4561.1

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CHAPTER 9. VALUATION PROCESSING

9-1. VALUATION ANALYSIS

A. Purpose. To evaluate the property as security for a

long-term coinsured mortgage.

B. Special Characteristics

1\. Acceptable Risk

a\. The analysis must show a reasonable expectation

that project income will, for the duration of the

mortgage term, be adequate to:

\- properly maintain the property

\- pay all required project expenses

\- meet debt service requirements and

provide a reasonable return to the

owners\' equity investment.

2\. Value/Replacement Cost. The appraiser:

a\. Uses the estimate of project replacement cost as

the determination of value, and

b\. Does not determine estimates of value by capitalization

and market comparison methods.

C. Market Criteria. The analysis must show sufficient market

demand for the number of units at the location, at rents

able to support the project.

D. Rental Rates/Carrying Charges. Must be competitive with

comparable unsubsidized rental projects.

There are no HUD tenant income eligibility requirements.

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9-1 6/85

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4561.1

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9-2. PRINCIPAL ELEMENTS OF VALUATION PROCESSING. Appraiser\'s duties:

A. Environmental Assessment Information. You may be required

to gather and organize information related to environmental

concerns so that HUD may make a determination. (See

paragraph 6-8)

B. Land Appraisal. Estimate the value of the site fully improved.

C. The Site and Market Acceptability. Decide whether site is

acceptable for the project and whether a market exists for

the units at estimated rents.

D. Market Rent by Comparison. Prepare estimates.

E. Annual Expense. Estimate project expenses based on comparison

with actual operating expense data from other projects.

F. Income Computations. Estimate occupancy and effective gross

income, then subtract annual expense to arrive at estimated

net income before mortgage payments.

G. Tentative Mortgage Amount. Figure the tentative mortgage

amount based on a mortgage credit determination of maximum

mortgage.

H. Replacement Cost. Estimate the replacement cost of the

project when mortgage amount has been determined. (Many

charges during construction depend on the mortgage amount.)

I. Maximum Allowable Rents. Estimate maximum allowable rents

for the first operating year by using a rent formula. The

rents would cover payment of operating expenses, taxes and

reserves, debt service and a reasonable return to the equity

investment for profit-motivated sponsors based on the

replacement cost of the project.

J. Operating Deficit. Estimate the operating deficit, if any,

expected during initial rent-up.

K. Cost Not Attributable to Dwelling Use. Estimate cost not

attributable to residential use to comply with statutory

per unit mortgage limits.

L. Narrative Summary. Briefly summarize important conclusions.

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6/85 9-2

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4561.1

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9-3. Forms and References

NOTE: You may ignore instructions in the references dividing the

various underwriting actions into separate processing stages; the

coinsurance program does not prescribe particular processing

stages. (See paragraph 4-1)

A. HUD Handbooks

1\. Handbook 4465.1, Valuation Analysis for Project Mortgage

Insurance: (Chapters 2, 3, 4, 5, 6, and 10 concerning

Market Value of Land, Ground Leases, Appraisal of Air

Rights, Estimated Rental Income, Operating Expense

Estimates, and Rehabilitation Processing).

2\. Handbook 4480.1, Multifamily Underwriting Reports and

Forms Catalog: (Form HUD-92264, Project Income

Analysis and Appraisal; Form HUD-92264-A, Supplement to

Project Analysis: Form HUD-92273, Estimates of Market

Rents by Comparison; Form HUD-92274, Operating Expense

Analysis Worksheet).

B. Information Sources

1\. Form HUD-92013, Application for Mortgage Insurance

2\. Owners and operators of rental properties, management

companies, mortgage lending institutions and real estate

appraisers specializing in this field

3\. Housing market reports/publications

C. Basic Form required for coinsurance valuation processing is

Form HUD-92264, available from the local HUD Office.

D. Exhibits. Attach to Form HUD-92264:

1\. Expense comparable analysis (Form HUD-92274)

2\. Rent comparable analysis (Form HUD-92273)

3\. Replacement cost formula

4\. Valuation Trial copy Form HUD-92264-A

5\. Rent formula

6\. Market absorption data

7\. Land sales data

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9-3 6/85

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4561.1

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9-4. New Construction Processing

A. General Considerations

1\. Project Eligibility. (See Chapter 3.)

2\. General Underwriting. (See Chapter 4.)

B. Step-by-Step Processing of Form HUD-92264

1\. Show project name from the mortgagor\'s application.

Obtain project number from the HUD Field Office (See

6-9 F.)

