C. The following is an example of a sample transaction – the data shown is for…

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Section 223(a)(7) - Project Analysis - Mortgage Sizing and Sources and Uses Worksheet Page 2 Project Name Oak Tree Manor Apartments Project # 123-45678 Project City, ST Springfield, MO Name of Mortgagor Oak Tree Manor LP Lender FHA Capital Mortgage, Inc. 5. Amount Based on Debt Service Ratio a. Mortgage Interest Rate 4.250000% b. Mortgage Insurance Premium Rate 0.450000% c. Initial Curtail Rate @ term assumed (mos.) 420 1.244728% d. Sum of Above Rates 5.944728% e. Net Income $ 400,000 X 90.0% $360,000 f. Annual Ground Rent + Annual Spec. Assmt. g. Line e minus line f $360,000 h. Line g divided by line d $6,055,700 i. Annual Tax Abatement divided by j. Line h plus line I $6,055,700 Note: rounding down amount: $86 10. Amount Based on Existing Indebtedness, Repairs, and Loan Closing Charges* Refi'd Debt*** $5,000,000 FHA # 123-45678 Interest Rate Amort. Start date Maturity date To Calc max mortgage based on cost, follow the steps below: Amount included for 5.375% 6/1/2008 6/1/2043 First, list known costs: (calc'd % Mortgage sizing Maturity-yrs. Princ. Bal date Rmng.Term-mos. Current Unpaid Principal Balance of Existing Debt $ 4,570,638 100.0% $ 4,570,638 35.0 9/1/2015 333 Total Prepayment Penalty Costs $ 137,119 3.0% Calc'd amort. -$429,362 8.6% Month of refi Prepmt pnlty pd by lender $ 48,000 Prepmt pd from loan proceeds (calc't'd): $89,119 Calc'd bal. $4,570,638 91.4% 87 De min. R4R dep by lender $ - Year of refi (truncated) 7 Ttl. borrower costs pd by lend $ 48,000 HUD approved debt to refinance via the A7 $ - $0 <-Mnthly P&I= $ - Amount required to pay off existing debt $4,707,757 $4,659,757 Note: Repairs Escrow calculations Critical repairs $ 25,000 $10,000 a. Non-critical repairs Non critical repairs $ 10,000 20.0% b. % escrow Initial deposit to Reserve for Replacements $ 12,000 $2,000 c. $ escrow Fees $ - Title & Recording $ 19,000 Legal & organizational $ 4,000 Note: Total knowns excluding payoff Other permitted costs $ - $ 70,000 (a). Total known/fixed costs before other costs $ 4,729,757 List known non FHA-loan sources that offset costs: Grants & other sources to pay costs $ - Purchased and Transferred Reserves $ 41,000 (b). Sum of known amounts to offset costs $41,000 (c)=(a)-(b). Total known costs less known offset sources $4,688,757 Second, list unknowns, i.e., costs as %s of the final mortgage amount: *** If a refi of a refi, describe original mortgage here: FHA MIP 0.45% Original Princ. Balance Int.Rate FHA exam 0.15% Financing Fee 0.50% Maturity date Term Amort. start date Perm Placement fee 1.25% 0 Allowance extra 0.00% FHA # Discount 0.00% Total of unknowns %s 2.35% (d). 1 minus % sum above is the gross up factor 97.65% Third, apply gross up factor based on unknowns 97.65% (c)/(d). Calculated cost mortgage $ 4,801,594 Calculated cost mortgage rounded down $ 4,801,500 Should be equal The figures below recate gorize the figures above to show a traditional cost mortga ge breakdown: a. Total Existing Indebtedness $ 4,659,757 b. Required Repairs $ 35,000 c. Other Fees $ - d. Loan Closing Charges ** (see details below) $ 147,835 e. Sum of line a through line d $4,842,592 f. Enter the Sum of any Grant/Loan and Reserves for Replacement and Major Movable Equipment on Deposit $41,000 g. Line e minus line f (rounded down) $4,801,500 $4,801,500 Note: rounding down amount: $92 consistency chk vs. M 108 (should be $0) $0 Chapter 18 - Section 223(a)(7) Project Analysis example Example derived from: Section 223a7 Mortgage Sizing and Sources and Uses worksheet 9-24-15.xlsx

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Chapter 18 Section 223(a)(7) 18.4 Processing

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