7.1 — HUD Multifamily Accelerated Processing (MAP)

A. This chapter provides guidance on HUD’s Valuation and Market Study requirements for Third-Party MAP Appraisers and Market Analysts, MAP Lenders and Underwriters, and HUD staff involved in reviewing appraisals.

B. A Valuation Analysis evaluates the existing or proposed project as collateral and security for a longterm mortgage. Depending on program requirements, this includes an estimation of the market value of the land and/or the property as well as an analysis of the project’s market need, location, residential and commercial rent and other income, and operating expenses.

C. The Valuation Analysis develops conclusions with respect to feasibility; suitability of improvements; extent, quality, and duration of earning capacity; and other factors that have a bearing on the economic soundness of the project. The objective of the appraisal and market study, if applicable, is to establish value for use in underwriting the supportable loan amount and to determine if the project will meet the market demand at rents that will pay operating expenses, service debt, and provide for sufficient deposits to any reserve accounts.

D. The Department has statutory authority (12 USC 1708(g)) to prescribe standards for the appraisal of all projects to be insured by the Federal Housing Administration. Such appraisals shall be performed in accordance with uniform standards, by individuals who have demonstrated competence and whose professional conduct is subject to effective supervision. Under the MAP Program, HUD relies on the MAP Approved Lender to provide such supervision through the underwriting, loan approval, quality control, and compliance program and protocols. Additionally, the Department requires a Uniform Standards of Professional Appraisal Practice (USPAP)-Compliant appraisal review by a HUD Review Appraiser (HRA) for medium- to high-risk transactions.

E. The Multifamily Regional Center Director has authority to rely on the Lender’s appraisal review without a HUD staff appraiser review. Exercise of such authority may be appropriate for low-risk (minimal Level 1 repairs or alterations) and some medium-risk transactions in which the application is complete, reliable, and not particularly complicated. In all cases, a qualified HUD employee must review each appraisal for compliance with USPAP and HUD requirements.

Low-Risk Transactions. These include, for example, most Section 223(f) projects with minimal (Level 1 or less) repairs or alterations.
Medium-Risk Transactions. These include, for example, 223(f) projects where significant repairs may be required, RAD or Tax Credit projects as well as Substantial Rehabilitation projects where there is minimal tenant displacement. This does not include projects that meet the criteria for large loan underwriting. New Construction projects may be included where the Lender’s Underwriter is experienced, and the market is well established.
High-Risk Transactions. These include, for example, most New Construction Projects and projects that meet large loan underwriting criteria as set forth in Chapter 3, Section 3.10. Also includes transactions with leasehold (versus fee simple) ownership interests.

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Chapter 7 Valuation & Market Analysis 7.2 Selection of Appraisers and Market Analysts

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