2\. Section A. Location and Description of Property

a\. Items A-1 through A-15. Show information from the

application and exhibits, confirmed by inspection

and modified as needed. (Item 4a, Census Tract

Number, and Item 4b, Placement Code, leave blank.)

b\. Item A-16. Enter year built. (Only applies to

rehabilitation.)

c\. Item A-16a. Indicate type of construction by checking

appropriate box.

d\. Item A-17. Describe Structural System as follows:

\- Steel frame; wood frame; solid masonry;

reinforced concrete; etc.

e\. Item A-17a. Describe Floor System (structural)

This does not refer to finished floors, but to steel

frame, reinforced concrete, etc.

f\. Item A-17b. Describe Exterior Finish as follows:

\- Brick; masonry; stucco and siding; prefab

panels, etc.

g\. Item A-18. Describe Heating/Air Conditioning System

by appropriate letter. Letters preceding the diagonal

mark describe the type of project heating system,

if any; those after indicate the type of project

air conditioning system, if any. Use the following

letters for both heating and air conditioning

systems:

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6/85 9-4

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4561.1

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(9-4)

I - Individual; C - Central; N - None;

E - Electric; G - Gas; and O - Oil.

For example, enter \"IG/IE\" for a project with

individual gas furnaces and individual electric air

conditioners.

3\) Section B. Information Concerning Land or Property

a\) Items B-19 through B-25. Take from the mortgagor\'s

application, Form HUD-92013, verified as necessary.

b\) Item B-26. Verify by site inspection. (If there are

unusual conditions, you may request help from the

lender\'s architect, cost analyst, or an engineer\'s

report.)

4\) Section C. Estimate of Income

a\) Items C-27, C-28. Estimate unit rents per month

based on and supported by current market rates

for similar units in comparable projects furnishing

comparable services in competing areas.

1\. You must not use rental data on subsidized

projects.

2\. Make adjustments on a rent comparable

analysis sheet (Form HUD-92273).

3\. Trend the estimates to 2 months beyond the

projected construction completion.

b\) Item C-27. You must complete all items.

1\. \"Rentable Living Area\" is the area of a living

unit measured from the inside faces of corridor

and exterior walls and from the inside faces of

partitions separating the living unit from other

living or commercial areas.

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9-5 6/85

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4561.1

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(9-4) 2. \"Composition of Units\" can be filled in by

abbreviations for the various rooms, preceded

by the number of each:

L - living room BR - bedroom

D - dining room B - bath

K - kitchen BALC - balcony

3\. Compare elevator units with elevator-unit

comparables and nonelevator units with

nonelevator comparables. When both are in

a project, separately Identify and list them.

c\) Item C-29, Parking. Enter the number of parking

spaces whether attended or self-park, and the number

of open and covered parking spaces. Enter the

monthly charge per space. Where the parking charge

is included in the basic rent, enter N/A and attach

supporting documentation to the appraisal report.

d\) Item C-30, Commercial

1\. Estimate rental income from commercial space on

the basis of existing leases and other market

data. (See paragraph 9-6 A for more details on

commercial space.)

2\. Additional income anticipated from submetering

utilities, valet service, nonlaundry

coin-operated equipment, cigar stands, vending

machines, pay telephones, apartment furniture,

T.V. satellite disk, etc., must not be included

in project income estimates. Income anticipated

from renting space for concession facilities or

the rental value of such space may be included

on the same basis as income from commercial

areas.

3\. Attach documentation supporting commercial

income estimates.

e\) Items C-33, C-34 and C-35. Enter gross floor, net

rentable residential, and net rentable commercial

areas. These figures are based on the mortgagor\'s

plans or other appropriate sources. The definitions

for the various areas are:

1\. Net Rentable Residential Area: Sum of all rentable

living areas within the exterior walls (including

nonrevenue-producing residential areas).

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6/85 9-6

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4561.1

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(9-4) 2. Net Rentable Commercial Area: Sum of all commercial

areas within the exterior walls, measured

from the interior faces of exterior walls, corridor

walls and partitions separating the area from

other commercial and/or living areas.

3\. Net Rentable Area: Sum of net rentable

residential area and net rentable commercial

area.

4\. Gross Floor Area: Sum of all floor areas of

headroom height within the exterior walls,

measured to the exterior faces of the walls or

to the center line of walls separating attached

buildings.

Note: Include built-in garages, commercial area,

basement and all other areas within the exterior

walls. Exclude recessed, extended or continuous

balconies, attached or detached carports,

accessory buildings, patios, porches or terraces

and all other areas outside the exterior walls.

f\) Item C-36 - Nonrevenue Producing Space

1\. If nonrevenue-producing apartment units are

provided to project employees, show type and

location of units.

2\. No income is attributed to nonrevenue-producing

units in Item C-27; however, the unit is listed

separately in the column \"No. of each family-type

unit.\"

3\. The loss of income is not considered an expense

in Section E and will lower payroll estimates

in Section E.

4\. Compare with Section A, Item 11, for accuracy.

5\) Section D. Equipment and Services Included in Rent and

Special Assessments

a\) Items D-37 (Equipment), D-38 (Services)

1\. Check the appropriate items for the equipment

and services included in the rent.

