5.14.3 Refinance/Acquisition Costs

A. For Section 223(f) acquisition/refinance loans or Section 223(a)(7) refinance applications the Lender must determine that:

1. The CNA describes, quantifies and estimates immediate repairs and future needs consistent with Chapter 5 and Appendix 5, Section A.5.7 and that replacement costs data sources are identified;

2. The assessed remaining useful lives of components and estimated useful lives for alternatives are justified whenever the entered values depart from the Standard Estimated Useful Life Table; and

3. The warning flags obtained from validation of the needs assessment in the CNA e-Tool are either removed by amending the needs assessment or explained in a flag comment.

B. The cost portions of form HUD-92264 should be completed based on the replacement cost of buildings as reported in the CNA e-Tool.

1. The Lender must review the Needs Assessor’s “Repair, Replace Add New Recommendations” and determine that life safety and accessibility repairs have been identified with a “yes” in the appropriate indicator and that the recommended timing, cost, and other action are appropriate and consistent with observed conditions.

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Chapter 5 Architectural and Construction Analysis 5.15 HUD Procedures

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2. The Lenders should review any immediate repairs for Section 223(a)(7) applications to ensure that repairs are limited and do not exceed routine maintenance, except for needed remedies for accessibility deficiencies.