4050.3

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CHAPTER 4. VALUATION PROCESSING USING CUPS

Section 1. SITE APPRAISAL AND MARKET ANALYSIS (SAMA) STAGE

4-1. VALUATION REVIEW OF FORM
[HUD-92013](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/92013.pdf)
APPLICATION AND DATA ENTRY.

The Appraiser assigned to process the multifamily proposal

will review the Form
[HUD-92013](http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/forms/files/92013.pdf)
application to be certain all

information is complete and accurate for Valuation processing.

a\. The Appraiser will identify the location of the proposal for

comparable data selection purposes by entering the applicable

expense/income place code area number in Section A, No. 4a.

He/She should also enter a land place code area number in

Section A, No. 4b. (In most cases, 4a and 4b will be the same

number.) See Chapter 7, Paragraph 7-7 of this handbook for a

discussion of the PLACE program used to enter and change

Place code schedules.

b\. Once the Appraiser has entered the place code numbers on the

application, he/she will review the place code schedules to

determine the most appropriate market areas for comparable

data selection. If the Appraiser determines that the most

appropriate areas for data selection are not those indicated

as alternates for the subject place code in the schedule,

he/she should select three other place code numbers to search

for comparable data. Using the above information, the Appraiser

will then complete the SEARCH Data Entry worksheet (Appendix 2).

A detailed discussion of the SEARCH program is contained in

Chapter 6 of this Handbook.

c\. Item A7, Type of Project, and A8, No. of stories, will be

reviewed to insure that any proposal four stories or less is

not shown as a high-rise or elevator type, although the project

may contain elevators. A7 should be shown as a highrise type

only when the proposal is five or more stories. If the

proposal is four stories or less and contains elevators, the

appraiser should indicate this feature under Item No. D37 as

Other Equipment.

d\. Item A16, year built, should show a four digit number if the

project is existing, e.g. 1973. If the application is for

proposed construction, A16 should either be blank or show the

projected year built.

e\. The Appraiser will review Section C, Items 27 and 36 to determine

if the entries or lack of entries for nonrevenue producing

space reflect the market conditions of the locale of the subject

proposal.

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4-1 11/80

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4050.3

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\(1\) If, typically, units are furnished rent free to managers,

janitors, maintenance personnel, etc., and the Office

processing reflects this condition, appropriate

alterations should be made to items 27 and 36. The P2013M

Program will accept a maximum of eight unit types for

Section C, Item 27. In the event that a proposal is

received showing more than eight living unit types, it

will be necessary to average the size for unit types of

similar bedroom count to the point where the number of

unit types has been reduced to no more than eight. The

Cost Branch and Architectural Branch (if plans and

specifications have been submitted) should be consulted

whenever this situation occurs.

\(2\) If the Appraiser determines that an accurate rent roll

can only be arrived at by the application of rentals to

living unit types that exceed eight, a manual calculation

will have to be made and held in the file for

documentation. However, similar unit types will have to

be averaged reflecting applicable averaged rents so that

living unit types do not exceed eight, and the case can

be processed on CUPS. Figure 4-1 is an example of

averaging three different types of 2 BR, 1.5B living

units:

Unit Averaging

Figure 4-1 20 @ 800 sf = 16000 renting @ \$250/mo. = 5000

16 @ 817 sf = 13072 renting @ \$255/mo. = 4080

19 @ 839 sf = 15941 renting @ \$270/mo. = 5130

\_\_\_\_\_ \_\_\_\_\_

\_\_\_ Total mo. Rent Roll = 14210

55 LU 45013 sq. ft.

45013 55 = 818 = Average unit size

\$14210 55 = \$258.36 or \$258 = Average rent

f\. The Appraiser will review C29, No. Parking Spaces, to insure

that the number and type of parking spaces are indicated on

the application. On multiple building type projects, the

number of each type of parking spaces should be entered

applicable to each building type. If this information is

unknown, show all parking spaces under the first type.

g\. The Appraiser will review Item C30, Commercial Area, if

applicable. Total commercial area shown in Item 30 should equal

the amount shown in Item 35, Net Rentable Commercial Area,

unless the Item 30 entry includes residentially related income

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11/80 4-2

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4050.3

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such as laundry. If the project is a multiple building type,

he/she should insure that commercial space is properly

distributed to each applicable building type.

h\. The Appraiser will review Section D, Equipment and Services

Included In Rent, to insure that the application reflects

equipment and services typically acceptable in the subject

locality. For multiple building types, he/she should insure

that equipment and services are reflected properly on each

building type.