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9-7 6/85

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4561.1

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(9-4) Compare with the mortgagor\'s application to see

if anything typically expected in the market

place was left out and could, therefore, affect

the rent.

Variations must be reflected in the appraiser\'s

estimate, and brought to the attention of the

lender.

2\. For services reported in Item D-38, check type

of fuel (gas or electricity) and by the service

included.

b\) Item D-39 (Special Assessments). Enter the balance

of special assessments, if any, the annual payment

amount and the remaining term of the special

assessment. Indicate prepayable or nonprepayable.

6\) Section E. Estimate of Annual Expense

a\) Items E-1 through E-22

1\. Estimate project expenses based on actual operating

experience of comparable projects on an

expense comparable analysis worksheet (Form

HUD-92274).

\--Use a suitable unit of comparison such

as per-unit-per-annum, or per-square-foot

of rentable area per annum.

\--Use data prudently, keeping in mind the

similarities and differences between the

comparables and the subject property.

Inaccuracies or improperly supported

estimates have a leverage effect in the

estimate of value many times their own.

a\. You must base estimates on the typical

expenses of comparables. Mortgagors\'

plans for significantly lower expenses

(i.e. - by providing their own management),

usually prove unrealistic.

b\. If a proposal has significantly more commercial

space than the comparables:

\(1\) Make a separate expense estimate for

the commercial space, using commercial

comparables, and attach it to the form.

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6/85 9-8

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4561.1

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(9-4) (2) Add the commercial and residential

expense estimates to get the total

operating expense estimate.

\(3\) Attach documentation supporting

commercial expense estimate.

NOTE: This procedure doesn\'t apply to

such normal residential operations as

tenant parking and laundry, which are

reflected in most per-unit expense data.

c\. Reanalyze estimates when there is any

revision of the equipment and services.

2\. Transfer estimated totals for Line E-21, E-22,

E-28 and E-29, trended to the time of endorsement,

to Form HUD-92264, using the proper multiplier

to obtain dollars-per-project-use.

a\. Item E-21. Replacement Reserve. Enter

.006 multiplied by Total Structures, for

new construction. This amount, on Form

HUD-92274, is not trended. Add it to the

total of E-1 through E-20 to provide the

Total Operating Expense in Line E-22.

b\. Items E-23 through E-28. Use data on Form

HUD-92274 in a similar way to develop tax

estimates for these items and to trend

these estimates.

7\) Section F. Income Computations

a\) Item F-30. Enter amount from Section C, Line 32.

b\) Item F-31. Occupancy Percentage and Rent Loss.

Long-term occupancy and rent collection ratios will

seldom exceed 93 percent for rental properties.

However, where a higher ratio can be documented,

95 percent may be used. Any occupancy percentage

below 93 percent anticipated during the rent-up

period must be analyzed for possible need for an

operating deficit requirement.

c\) Items F-32 through F-35 - Self-explanatory.

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9-9 6/85

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4561.1

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(9-4) d) Additional Mortgage Amount - Tax Abatement. Tax abatement

is the reduction of property taxes for a specific amount or

amounts for a specific term or terms by the appropriate

taxing authority. Unless the abatement is for the same

amount and for the entire term of the mortgage, property

taxes will be estimated on line E-23 as if there was no

abatement. Calculate mortgage amounts as follows:

1\. If the annual abatement is the same amount and for a

term shorter than the mortgage term, calculate as

follows:

a\. Determine annual income attributable to the

abatement.

b\. Divide by the debt service rate based on the per

permanent interest rate, MIP and the term of the

abatement.

c\. Add the mortgage amount attributable to the

abatement to the debt service criteria of Form

HUD-92264-A.

2\. If the abatement is for different amounts and terms and

the amounts are declining, calculate as follows:

a\. Deduct the annual abatement amount from the second

abatement term from the first annual abatement

amount.

b\. Repeat Item 7, d) 1.b. (Note base term of the

abatement on the first term only.)

c\. Deduct the annual abatement amount from the third

abatement term from the second abatement amount.

d\. Repeat Items 7, d) 1.b. again, based on the total

of the first two abatement terms.

e\. Repeat this process till all the terms of the

abatement have been considered.

f\. Total the mortgage amounts attributable to the

abatement and add to the debt service criteria of

Form HUD-92264-A.

8\) Section G. Estimated Replacement Cost

Enter the estimate for \"Total for All Improvements\" established

by lender\'s cost estimates on line G-50. Complete the Section

as follows:

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6/85 9-10

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4561.1

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(9-4) a) First, approximate the project replacement cost by

using one of the formulas in Exhibits 1 through 5,

pages 9-38 through 9-42. This will show the

replacement cost and mortgage amount that would result

if the mortgage amount were limited only by the

replacement cost.

