5.13 CNAs are Required for All Applications

A. For new construction and substantial rehabilitation, the Lender’s Construction Analyst may prepare the CNA based on the Project Architect’s proposed plans and specifications assuming construction completion (that is, the CNA will estimate only future repairs and replacements and not immediate construction). In other applications, the CNA is prepared by the Needs Assessor based on existing conditions. In either instance, it is the Lender’s responsibility to ensure that the estimated remaining useful life of components and the costs of future replacements and any immediate repairs are estimated consistent with Chapter 5 and its appendices. The Lender’s Underwriter will develop a financial plan for funding future capital needs by using the “Financial Factors” screen (see Appendix 5, Section A.5.7). Based on the financial factors, the CNA e-Tool will generate a schedule of annual deposits to the RfR escrow. In accordance with Appendix 5, Section A.5.7, the Lender must adjust the financial factors so as to plan funding sufficient to pay estimated future capital needs. The Borrower’s schedule of deposits to the RFR will be based on actual expected capital needs, not on a percentage of construction cost or mortgage amount.

B. Whether prepared based on conditions at an existing property or for a property to be built, the CNA e- Tool will generate an estimated replacement cost for each structure, which should be used as the Schedule of Insurable Values, (HUD Form 92329). In the case of CNAs based on construction to be completed, the Lender’s Construction Analyst should ensure that the replacement cost per square foot entered on the “Buildings ” screen of the CNA e-Tool is consistent with cost estimates for each identified building.