i\. The processing Appraiser will correct any discrepancies or

errors on the application face sheet. He/She will forward a

copy of the corrected application and the SEARCH program

worksheet to the Terminal Operator. Copies of both will also

be retained in Valuation\'s case binder.

j\. The Terminal Operator will execute the P2013M program according

to instructions contained in Handbook 2361.13, Chapter 3,

Paragraph 3-15. He/she will enter the Form
[HUD-92013](http://www.hud.gov/offices/adm/hudclips/forms/hud9.cfm) data

and response with \"N\" to all cost data selection prompts.

Following data entry, the Terminal Operator will execute the

SEARCH program according to instructions in Chapter 3,

Paragraph 3-38 of Handbook 2361.13.

k\. The Terminal Operator will return all program printouts to the

Valuation Branch.

l\. If the appraiser determines that is necessary to correct the

Form [HUD-92013](http://www.hud.gov/offices/adm/hudclips/forms/hud9.cfm)
printout, he/she will indicate the necessary

changes in red ink on the printout and return it to the

Terminal Operator.

m\. The Terminal Operator will make any necessary corrections

using the C2013M program according to instructions in

Handbook 2361.13, Paragraph 3-8, and will retrieve a new

printout using the P2013M program. All printouts will

be returned to the Valuation Branch.

4-2. VALUATION PROCESSING USING SEARCH PRINTOUTS AND P2264M WORKSHEET.

a\. Search Review. The Appraiser assigned to process the multifamily

proposal will review the comparable data selected by

the SEARCH program. If the Appraiser determines that the data

selected by the initial Search is inadequate, he/she may

request another program run using the place code override in

the segmented option. Detailed instructions for the segmented

search are contained in Chapter 8, Paragraph 8-1. If more

than one Search is run, the Appraiser will retain only those

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4-3 11/80

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4050.3

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printouts that support and justify processing. If after two

Searches, adequate data cannot be retrieved, the appraiser

may select his data manually. The Check Programs (CHK184,

CHKEXP, and CHKLAN) should be used in determining the adequacy

of computer selected data in view of other data that may be

available for selection and in the manual selection of data.

b\. Field Trip. A field trip to visit the proposed project site

will be made according to processing instructions contained in

Handbook 4465.1. The Appraiser may use a copy of the

Search printout as a worksheet for recording notes while on

the field trip. If the Appraiser collects any additional data

while on the field trip, he/she will forward it to the Data

Appraiser for entry into the computer data files. If it is

necessary that new data be used to substantiate processing

conclusions, that data should be entered into the data file

immediately so that a new Search can be run.

c\. Processing.

\(1\) Upon returning from the field trip, the Appraiser will

process the subject proposal according to instructions

contained in Handbook 4465.1.

\(2\) Using the Search printout, field data, and the inspection

and appraisal of the subject site, the Appraiser will

complete a P2264M Program Worksheet (Appendices 8 and 9)

for the following information:

\(a\) Page one, indicating market rentals.

\(b\) Page three, indicating market need, land use intensity

rating (LUI), land value, and location acceptability.

\(c\) Page four, indicating Section O remarks and signature

only.

\(3\) The processing Appraiser will sign the P2264M Worksheet

and submit it to the Chief Appraiser for review. If due

to the sponsor submitting sketch drawings for the subject

proposal, the Architectural processor completes page one

of the Form FHA-2264, it will be forwarded with the P2264M

Worksheet to the Deputy Director of the Housing Division

for preparation of the SAMA letter and finding conference.

Section 2. CONDITIONAL AND FIRM STAGES

4-3. VALUATION REVIEW OF FORM
[HUD-92013](http://www.hud.gov/offices/adm/hudclips/forms/hud9.cfm)
APPLICATION AND DATA CHANGES.

