5.10.4 Lender’s Review of Costs

A. Lender should ensure that each repair and alteration work items listed in the CNA e-Tool is identified by Class of Work and properly cross-referenced with any plans and specs, as relevant.

B. When a General Contractor is engaged, the Lender should verify that the costs of repairs and alterations as reported in the CNA e-Tool’s lists of Critical and Non-Critical repairs are hard costs only[16] and consistent with any bids obtained or if applicable, General Contractor’s AIA A104.

C. Report costs (both the hard costs and soft costs) in accordance with Section 5.3.3.5 using the Lender’s 223(f) Repairs & Alterations Cost Worksheet (Cost Worksheet) when a Project Architect and/or General Contractor is involved.

D. No totals from the Cost Worksheet should be transferred to form HUD-92264, Section G. However, the Lender should ensure that their appraiser is provided with the Cost Worksheet and the lists of repairs and alterations so that the appraisal may establish value based on the assumption that repairs and alterations are completed. If the appraiser concludes that repairs and alterations have a material impact on income (Section C), on amenities and services (Section D), or on expenses (Section E) then these impacts should be reflected in the relevant section and explained in Remarks (Section O). The CNA e-Tool report entitled “Property Insurance Schedule” (the automated HUD Form 92329) describes the estimated replacement cost for all improvements assuming the improvements are reconstructed at current construction pricing. This figure should be entered in line 72 of Section G. The appraiser’s valuation of the land should be entered in line 73a and the total entered in line 74.

E. Similarly, on form HUD-92013, the description of the property (Section C), available utilities (Section D), income (Section E), equipment and services (Section F,) and expense (Section I) should assume the completion of repairs and alterations. In Section G, the sum of hard and soft costs of repairs and alterations should be entered in line 20. If a refinance, the amount required to pay-off existing liens should be entered in Section G, line 23 and the line item renamed “Existing Debt”. If an acquisition, the contract price should be entered in Section G, line 46 and the line item renamed, Purchase Price. These entries plus other costs (MIP, financing fees, due diligence fees, relocation, etc., on lines existing in Section G of form HUD-92013) will be summed in Section J, Line 1.

F. The referenced HUD Forms (92264; 92264A; 92013) are not attachments to the CNA in the CNA e- Tool.