To complete the formula refer to Form HUD-92013,

Section B, for type of mortgagor. To find the

appropriate ratio of loan to cost, use the following

table:

Section Mortgagor Percentage

1\) 221(d)(3) General and Limited 90

Distribution

2\) 221(d)(3) Cooperatives 98

3\) 221(d)(3) All others 100

4\) 221(d)(4) All Mortgagors 90

b\) Next, complete a valuation trial copy of Form HUD-92264-A,

Part I, Determination of Maximum Insurable Mortgage.

1\. For Criterion 3, use the estimate produced by

the replacement cost formula, multiplied by the

loan ratio (according to above loan table) for

the type of mortgagor and section of the Act.

On Line 3b enter the value of any leased fee,

multiplied by the loan ratio.

2\. For Criterion 4, complete Exhibit 6 or 7, pages

9-43 through 9-44.

3\. For Criterion 5.

a\. Item 5a. Enter permanent interest rate

from HUD-92013

b\. Item 5b. Enter .5 percent for mortgage

insurance premium payable to HUD and, if

charged, .25 percent for lender\'s premium.

(See paragraph 4-5B.)

c\. Item 5c. Enter required initial curtail

rate applicable to amortization plan and

mortgage term.

d\. Item 5d. Self-explanatory.

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9-11 6/85

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4561.1

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(9-4) e. Item 5e. Enter net income from Item F-34

and applicable debt service percentage.

(See paragraph 4-3 C.)

f\. Item 5f. Enter ground rent from Item K-6

and special assessments from Item D-39.

g\. Items 5g and h - Self-explanatory.

h\. Add the mortgage amounts attributable to

tax abatement.

4\. The final maximum insurable mortgage cannot exceed

the least mortgage amount shown for any of

the applicable criteria.

c\) Use the mortgage amount from b) above to estimate

carrying charges and financing items to complete

the total estimated replacement cost.

1\. Item G-53 - Interest. Estimate the accrual

during estimated construction period plus 2

months at the rate requested in Section B of

Form HUD-92013. It is computed on half the

mortgage.

For example, the interest based on a \$2,600,000

mortgage, for a 16-month construction period,

plus 2 months and an 11.0 percent interest rate

is calculated as follows:

Half the Mortgage \$1,300,000

Interest Rate .110

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Annual Interest \$ 143,000

18-month construction period

18 divided by 12 = 1.5 years X 1.5

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Interest during construction \$ 214,500

2\. Item G-54 - Taxes. Show on pro rata basis the

taxes (and any special assessments) accruing

during the estimated construction period plus

2 months.

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6/85 9-12

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4561.1

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(9-4) 3. Item G-55 - Insurance. Estimate insurance

including fire, windstorm, extended coverage,

liability and other risks customarily insured

against in the community during construction.

The estimate covers the construction period

plus 2 months. Do not include workmen\'s

compensation and public liability insurance.

They are in the cost estimate, Line G-50.

4\. Item G-56 - Mortgage Insurance Premium.

Calculate mortgage insurance premium earned during

the presumed construction period plus 2 months.

The amount is 1 percent of the mortgage for the

first year and 0.5 percent more for each

additional year or part of a year.

5\. Item G-57 - Examination Fee. Calculate based

on not more than 0.3 percent of the estimated

mortgage.

6\. Item G-58 - Inspection Fee. Calculate based

on not more than 0.5 percent of estimated

mortgage.

7\. Item G-59 - Financing Fee. Calculate based on

not more than 2 percent of estimated mortgage.

This is an initial service charge, not to be

confused with discounts.

8\. Item G-60 - AMPO. Calculate AMPO (allowance to

make project operational) based on 2 percent of

replacement cost in cases involving nonprofit

mortgagors-not including cooperative mortgagors.

See HUD Handbook 4500.1, Allowance for Making

Nonprofit Projects Operational and Use of

Housing Consultants, for more details, if needed.

9\. Item G-61 - FNMA/GNMA Fee. Calculate fee for

commitment and marketing (permanent loan placement

fee) for all mortgagors, based on not more

than 1-1/2 percent of the mortgage amount.

10\. Item G-62 - Title and Recording. Show the

costs typically incurred for a mortgage

transaction, such as:

a\. Recording fees

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9-13 6/85

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4561.1

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(9-4) b. Mortgage and stamp taxes

c\. Survey

d\. Title Insurances

e\. Title work - from initial through final

endorsement

11\. Item G-64 - Legal. Estimate the fees usually

required for:

a\. Counsel to create the mortgagor entity;

however, don\'t include cost of legal

services to create tax shelters, trusts, etc.

b\. Initial and final closing.

c\. Normal interim activities in creating a

project.

NOTE: Legal fees for land acquisition are

not allowable since they are

attributable to mortgagor\'s cost and are

reflected in Land Value.