The Appraiser will review the application submitted for

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11/80 4-4

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4050.3

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conditional or firm processing with the plans and specifications

for the subject proposal to insure that the project

is being designed and conceived as envisioned at the SAMA

Stage if it was not bypassed. The Appraiser will compare the

SAMA Stage Form HUD-9201.3 and the SAMA letter to the Form

[HUD-92013](http://www.hud.gov/offices/adm/hudclips/forms/hud9.cfm)
received for conditional or firm processing. The

Form [HUD-92013](http://www.hud.gov/offices/adm/hudclips/forms/hud9.cfm)
will be reviewed in the same manner as described

in SAMA review, Paragraph 4-1 of this Handbook to insure that

all information is complete and accurate for Valuation processing.

a\. The processing Appraiser will correct any deficiencies or

errors on the application printout in red ink. A copy

will also be retained in the Valuation\'s case binder. In

addition to the application review, the Appraiser will

complete a SEARCH Data Entry request worksheet.

b\. The Appraiser will forward the P2013M printout along with

the SEARCH data entry worksheet to the terminal operator.

c\. The terminal operator will execute the C2013M program

according to instructions contained in Handbook 2361.13,

Chapter 3, Paragraph 3-8, and make the necessary changes

that are noted on the printout. The terminal operator

will then execute the P2013M program to retrieve the changed

printout. Instructions for this program are contained

in Chapter 3, Paragraph 3-15 of Handbook 2361.13. Upon

completion of the P2013M program, the operator will then

execute the SEARCH program using the SEARCH data entry

worksheet and instructions in Chapter 3, Paragraph 3-38 of

Handbook 2361.13.

d\. The terminal operator will return the P2013M and SEARCH

program printouts to the Appraiser who will review them

for accuracy.

4-4. VALUATION PROCESSING USING SEARCH PRINTOUTS AND P2264M PROGRAM.

The processing Appraiser will analyze the Section C, Income

portion of the Form
[HUD-92013](http://www.hud.gov/offices/adm/hudclips/forms/hud9.cfm) to
resolve discrepancies between

decisions reached in the SAMA stage and changes on the conditional

application. He/she will compare Section C of the application

to the Section C of the P2264M program worksheet completed at

SAMA stage. If the conditional or firm SEARCH printout indicates

a change in gross income at the conditional stage, that

printout with appropriate adjustments will be retained as

documentation for substantiating rentals. The Appraiser will

complete the P2264M worksheet for conditional or firm processing

as follows:

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4-5 11/80

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4050.3

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a\. Heading. If the subject proposal is a Section 223(f) case,

enter the appropriate suffix type. Indicate that this is

conditional stage of processing, and indicate the project

number. In those offices having multifamily processing

responsibility in more than one insuring jurisdiction, the

applicable jurisdiction must be indicated to the CUPS

terminal operator by either showing the office ID number

or the insuring office name.

b\. Sections A and B. The Appraiser will not make any entries

for these sections on the worksheet. If the appraiser

determines that it is necessary to make corrections for

these sections, he/she will complete a P2013M worksheet

(Appendix 1) indicating the necessary corrections.

c\. Section C.

\(1\) The Appraiser will enter the composition of the unit

types for Item 27 in the same order as shown on the

application printout.

\(2\) Following composition, the adjusted monthly rental

estimate will be entered which reflects all adjustments

and applicable trending. The Appraiser should insure

that rental estimates are entered for all unit types.

\(3\) The income portion of the SEARCH program printout

will be used in lieu of Form HUD-92273 as documentation

to substantiate rental estimates used in processing the

subject proposal. Enter a plus or minus adjustment by

those items of the comparable requiring adjustment to

reach comparability with the subject proposal. (See

reference \"a\" on Figure 4-2 for an illustrated

example). Elements of comparability that are not

shown on the printout that require adjustment

are interlined between the descriptive items of

the subject proposal on the left side of the SEARCH

printout. (See reference \"b\" of Figure 4-2). After

all adjustments are made, the Appraiser will arrive

at an adjusted rental for each comparable. (See

reference \"c\" of Figure 4-2). Rental amount after

appropriate adjustments reflecting differences between

comparable and subject are shown and a rental amount

applicable to the subject before trending and Special

Section 8 adjustments, if applicable is arrived at

through the process of correlation (see reference \"d\"

of Figure 4-2). Trending and Special Section 8

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11/80 4-6

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4050.3

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adjustments, if applicable, are applied to the indicated

subject rent found by correlation to arrive at an

indicated rent fully adjusted as permitted by the

Section of the Act under which the case was processed

(see reference \"e\" of Figure 4-2). The anticipated

date of occupancy as well as the processing date must

be shown (see reference \"f\" of Figure 4-2), together

with the annual trend factor used to arrive at the

total composit trend factor (see reference \"g\" of

Figure 4-2). The printout is then initialed and

dated by the appraiser and reviewer (see reference

\"h\" of Figure 4-2). Rental updates will be noted on

the printout together with the date of update. This

procedure utilizing the SEARCH printout is followed

for each unit type in the proposed project. The

SEARCH printouts will be retained in the Valuation

case binder as processing support documentation.

