A.5.7.2.1 Applications for New Construction or Substantial Rehabilitation

A. Applications for projects to be insured under Sections 220, 221, and 231 (and any Section 241(a) supplemental loan funding new construction or substantial rehabilitation) require a CNA, but except as noted below, these CNAs are to be prepared by the Lender’s Construction Analyst in collaboration with the Borrower’s Project Architect.

1. New Construction. The purposes of the CNA prepared for new construction are to provide a permanent, standardized description of the physical inventory of the proposed project and to plan for future repairs and replacements. Since the CNA is based on a physical inventory to be built, no onsite inspection of sampled units are required in the CNA e-Tool for new construction.

   • The Lender’s Construction Analyst completes the CNA (exclusive of the Financial Factors) based on the construction drawings and specifications submitted and approved for Firm Commitment. In the case of streamlined processing, the construction documents should be complete enough to estimate future repairs and replacements.

• The completion of the Financial Factors and the development of a balanced financial plan funding anticipated capital repairs and replacements during the Estimate Period are the responsibilities of the Lender’s Underwriter. This task must be completed prior to submitting a CNA to HUD for review.

2. Substantial Rehabilitation. The purposes of the CNA prepared for substantial rehabilitation are similar to new construction except that in substantial rehabilitation, significant portions of the existing property may be retained, and the CNA must describe the existing components and their conditions. The CNA also must account for any new components and construction as described in the drawings and specifications.