12\. Item G-65 - Organization. Estimate administrative

cost of services, reflecting project size

and type of ownership, required to:

a\. Initiate a project

b\. Organize its planning, financing and construction

c\. Control and manage construction through

final endorsement

Examples of the above are:

\- Collecting data and documentation for requests

for mortgage insurance including analysis of

market need, selection and optioning of site and

project design considerations.

\- Assembling the data and documentation from

various parties for mortgage closings; arranging

for execution of documents; attending to closings.

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6/85 9-14

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4561.1

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(9-4) - Controlling and accounting for disbursement of

mortgage proceeds and working capital.

\- Placing mortgagor\'s hazard and liability

insurance; coordinating building release for

occupancy.

\- Paying and helping auditor obtain information for

cost certification.

\- Liaison with HUD through final endorsement, as

normally indicated for typical projects.

13\. Item G-66 - Cost Certification Audit Fee. Show

typical cost of hiring an accountant to audit the

account books and to issue an opinion for the

mortgagor.

14\. Item G-68 - Builder and Sponsor Profit and Risk.

Calculate the Builder\'s and Sponsor\'s Profit and

Risk Allowance (BSPRA) or Sponsor\'s Profit and

Risk Allowance (SPRA). (Not applicable to

non-profit mortgagors.)

a\. If the lender determines that an

identity-of-interest exists between the mortgagor

and the general contractor, BSPRA will be

calculated as follows:

1\. not more than 10 percent of the sum of

lines G-50, G-63 and G-67.

2\. no profit will be allowed on line G-44.

b\. If the lender determines that an

identity-of-interest does not exist or will not

exist between the sponsor and the general

contractor as of the date of the firm commitment

in insurance upon completion of cases or initial

endorsement in insurance of advances cases ,

SPRA will be calculated as follows:

1\. not more than 10 percent of the sum of

lines G-45, G-46, G-63 and G-67.

2\. profit may be allowed on line G-44.

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9-15 6/85

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4561.1

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(9-4) 15. Item G-69 - Consultant Fee. If nonprofit sponsor

is using an approved consultant, enter the consultant\'s

fee. The maximum allowable in replacement

cost and mortgage proceeds must not exceed

the schedule in Chapter 2 of Handbook 4500.1.

16\. Item G-70 - Supplemental Management Fund. Not

applicable to unsubsidized coinsured projects.

17\. Item G-71 - Contingency Reserve. Not applicable

to coinsured new construction projects.

18\. Item G-72 - Total Estimated Development Cost.

Total all items of replacement cost except the

\"Warranted Price of Land.\"

19\. Item G-73 - Warranted Price of Land. Enter from

item J14(3) of Form HUD-92264.

20\. Item G-74 - Total Estimated Replacement Cost.

Sum of Items G-72 and G-73. When the least

mortgage amount on FHA Form 2264-A is the mortgage

limited by replacement cost (in Criterion 3), the

\"Total Estimated Replacement Cost of Project\" in

G-74 should be within a few dollars of the

\"Replacement Cost by Replacement Cost Formula.\"

9\) Section H. Maximum Permissible Rent

a\) Item H-1. HUD limits the return a sponsor can

expect from the residential portion of a coinsured

project by limiting the initial rents. Calculate

maximum residential gross income using the rent

formula in Exhibits 8 and 9, pages 9-45 and 9-46.

Underline and enter the amount of the indicated

monthly maximum.

b\) Items H-2 through H-7. Not applicable to coinsurance

processing.

10\) Section I. Estimate of Operating Deficit

A project that can not rent-up in the first year should

be carefully examined for feasibility; however, it is

almost inevitable that occupancy percentage for the

first year or so will be less than the long-term percentage.

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6/85 9-16

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4561.1

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(9-4) Estimate the operating deficit as follows if the entire

project net income probably will not be available

during the initial rent-up period:

a\) Determine the estimated rent-up period or periods.

b\) Determine the approximate date of project construction

completion and the date amortization of the

mortgage will probably begin.

c\) For each period, estimate:

1\) the average number of units expected to be

occupied

2\) rental income and

3\) the expenses, taking into account probable

initial increases in administrative expenses

and decreases in maintenance expenses. Reserves

for replacement should not be included

in the estimate of the expenses before amortization,

but must be included after amortization

begins.

d\) Deduct total expenses for each period from rental

income to find the net income available to pay the

debt service.

e\) Calculate the debt service requirement.

1\) For any period of anticipated income deficit

before start of amortization, multiply the

mortgage by the sum of the interest rate and

the mortgage insurance premium rate, and add

to the total any ground rent for the period.

2\) For any period of anticipated income deficit

after the start of amortizaton, include payments

for principal, interest, MIP, and any

ground rent.

f\) If debt service is greater than net income for the

same period, the difference is the operating deficit

for that period.

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9-17 6/85

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4561.1

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(9-4) 11. Section J. Project Site Analysis and Appraisal

NOTE: If a negative answer is indicated for an

item from J-1 through J-5, explain under

\"Remarks.\"

a\) Item J-1. Site Location. Analyze the location of

the site.

