13.22 Restrictions on Mortgage Increases

A. A mortgage increase may not be granted for cost overruns associated with completion of the work in accordance with the original contract documents by the original contractor, changes made primarily for the convenience of the Borrower or contractor, or for the aggrandizement of the Borrower or contractor.

B. Cost overruns are not a basis for granting a Borrower’s request for mortgage increase, nor are changes made primarily for the convenience or aggrandizement of the Borrower or contractor.

C. Any mortgage increase for an insured project must be in an amount greater than 2.5% of the original mortgage or $400,000.

D. The increase must be supported by the underwritten net operating income under Criterion 5 of form HUD-92264-A finally approved at Firm Commitment or Initial Endorsement.

E. A mortgage increase may not be granted for replacing a contractor where the Borrower sets up a “straw contractor” for purposes of BSPRA.