7.12.1 Lender’s Responsibilities

A. The Underwriting Narrative must demonstrate that the MAP Underwriter performed adequate due diligence in reviewing the appraisal, which shall include a thorough discussion comparing the appraiser’s market analysis to the conclusions from the market study (in cases where a separate market study is required.) There must also be a full discussion by the Underwriter of the approaches to value and the appraiser’s reconciliation and value conclusion.

B. The Lender must state any reasons for disagreement with the appraisal report. The underwriting summary should contain a thorough discussion of any differences between the value conclusions made by the appraiser and those conclusions used in underwriting the loan. The appraiser’s value conclusions may be adjusted downwards by the Underwriter but may not be adjusted upwards.

C. The appraiser must complete an appraisal of the project establishing market value utilizing the cost, income, and comparable sale approaches. The Cost Approach may be eliminated at the discretion of the appraiser for subjects that are ten or more years old, although an estimate of the land value must still be provided.

D. The appraiser should participate in the inspection of the project with the capital needs assessor where practicable.

E. The appraiser must consider the eligibility of the project, confirm the project occupancy level, and verify the owner’s rent roll during the inspection. When the appraiser has established that the owner’s rent roll is correct, the actual occupancy based on the owner’s rent roll must be entered in the Remarks section of form HUD-92264. The appraiser must also determine whether the apartments are furnished or unfurnished.

F. The appraiser must analyze the project for acceptability.

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Chapter 7 Valuation & Market Analysis 7.13 Substantial Rehabilitation for 220, 221(d)(4), and 231

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G. The Lender must confirm that the HEROS report, including the Phase I ESA, is prepared in accordance with Chapter 9 of the MAP Guide and with all appropriate directives.

H. The Lender must assure that the appraiser completed forms HUD-92273 (Estimate of Market Rents) and HUD-92274 (Operating Expense Analysis Worksheet). This is based on the determination made by the appraiser of the project’s income and operating expenses including a review of the operating history of the project (rent roll and financial statements).

I. The Lender must assure that all applicable sections of the Rental Housing Project Income Analysis and Appraisal (form HUD-92264) are completed in accordance with current policy, for the type of project proposed. Form HUD-92264 items to be calculated by the appraiser include:

1. Market rents and estimated income,

2. Estimated total operating expenses,

3. Total estimated replacement cost,

4. “Warranted Price of the Land”,

5. Market value of the project,

6. Estimate of operating deficit as necessary and replacement reserve,

7. Estimated and actual occupancy rate, and

8. REL.

J. The data provided in the Lender's form HUD-92013 and Lender’s form HUD-92264 must be consistent, and any inconsistency between the data reported on a form HUD-92264 prepared by the appraiser and the Lender’s form HUD-92264 must be explained in the Underwriting Summary.