1\. Relative to the needs of the tenants for

a\. transportation

b\. schools

c\. shopping

d\. community centers and

e\. churches.

2\. Determine any special hazards or nuisances

such as:

a\. flooding

b\. airport hazards

c\. airport, railroad, or highway noise levels

d\. noxious odors and/or concentrated air

pollution

e\. flammable or explosive hazards

f\. overhead high voltage transmission lines,

pipelines and drainage channels.

b\) Item J-2. Adequacy of Site. Determine if the site

is adequate in size, shape, exposure, and contour.

Compare the density of the proposed project with

that of similar successful projects operating in the

same market area.

c\) Item J-3 - Permissive Zoning. Determine if the proposed

structure(s) and the number of units comply

with current zoning.

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6/85 9-18

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4561.1

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(9-4) d) Item J-4 - Availability of Utilities. Determine

whether the water, sewer, gas and electrical facilities

are adequate for the project.

e\) Item J-5 - Market of Rents Proposed. Analyze all

market data for the area to determine demand

potentional for the type and number of units at the

rents indicated by market rent comparison. Examine

economic and market analysis reports, data from

building departments on new construction absorption,

and vacancy reports and rental schedules in the area.

f\) Item J-6 and J-7 - Site Acceptable or Unacceptable.

Check one based on J-1 through J-5.

g\) Item J-8 - Value Fully Improved. Enter in the top

row the location and size of the project. Use the

rest of Item 8 to estimate, by market comparison,

the market value of the site fully improved. Attach

copies of the land sales data cards/sheets of the

comparables (to the Form HUD-92264).

1\. The value fully improved estimate for the site

must be the value for the intended use for which

the mortgage will be insured.

2\. Under the heading \"Adjustments\", consider each

element when estimating value, whether sales

price per foot or per unit is the basis for

comparison. Make adjustments from the comparison

property to the subject.

a\. To find the \"Adjusted Price\" for a comparable:

apply its \"Total Adjustment\" to the

comparable\'s sale price per square foot or

per unit.

b\. To find an \"Indicated Value by Comparison\":

multiply the area of the subject site by

the comparable\'s adjusted square foot price

or number of subject\'s units times the

comparable\'s adjusted unit price.

c\) Use this procedure for each comparable to

arrive at a range of values from which the

value of the site fully improved is estimated

by correlation and entered in Item 9.

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9-19 6/85

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4561.1

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(9-4) This value estimate is based on the assumption

that any offsite work has been completed

and any unusual site conditions

corrected.

d\) Pertinent remarks explaining all adjustments

must be made in the remarks section or in an

accompanying memorandum.

h\) Item J-10 - Value \"As Is.\" Enter \"N/A\" for \"not

applicable.\"

i\) Item J-12 - Acquisition Cost. Record the names and

addresses of the principals, the price paid, date of

sale and sources of information for the last

arm\'s-length transaction. The transaction that first gave

the sponsor effective control of the property

(whether the control was direct or indirect) is the

last arm\'s-length transaction. Interview principals,

brokers or others who know the price paid in that

transaction.

j\) Item J-13 - Other Costs. Enter reasonable actual or

estimated costs related to acquisition of site.

k\) Item J-14 - Value of Land and Cost Certification.

Fill in J-14(1) through (7) according to Handbook

4480.1, page 2264-27, to estimate the \"Warranted

Price of Land Fully Improved\" and the \"Commissioner\'s

Estimated Value of Land \'As Is\'.\"

l\) Remarks. Use this section for pertinent comments on

any item in the analysis and site appraisal. If

necessary, attach a separate memorandum to the Form

HUD-92264, with a note here to see the memorandum.

12\) Section K. Income Approach to Value

1\. Item K-1. Estimate economic life of the property.

2\. Items K-2 through K-5. Leave blank.

3\. Item K-6. Estimate the value of any leased fee.

Generally it can\'t exceed the as is value. See

Chapter 3 of Handbook 4465.1 for details.

13\) Section L. Market Comparison Approach to Value

Leave blank.

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6/85 9-20

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4561.1

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(9-4) 14) Section M. Cost Not Attributable to Dwelling Use

Copy data from form supplied by cost analyst.

15\) Section N. Calculation of Budgeted Construction Cost.

Leave blank - not applicable in coinsurance proposals.

16\) Section O. Remarks

Enter any relevant remarks, including, but not limited

to, the value of land underlying items of cost not

attributable to residential use.

17\) Narrative Summary

Briefly summarize important conclusions.

Both the Form HUD-92264 and this report must be signed

by the appraiser.

NOTE: For Section 221(d)(3) Builder - Seller proposals,

two Form HUD-92264s are to be completed. One as

a nonprofit mortgagor and one as a limited

distribution mortgagor. The difference in the

mortgages will be placed in an escrow account. If

the nonprofit mortgagor is not formed, the

mortgage will be reduced by the escrow amount.