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4-7 11/80

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4050.3

FIGURE 4-2

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SEARCH RENTAL ADJUSTMENTS

(SAMPLE)

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11/80 4-8

HUD-Wash., D. C.

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4050.3

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\(4\) Enter the per square foot rent per month for Item 29,

open parking spaces or covered parking spaces.

\(5\) Item 29, Laundry/Other Income. If there is laundry

income or other residentially related income

considered, enter the unit of measurement (square

feet or living units) and the monthly rent per

unit of measurement in each appropriate box.

d\. Section D. The Appraiser will not make any entries for this

section on the worksheet. If the Appraiser determines

that it is necessary to make corrections to this section,

he/she will complete a P2013M worksheet (Appendix 1)

indicating the necessary corrections.

e\. Section E. The tax estimate may be calculated either on a

per unit basis by comparison (Option A) or by applying a tax

rate to an assessed valuation (Option B). Check either

A or B on the top of page 2 of the worksheet. If real

estate taxes, Item E23, are calculated using a rate and

an assessed valuation, the estimate for any personal property

tax, Item E24, must also be calculated using a rate and an

assessed valuation. Employee payroll tax, Item E25,

and other taxes, Items E26 and E27, must be entered on

a per unit basis under either Option A or B. If Option

A is selected, a zero should be entered on the worksheet

for Items E23 and E24, where the tax rate and assessed

valuation is normally shown. The Appraiser will make

all component expense entries as an annual per unit

dollar amount in each appropriate boxed area. Annual

totals will not be shown on the worksheet.

\(1\) Items 1 through 19. The component expense estimates

will represent estimates as of the date of the

appraisal. Enter estimates adjusted for time

to the date of appraisal. Do not enter trended

estimates since time and trending will be handled

under Items 28 and 29. Make no entries for Items

4 and 13 totals.

\(2\) If the management expense (Line e.2) is calculated

as a percentage of effective gross income, that amount

must be detrended before entry onto the worksheet.

\(3\) Items 20 through 23. Make no entries for these

items since they represent totals and replacement

reserve, which will be calculated by the program.

Item E21, replacement reserve, is calculated

using .006 as the factor for all Sections of the Act.

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4-9 11/80

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4050.3

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\(4\) Items 23 and 24. When processing under Option A,

enter the untrended tax estimates on a per unit

basis in the appropriate boxed areas. Enter zero

in the boxes for assessed value and tax rate per

\$1,000. When processing under Option B, enter

the assessed valuation and applicable tax rate

per \$1,000 in the appropriate boxed areas. Do

not enter a per unit estimate of tax expense

in the large boxed areas for Items E23 and E24.

Under Option B, the program will calculate the

tax expense based on the tax rate assessed

valuation with the result being untrended. Trending,

if applicable, will be accomplished by entries for

Items E28 and E29.

\(5\) Items 25 through 27. Enter the untrended tax

estimates on a per unit basis in the appropriate

boxed areas.

\(6\) Items 28 and 29. The Appraiser will indicate the

estimate as to what extent expenses will increase

or decrease by the time the project has experienced

one year of operating experience by making two

trending entries in N.NN format for Items E28 and

E29. The trending entry for Items 1 through 19

represents a percentage to be applied to each

component expense item not including taxes. The

trending entry for Items 23 through 27 represents

a percentage to be applied to each tax estimate.

The trending entries will be shown on the worksheet

as decimal factors; e.g., a 7 percent increase would

be shown as 1.07 and a 7 percent decrease would be

shown as .93. No change would be shown as 1.00.

When processing on CUPS, it is not necessary to

complete an Operating Expense Analysis Worksheet,

Form FHA-2274 or include a copy of the Form FHA-2275

with documentation. The expense portion of the

SEARCH program printout will represent documentation

to substantiate the expense estimates for the

subject proposal. Enter a plus or minus adjustment

on the printout before those items requiring

adjustment. (See reference \"a\" on Figure 4-3 for

an illustrated example). Then enter the adjusted

amount following the items being adjusted. (See

reference \"b\" of Figure 4-3). Enter the final

component estimate in the space between the item

name and the dollar amount on the SEARCH printout.

