7.4 Valuation Reviews of Third-Party Reports

A. Certain underwriting functions may be transferred to HUD staff who are in locations that are distant from the project under review. These functions may include, but are not limited to, appraisal and market study review.

B. Third Party Appraisers and Market Analysts working on MAP transactions should assume that HUD staff who are performing reviews may not always be able to physically inspect the subject and comparables, and that the market information used to verify and determine the validity of conclusions may be purchased from national data sources such as, but not limited to, CoStar and REIS. (Note: In all cases, the project will be physically inspected by a qualified HUD staff member for purposes of an environmental review.)

C. Project locations that are outside the urbanized areas covered by these national data sources are affected by market forces for which there will be little property-specific information available to HUD staff. HUD staff will not typically have the same level of knowledge of a particular project or location as the professional who has done the extensive research and analysis necessary to develop credible conclusions. The review function would not be efficient or sensible if it involved the same level of time required to develop and prepare an appraisal report/study. However, reviewers must take the time needed to make contacts with market participants to develop as much knowledge as possible to reach reliable conclusions about the work under review.

D. Third-party report providers and MAP Underwriters must ensure the application and supporting material contain sufficient information for remotely located HUD staff to make an informed decision. For projects in a location that are not adequately covered by national data sources, the reports must reference the local sources and contrast them with recognized national sources. The goal is to assure that the reviewer can fully understand the nuances of the local market.