13.2 Projects Exempt from Cost Certification

A. The Housing and Economic Recovery Act (HERA) of 2008 affected the Borrower’s obligation to certify “actual cost” (as defined in the National Housing Act) under insured mortgage programs. If it is determined at the time of issuance of the Firm Commitment for insurance that the ratio of loan proceeds to the actual cost of the project is less than or equal to 80 percent, the Borrower is not required to certify actual cost to HUD. This exemption affects construction, rehabilitation (including property acquisition), purchase, or refinance of a multifamily housing project for which equity is provided through tax credits (e.g., LIHTC, Historic Tax Credits, or New Market Tax Credits.) Since the actual cost is not known at the time of the issuance of the Firm Commitment, use in lieu of the actual cost the Total Estimated Replacement Cost of the project (see Section G line 74 on the form HUD-92264, Multifamily Summary Appraisal Report). An example of this computation is provided below.