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11/80 4-10

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4050.3

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(See reference \"c\" of Figure 4-3). These estimates

will be entered on the worksheet. The Appraiser

will calculate time and trend from the effective

date of the data to the time of initial occupancy.

The appraiser and reviewer will date and sign the

analysis. (See reference \"d\" of Figure 4-3).

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4-11 11/80

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4050.3

FIGURE 4-3

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SEARCH EXPENSE ADJUSTMENTS

(SAMPLE)

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11/80 4-12

HUD-Wash., D. C.

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4050.3

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f\. Section F. Enter Item 31, Occupancy Percentage in NN

format. All other items in Section F will be calculated

by the P2264M program.

g\. Section G. All dollar entries in Section G will represent

total project amounts relating to other construction period

plus two months.

\(1\) Items 36 through 52. These items are completed by

the cost analyst; the Form FHA-2264 will be updated

by the cost processing programs.

\(2\) Item 53. Enter the applicable interest rate for the

construction loan. The P2264M program will

automatically add two months to the construction time

shown in Item G52 for calculating interest during

construction and the Mortgage Insurance Premium

(MIP). If the time used in calculating carrying

charges is to be charged to a time other than

construction time plus two months, enter in red ink

for Item G53 the number of months that carrying

charges and financing time should exceed construction

time, Item G52. Option 2 of the P2264M program will

permit this override of the additional two months,

if necessary. For example, if carrying charge time

and construction time are equal, enter a zero for

Item G53. This entry will override the two months

that the program would normally add to construction

time in Item G52.

\(3\) Items 54 and 55. Enter appropriate dollar amounts in

the boxed areas for taxes and insurance.

\(4\) Item 56. The FHA Mortgage Insurance Premium will be

calculated by the program. However, if the subject

proposal is being processed with insurance upon

completion, cross out .5% and enter a zero in red ink.

\(5\) Items 57 through 61. Make no entries for these

items unless it is necessary to change the fee

percentages as shown on the Worksheet. If so,

cross out the incorrect fee percentage, and enter

the correct percentage in red ink.

\(6\) Items 62 through 70. Do not make any entries for items

63, 67 and 68, since they will be calculated by the

program. Enter appropriate total dollar amounts for

items 62, 64, 65, 66, 69 and 70 in the boxed areas.

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4-13 11/80

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4050.3

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\(7\) Item 71. If the case is a Section 223(f) project, and an

Engineering Survey was made, enter the dollar amount

for the Engineering Survey in the boxed area for Item

G71. Item G71 will printout on the Form FHA-2264 as

Engineering Survey for Section 223(f) cases only.

\(8\) Items 72 through 74. Make no entries for these items,

since they will be calculated by the program.

h\. Section H. Make no entries in Section H. The program will

calculate the rent formula reflecting any laundry/other and

parking income using entries made on page one of the 2264

worksheet.

i\. Section I. Make entries only in the boxed areas for the

first and second periods of anticipated deficit. If no

deficit is anticipated for the first and second periods,

the entry of proper percentage will result in a zero

deficit.

\(1\) Occupancy %. Enter the occupancy percentage anticipated

for each period of deficit. If sustaining occupancy is

to be reached prior to the end of the first period,

enter a zero.

\(2\) Expense %. Enter the percentage of Total Operating

Expense including taxes that best represents the total

operating expenses applicable to the period of deficit.

For example, if it is anticipated that 60% occupancy

will be reached at the end of the first period, the

appraiser may estimate that expenses for that period

would be an amount equal to 85% of the total expenses.

85 would be entered for expense percentage.

\(3\) Debt Service Rate. Enter a percentage for the applicable

debt service rate. If two rates, one before the start

of amortization and one after the start of amortization,

are applicable to a one year operating deficit period,

it is necessary to prorate each rate for the portion of

the year covered by each rate, and enter a composite rate

for the one year period. This is accomplished by

dividing each rate by 12 months and then multiplying

each result by the number of months applicable to each

rate. Enter the total of these two prorations as

the composite rate on the worksheet. For example,

assume a project loan has a start of amortization

that will commence eight months following completion

of project construction with a permanent loan

interest rate for 40 years at 8-1/2%. Enter on the

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11/80 4-14

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4050.3

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worksheet the composite rate of 9.09904, which

is calculated as follows.

\(a\) The rate before amortization is 8-1/2% interest

rate plus .5 MIP which equals 9.0. Nine divided

by 12 months equals .75. .75 x 8 months to start

of amortization = 6.0.

