3.7.5 Repairs

A. Critical-life safety repairs must be performed prior to endorsement. Critical-accessibility repairs must be completed as soon as possible but may be deferred to after endorsement when completion prior to endorsement is not possible. See Chapter 5, Section 5.3 and Section 5.10 concerning repairs and alterations in Section 223(f) transactions.

B. Non-critical repairs, approved by HUD, may be completed after endorsement. These repairs, together with any deferred critical-accessibility remedies, must be described with work write-ups sufficiently detailed to facilitate inspections, schedules for completion of repairs, credible bids on work items greater than $35,000, and a financial escrow equal to 120% of the cost of deferred repairs which must be established at closing. The 20% portion of the escrow above the 100% of the deferred repair cost is non-

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Chapter 3 Programs 3.7 Section 207/223(f) Refinance or Acquisition

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mortgageable and may be reduced to 10% for affordable and Section 223(a)(7) transactions. See Chapter 5, Section 5.3 and Section 5.10 concerning repairs and alterations in Section 223(f) transactions.

C. Construction of additional units is not permitted under the Section 223(f) program. Ancillary improvements such as community buildings and leasing offices or amenities such as swimming pools or other similar revenue-enhancing improvements are permitted as long as the total size of improvements do not exceed a gross floor area of 5,000 square feet. Additionally, if new improvements are proposed, refer to Chapter 9, Section 9.1.3.C for information on environmental reporting.