9-5 Rehabilitation Processing

A. General Processing Consideration

1\) As Is Value of the property before rehabilitation is

based on:

a\. the property\'s intended multifamily use and not

the current or highest and best use.

b\. its condition at the time of appraisal

You may complete the \"as is\" appraisal using the Form

HUD-92264 or by a narrative containing all pertinent

conclusions and documentation.

2\) Once you have the as is value, complete Form HUD-92264

as instructed for new construction, with the following

exceptions and amplifications:

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9-21 6/85

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4561.1

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(9-5) a) Section C. Estimate of Income. Estimate rent to

be obtained after rehabilitation, when the project

is offered to the market. Form HUD-92273 (Rental

Analysis Worksheet) are completed showing rental

estimates for each unit type trended to two months

beyond rehabilitation completion.

1\. Project Eligibility, See Chapter 3.

2\. General Underwriting, See Chapter 4.

b\) Section E. Replacement Reserve. Calculate Item

E-21 by applying the factor .004 to the mortgage

amount used in processing.

c\) Section G. Estimated Replacement Cost. Complete

the appropriate replacement cost format (see exhibits)

to show mortgage amount if replacement cost

were the only limiting criterion.

Use the replacement-cost-by-formula to complete the

cost-not-attributable format (Appendix 16) for

rehabilitation only.

Enter the resulting cost-not-attributable amount on

line 4b of the trial Form HUD-92264-A.

Complete the trial Form HUD-92264-A to show the

mortgage amount to be used in completing Section G.

B. Step-by-Step Processing of Form HUD-92264

1\) Item G-53 - Interest. Calculate in the same manner

as new construction except compute it on half the sum of

the mortgage and the as is value.

2\) Item G-58 - Inspection Fee. Calculate at 0.5 percent

on the total (rounded to the next \$100 multiple) of Line

50 plus either BSPRA or SPRA.

3\) Item G-71 - Contingency Fee. Enter the amount, which

may vary from 0 to 10 percent of the sum of Items 36(c),

41 and 42. The lender will tell you the exact percentage

to use for this reserve on each project.

4\) Item G-72a - Offsite. Show any offsite costs or onsite

demolition costs, by inserting an \"Item 72a.\"

This separate entry is necessary in rehabilitation

processing because the as is value does not include

offsite requirements.

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6/85 9-22

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4561.1

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(9-5) 5) Item G-73 - Warranted Price of Land. Amend to read

as-is value. Enter the value of the property before

rehabilitation.

9-6 Commercial Space Processing - New and Substantial Rehabilitation

(Also see paragraphs 3-1 J, 7-7 and 7-8)

A. General Considerations

1\) Eligibility. See paragraph 3-1 J.

2\) Commercial Space In Excess of 10 Percent Net Rentable

Area.

The lender must submit the commercial rent test as outlined

below with the supporting data to HUD Headquarters

(Office of Insured Multifamily Development) for approval.

3\) Commercial Rent Test. Commercial income must support

its cost. (Use Appendix 17.)

4\) Commercial Data. The appraiser must:

a\) Use current and complete income and expense data

from successfully operating commercial projects and

other residential projects containing commercial

facilities.

b\) Make a special effort to obtain commercial data

that reflects the type of commercial use and condition

of the space being processed.

5\) Commercial Processing. The appraiser must:

a\) Obtain from the application or the mortgagor the

proposed type of commercial use and rents.

b\) Determine if the proposed occupancy percentage of

commercial use is realistic.

c\) Determine the degree of finishing required to make

the space competitive.

HUD will allow finishing and alteration costs in

mortgage amount to cover minor tenant accommodations,

such as electrical and heating locations.

HUD will not allow in mortgage amount commercial

realty improvements not typical in competing

commercial space in the area. An escrow must be

established for any cost to the sponsor not included

in the mortgage.

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9-23 6/85

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4561.1

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(9-6) d) Identify lease agreements concerning payments of

property charges - such as taxes, insurance,

maintenance, utilities, etc. - or any other condition

that would affect lease payment. This will clearly

define actual income derived from the lessee.

e\) Verify with local building department that the

facilities would meet local codes for parking, fire,

delivery and any other requirements.

B. Step-by-Step Processing of Form HUD-92264

1\) Section C. Estimate of Income

a\) Don\'t limit the analysis to the two categories shown

on the form if plans and specifications indicate

more are applicable.

b\) Use a minimum of three commercial income comparables

for each type of commercial space offered.

c\) Make adjustments if lease terms applicable to the

comparables are different from the proposed commercial

terms. Rent raises and percentage clauses

may be considered if data warrants.

d\) Convert all rents to a square-foot basis for analysis

and for Form HUD-92264.