\(b\) Rate after start of amortization is 8-1/2% interest

plus .5 MIP plus .297129 initial curtail which

equals 9.297129. 9.29729 divided by 12 months

equals .77476. .77476 times 4 months following

the start of amortization equals 3.09904.

\(c\) The composite rate of 9.09904 is the total of 6.0

(Step a) and 3.09904 (Step b). If a composite

rate is entered in Section I of the worksheet,

the following remark should be included in Section

O: \"First/Second period of the Operating Deficit

shows a debt service requirement indicating

commencement of amortization is in effect for the

last \_\_\_ months of the deficit period.\"

j\. Section J. Complete Section J of the worksheet as follows:

\(1\) Heading. Indicate the unit of measurement to be used

to arrive at the Land Value. Enter a check in Box 1

if the \"square foot\" method is used. If the \"per

living unit\" approach is used, check the box following

number 2.

\(2\) Items 1 through 6. Check Yes or No as applicable

to the subject project.

\(3\) Item 7. This item, \"Is the subject property located in

an older declining neighborhood?\", relates to Section

223(f) processing only. If the response is Yes, the P2264M

program will automatically deduct the .5 override

from the rent formula rate calculation. For all other

cases other than those processed under Section 223(f),

check No.

\(4\) Date of Inspection. Enter the date of project site

inspection in MM/DD/YY format in the designated area.

\(5\) Land Use Intensity (L.U.I.) Number. Enter the L.U.I.

number in the designated area.

\(6\) Items 8 and 10. Enter the sequence numbers of the land

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4-15 11/80

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4050.3

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sales used as comparables for the subject as shown on the

land portion of the SEARCH printout. Complete the entire

grid for these items and enter a Value of Site Fully

approved and a Value of Site \"As Is\" by comparison, if

applicable, in the designated areas. Show percentage

adjustments on the worksheet as factors in N.NN format.

For example, if the location adjustment is a plus 10

percent, enter 1.10 on the worksheet. If the location

adjustment is a minus 10 percent, enter .90 on the

worksheet. Enter 1.00 if no adjustment is to be made.

Sales price as printed out by the program for Item J8 will

include any amounts for assessments, off-site costs,

demolition, and excess on-site costs that were entered

for the land sale by use of the LAND program. (See

Chapter 7, Paragraph 7-1 of this Handbook for a

detailed description of the LAND program).

\(7\) Items 12 and 13. Complete all information for J12,

Acquisition Costs. Enter Other Costs for J13, except

for lines 5 and 6 which will be calculated by the

program.

\(8\) Item 14. Make no entries under this item, since all

values will be calculated by the program.

\(9\) Remarks. Enter any remarks pertinent to the project

site analysis or appraisal. Use this area to explain

adjustments to land comparables that are not

self-explanatory. Also, explain in the Remarks any

significant differences between the acquisition price of

the site and the \"As Is\" value.

\(10\) Site Purchased From a Public Body. When a site has

been purchased from a public body, the following

procedure will be followed to insure that the proper

land value is used for completing Section G.

\(a\) Complete the land appraisal grid and arrive at

indicated values by comparison. Arrive at a

value of Site Fully Approved and enter that

value in the box for Item J9.

\(b\) Using the first retrieval of the Form

FHA-2264 printout, calculate the total of

line 6, \"As Is\" based on acquisition Cost to

Sponsor; line 3(a), amount shown for required

off-sites to be paid by mortgagor; and line

2, amount shown for unusual site correction

costs. If the total of these three lines is

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11/80 4-16

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4050.3

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less than the Value of Site Fully Approved

shown in Item J9, enter in red ink for Item

J9 on the worksheet the lesser amount indicated

by acquisition cost. Then enter in Remarks

the Value of Site Fully Approved by Comparison.

Option 2 of the P2264M program will be used

to enter the acquisition cost in Item J9.

If acquisition cost is greater than the

Value of site Fully Approved in Item J9, no

modification to the Form FHA-2264 is necessary,

since Value of Site Fully Approved will be

the controlling criterion.

k\. Section K.

\(1\) Item 1. Enter the estimated remaining economic life

in years.

\(2\) Items 2 and 3. If the case is being processed under

Section 207 or 223 (f), indicate the approach used to

arrive at the overall capitalization rate. Enter

the rate on Line K3. If a finding of value by

the income approach is not applicable to the

case, enter a zero for Item K3. Retain all

documentation used to arrive at a capitalization

rate in the Valuation case binder.

