13.23 — HUD Multifamily Accelerated Processing (MAP)

A. Technical processing consists of Step One through Step Four below. There are four steps to processing a mortgage increase, depending on the bases for the increase being considered.

Step One : Use the alternative applicable to the basis for the increase being considered.

Alternative One , applicable to necessary items and betterment change order cost increases:

1. HUD Construction Analyst and Valuation staff review the change orders to determine eligibility for processing a mortgage increase. Architecture further reviews for the added cost.
1. HUD Underwriter computes the allowable costs on form HUD-92331-A, Cost Certification Review Worksheet–Mortgage Credit Staff, line 1.d. Reduce this amount by the cost attributable to any change order(s) not qualifying for a mortgage increase.
1. The adjusted hard cost forms the basis of the mortgage increase computation.

Alternative Two , applicable to contract time extension soft cost increases:

1. HUD Underwriter computes the allowable costs on form HUD-92331-A, Cost Certification Review Worksheet, Mortgage Credit Staff lines 3 through 6.
1. The adjusted soft cost forms the basis of the mortgage increase computation.
Alternative Three , applicable to construction contract cost increases due to a change in the contractor:
1. HUD Construction Analyst computes a new form HUD-2328 and form HUD-92264, Section G through line 50.
1. HUD Underwriter computes the allowable costs of form HUD-92331-A, Cost Certification Review Worksheet–Mortgage Credit Staff, line 1.c. for hard cost increases between the

MAP Guide, March 2021 Go to beginning of Chapter 13

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

Chapter 13 Page 13-37

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

Chapter 13 Cost Certification 13.23 Processing a Mortgage Increase

Go to Table of Contents

original contractor and the contractor completing the work, and lines 3 through 6 for soft cost increases associated with the change in contractor.

1. The adjusted hard and soft costs form the basis of the mortgage increase computation.
- Alternative Four , applicable to substantial errors in HUD cost processing:
  - 1. The HUD Construction Analyst completes a new form HUD-2328 and form HUD-92264, Section G through line 50.
  - 1. Underwriter computes the allowable costs on form HUD-92231-A, Cost Certification Review Worksheet–Mortgage Credit Staff, line 1.c, using the criteria in Section 13.23.A.3. below.
  - 1. The allowable construction costs for processing the increase will be based upon the lesser of:
    - a) The amount of the construction cost certified by the Borrower, or
b) The upset price of the construction contract as adjusted by approved change orders eligible for a mortgage increase, plus the increases resulting from correcting or errors in the original processing.
- 1. The adjusted hard cost forms the basis of the mortgage increase computation. Where there is a substantial error in HUD cost processing, the mortgage credit Underwriter must not use the adjusted upset price of the construction contract as a limiting criterion.

Step Two : The HUD Underwriter must compute (for use by Valuation to complete form HUD-92264) the eligible costs and fees for the following: Architect’s fees, bond premium if paid by the Borrower, other fees not included in the construction contract and paid by the Borrower, interest, taxes, the mortgage insurance premium, Developer’s fee (if applicable), legal, organizational and audit fees, marketing (if applicable), offsite costs, as-is land value, and “as-is” value of property (if applicable). The HUD Underwriter must comply with the following to compute the costs and fees:
- Do not increase BSPRA or restore Contingency Reserve or non-profit’s Developer’s Fee.

Do not include non-mortgageable items (construction or permanent loan extension fees, discount rate, maintenance fees, etc.)
Offset non-mortgageable items by net interim income (net non-proprietary income, if applicable) to offset amount of mortgage increase.

For increases caused by natural disaster:

1. Consider in the revised cost any increases from any interim closing for carrying charges, financing fees, and legal fees. Do not include any cost due to construction delays before the disaster.
1. Cut the new estimated replacement cost by the amount of any actual recovery through insurance proceeds.
1. Require prepayments to be made for any late recovery of insurance proceeds.

Step Three : Valuation must use the costs and fees developed by HUD Underwriter in Step Two in revising form HUD-92264. Valuation must consider each of the following:
- Examination fee, initial service fee, Ginnie Mae fee, inspection fee, MIP, and title and recording based on the approvable increased mortgage amount.

MAP Guide, March 2021 Go to beginning of Chapter 13

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

Chapter 13 Page 13-38

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

Chapter 13 Cost Certification 13.24 Authorization to Reopen Mortgage Transaction

Go to Table of Contents

Net operating income derived from the final underwritten market rent in Criterion 5 of the form HUD-92264-A, approved at Firm Commitment or initial endorsement. This test will determine whether the current NOI is no lower than the underwritten market rent. If the NOI is lower the project will not qualify for a mortgage increase. If the NOI has increased the test is based on the rent and expense and occupancy approved at Firm Commitment or initial endorsement.

Step Four : The HUD Underwriter must prepare a revised form HUD-92264-A, using the revised form HUD-92264 and Trial form HUD-92264-A prepared by Valuation in Step Three.

B. Prepare a modified form HUD-92580 for a Mortgage Increase.

Add on line 1(d) Other: “ADD Mortgage Increase” and enter the amount of the approved increase as an amount rounded to an even $100.
Include a condition in Schedule 1 requiring the modification of the mortgage at final endorsement.