beginning of Chapter 13

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

Chapter 13 Page 13-32

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

Chapter 13 Cost Certification 13.19 Special Instructions for Substantial Rehabilitation

Go to Table of Contents

1. The Borrower must certify to the total actual costs incurred in the acquisition or refinancing of the property. The certification must be submitted on form HUD-2205-A, and it must be dated and signed by an authorized agent of the Borrower.

2. The Lender must submit the certification to HUD for computation of the maximum insurable mortgage and completion of Section II of form HUD-2205-A.

3. If in a purchase transaction, the amount of the acquisition cost determined allowable at cost certification exceeds the estimate of value (which was determined during processing), the rent formula shall be recomputed. This re-computation may be accomplished using the allowable acquisition cost as determined by cost certification and the dollar amount of secondary financing represented by the approved promissory notes (form HUD-92223).

B. For an escrow that was established at initial/final endorsement to complete non-critical repairs, the Borrower must submit a supplemental cost certification for deferred repairs within 15 days after repairs are complete. In cases where the actual costs are less than estimated, the Lender must recalculate the maximum insurable mortgage. If the maximum insurable mortgage is reduced based upon this recalculation of the lower actual costs, the Borrower must either:

1. Have the required prepayment deducted from the repair escrow, or

2. Deposit proceeds into the project’s replacement reserve account, or

3. Provide the required prepayment to the Lender.