\(3\) Items 4 and 5. Make no entries for these items

since they will be calculated by the program.

\(4\) Item 6. Enter the Ground Rent and the Capitalization

Rate, if applicable to the case.

l\. Section L. If a finding of value is required (Section 207

and 223(f) cases), complete the grid analysis to arrive at

a value by market comparison. Retain all backup documentation

used to arrive at the value by market comparison in the

Valuation case binder.

\(1\) Item 8. Enter the value of the project by market

comparison.

\(2\) Appraisal Summary. On proposals other than Sections

207 and 223(f) projects, the program will complete

the Appraisal Summary by printing an amount for

Summation and then carrying over that amount as

the Fair Market Value (or replacement cost) of

the property. For cases processed under Sections

207 and 223(f), the program will complete the

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4-17 11/80

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4050.3

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Appraisal Summary by printing values for capitalization,

summation and comparison, then selecting the lesser

of the three values. For Sections 207 and 223(f)

cases, the appraiser may correlate the three values

and arrive at a Fair Market Value. If this value is

different from the existing value printed on the

Form FHA-2264, enter it in red ink on the worksheet.

Option 2 of the P2264M program will be used to

enter the new Fair Market Value on the Form

FHA-2264, and the final printout will reflect the

change.

m\. Section M. Section M is completed by the Cost Analyst;

the Form FHA-2264 will be updated by the cost processing

programs.

n\. Section N. For cases other than Section 223(f) cases, Section

N will be completed by the program. For Section 223(f) cases,

Section N on the Form FHA-2264 will remain blank and unused.

o\. Section O. Enter in Section O any remarks and/or conclusions

applicable to the project. For Section 223(f) cases, complete

the following items on the worksheet.

\(1\) Item 1. Enter the project age to the nearest whole year.

For example, enter 1 if the project is 1 year old and

enter 3 if the project is 2 years and 9 months old. Do

not enter the year that the project was built.

\(2\) Item 2. Enter the required amount of initial deposit

into replacement reserve, if calculated by a manual physical

take-off. Enter a zero if the deposit to replacement

reserve is to be calculated by applying the factor .004

to Total Structures (Line G 41) and multiplying the

result by the age of the project, not to exceed 15 years.

\(3\) Item 3. Enter the estimated dollar amount for repairs.

\(4\) Item 4. Enter the date of the Owner\'s rent rolls in

MM/DD/YY format.

\(5\) Item 5. Enter the date of HUD inspection in MM/DD/YY

format.

\(6\) Item 6. Enter the occupancy percentage as of HUD

inspection date

\(7\) Item 7. Enter the number of months for the project to

reach sustaining occupancy.

\(8\) Item 8. Enter the dollar amounts, based on minimum

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11/80 4-18

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4050.3

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insurable mortgage, for legal, organization, and title

and recording.

p\. Trial Supplement to Project Analysis, Form FHA-2264-A. The

P2264M program will reflect the prevailing maximum permissible

FHA interest rate and the appropriate initial curtail rate

under Level Annual Monthly Payments (LAMP) in calculating debt

service requirement on the Trial and Final Form FHA-2264-A.

The debt service percentage limitation of 90% for Sections 207

and 221(d)(4) and 85% for 223(f), and the .5% mortgage insurance

premium are also reflected in the P2264M program. In those

cases where mortgage amount is limited by criterion 4 of the

Form FHA-2264-A, it is necessary to calculate the value of the

portion of the site allocated to facilities not attributable

to dwelling use, and enter the value under the Trial 2264-A

portion of the program.

\(1\) Item 1. Enter the dollar amount for the value of land

not attributable to residential use, if applicable to

the case.

\(2\) Item 2. Enter the interest rate at which the permanent

loan is to be insured, if it is different from the

prevailing FHA interest rate.

\(3\) Item 3. Enter the applicable initial curtail rate, if

it is different from the rate that would be applicable

to the prevailing FHA interest rate under LAMP.

\(4\) Item 4. Enter the correct debt service percentage

limitation, if it is different than 90% for Section 207

and 221(d)(4) cases or 58% for Section 223(f) cases.

q\. The Appraiser will forward the P2264M worksheet to the terminal

operator.

r\. If it is necessary to make corrections to the application, the

terminal operator will execute the C2013M program according

to instructions contained in Handbook 2361.13, Chapter 3,

Paragraph 3-8. He/she will then execute the P2264M program,

Option 1, according to instructions contained in Chapter 3,

Paragraph 3-16 of Handbook 2361.13. If necessary, Option 2

of the P2264M program may be used to make any corrections

following the entry of the data under Option 1. When the

data have been completely entered and any necessary corrections

have been made, the terminal operator will retrieve a printout

for all sections of the Form FHA-2264 and the Trial Form

FHA-2264-A using Option 3 of the P2264 program.

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4-19 11/80

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4050.3

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s\. Upon completion of the P2264M processing, the terminal

operator will return all worksheets and printouts to the

Valuation Branch.

t\. The processing Appraiser will review the printouts, and

if necessary indicate any changes in red ink on the

P2264M worksheet.

u\. The Appraiser will forward the corrected P2264M program

worksheet to the terminal operator, who will use Option 2

of the P2264M program to make the necessary corrections.

The final printouts will be returned to the Valuation Branch.

4-5. VALUATION REPROCESSING USING C2264M AND P2264M PROGRAMS. The

Appraiser will review the new Form
[HUD-92013](http://www.hud.gov/offices/adm/hudclips/forms/hud9.cfm)
printout with the

Conditional printout of Form FHA-2264 and not any differences

resulting from the new application. Previous estimates and

conclusions should be reviewed in light of any new data contained

in the firm SEARCH program printouts. Firm processing will be

accomplished by using option 2, Reprocessing, of the P2264M

program. The P2264M worksheet will be completed as follows.

a\. Heading. Enter the project number. Indicate the insuring

jurisdiction if the processing office has more than one

multifamily processing responsibility.

b\. Sections A and B. The Appraiser will not make any entries

for these sections on the worksheet. If the Appraiser

determines that it is necessary to make further corrections

for these sections, he/she will indicate the necessary

corrections in red ink on the P2264M worksheet.

c\. Section C. Check for any variation in the number of each

family type unit, and review income estimates in view of

additional data that may be available from the firm

SEARCH printout. Enter any new income estimates in

the appropriate boxed areas.

d\. Section D. The Appraiser will not make any entries for

this section on the worksheet. If the Appraiser determines

that it is necessary to make corrections for these sections,

he/she will indicate necessary changes in red ink on the

worksheet.

e\. Section E. Review all expense estimates in view of additional

data that may be available from the firm SEARCH printout;

enter any new expense estimates in the appropriate boxed areas.

f\. Section F. Indicate the new occupancy percentage, if it has

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11/80 4-20

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4050.3

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changed since conditional processing.

g\. Sections G, H, I, K, and L. Make new entries for any items

in these sections that have changed since conditional

processing.

h\. Section J. Make no changes to this section. If off-sites and

unusual costs have changed since conditional, the changes will

be reflected on the Form FHA-2264 printout after Cost has

completed firm processing.

i\. Section O. If additional remarks are to be entered at firm

stage, refer to the conditional Form FHA-2264 printout and

indicate the line number that would follow the existing remarks.

For example, if four lines are shown on the printout and

additional remarks are to be made, enter the number five

followed by the additional remarks. If the old remarks are

no longer applicable, begin with line number two followed by

the new remarks. If the old remarks are no longer applicable,

and no new remarks are to be entered, indicate the line numbers

for the terminal operator to blank out. A maximum of

120 characters for line numbers two through eleven may

be entered on the worksheet. Line number one and twelve

of Remarks are reserved for the calculated dollar amounts for

tentative maximum mortgage amount and the value of site not

attributable to dwelling use.

j\. The Appraiser will forward the P2264M worksheet to the terminal

operator.

k\. If it is necessary to make corrections to the face sheet of

the application, the terminal operator will execute the C2264M

according to instructions contained in Handbook 2361.13, Chapter

3, Paragraph 3-9. He/she will then execute the P2264M program,

Option 2, according to instructions contained in Chapter 3,

Paragraph 3-16 of Handbook 2361.13, and make the necessary

changes noted on the P2264M Worksheet.

l\. Upon completion of the P2264M processing, the terminal

operator will return all worksheets and Form FHA-2264

printouts to the Valuation Branch.

m\. The processing Appraiser will review the printouts, and if

necessary, indicate any changes in red ink on the firm P2264M

Worksheet.

n\. The Appraiser will forward the corrected worksheet to the

terminal operator, who will use Option 2 of the P2264M program

to make the necessary corrections. The final printouts will

be returned to the Valuation Branch.

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4-21 11/80