2\) Section F. Income Computations

a\) Vacancy Factor:

Use an 80 percent occupancy factor for the commercial

portion of gross effective income unless signed

leases from established commercial tenants approved

by the lender support a higher estimate. At any

time during processing, before initial endorsement,

any newly signed acceptable leases will be considered.

Never will the commercial occupancy factor

exceed the residential occupancy factor.

1\. When carrying the total annual rent from Section

C to Section F, show it on Line F 30 in two

amounts: the commercial portion broken out and

identified as such just above the remainder of

total project gross income.

2\. On Line F 31, show the occupancy factors used.

Keep in the case file all documentation supporting

the factors.

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6/85 9-24

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4561.1

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(9-6) 3. To find effective gross income (Line F 32),

apply the appropriate occupancy factors to the

respective gross incomes.

b\) Expense Analysis:

1\. If the lessee assumes all property charges and

there are no operating expenses attributable to

the commercial facilities, note this on Form

HUD-92274 prepared for the residential portion

of the project.

2\. If certain property charges such as utilities,

taxes, maintenance and insurance will be borne

by the lessor, identify them either on a

separate analysis worksheet or on the Form

HUD-92274 and note appropriately.

3\. Keep on file all documentation supporting the

commercial expense estimate.

3\) Section I. Estimate of Operating Deficit. Show

calculations on Form HUD-92264 to support need or lack of

need for an operating deficit.

4\) Section G. Estimated Replacement Cost

a\) Review the plans with the cost analyst to see how

much finishing HUD can be expected to coinsure for

each commercial area, as warranted by market and

the commercial rents.

b\) On Line G 71, enter the amount estimated by the

cost analyst and identified as \"Commercial

Contingency\". For rehabilitation proposals, put the

amount just to the left of the total dollar amount.

9-7 Cooperative Processing Procedures

The procedures for processing Section 221(d)(3) cooperative

projects are basically the same as under the Sections 221(d)(3)

and 221(d)(4) rental programs. The following handbooks help.

A. 4465.1 - Valuation Analysis for Project Mortgage Insurance

B. 4480.1 - Multifamily Underwriting Reports and Forms

C. 4550.1 - Basic Cooperative Housing Insurance

D. 4550.2 - Presale-Management Type Cooperative

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9-25 6/85

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4561.1

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9-8 Basic Form for Cooperatives

Use the Form HUD-92264B Cooperative or Condominium Housing Project

Analysis, (See Appendix 65 for list of cooperative forms).

Exhibits to include are:

A. Form HUD-92273 - Estimate of Market Rent by Comparison

B. Form HUD-92274 - Operating Expense Analysis Worksheet

C. Replacement Cost Formula

D. Rent Formula

E. Land Sales Data

F. Absorption Data

G. Trial Form HUD-92264-A

9-9 Commitment Processing - Cooperative Management Type,

Under 221(d)(3)

Complete Form HUD-92264B as follows. Use the mortgagor\'s

application (Form HUD-93201, Application for Mortgage Insurance

Cooperative Housing - Condominium Housing) as the prime source

of data for the descriptive portion of the form. Unless noted

in the following, the individual items will be completed as

described in paragraph 9-4, New Construction Processing.

A. Location and Description. No change from paragraph 9-4

B.2.

B. Property Information Concerning Land or Property. No change

from paragraph 9-4 B.3.

C. Unit Composition and Charges

In order to limit the cooperative mortgage to an amount

which bears a reasonable relationship to the earning

capacity of the property in the rental market, the unit

charge per month shall be based on the current rental

charge for similar units in the same or competing locations.

Using Form HUD-92273, make adjustments for:

1\. Any significant differences but not for

2\. Owner\'s income tax benefits

(NOTE: Income sufficient to support a 90 percent

rental mortgage would be more than adequate to

support a 98 percent cooperative mortgage.)

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6/85 9-26

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4561.1

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(9-9) D. Equipment and Services Included in Charges and Special

Assessments

Ranges and Refrigerators Replacement - indicates that

subsequent replacements will be made from the corporate

replacement reserves. If down payments are typically

less than \$500 per unit, replacement of refrigerators

and ranges as a corporate expense must be required.

E. Estimate of Annual Common Expense

Determine the common expense by an estimate performed on

Form HUD-92274 or equivalent. The only variances from the

rental procedure are:

\- an estimate of apartment resale expense in lieu of

advertising.

\- computation of \"Reserve for Replacements\" .004 of Section

H, Line 50, when replacement of refrigerators and ranges

is not a corporate expense. When it is a corporate

expense, compute the replacement as .066-of Section H,

Line 50.

F. & G. Annual Fixed Charges and Net Common Expense and Fixed Charges

Exhibit 10, \"Cooperative Net Income,\" page 9-47, has been

substituted for these sections and is self-explanatory.

When the Annual Net Income has been entered in Line 7 of

Exhibit 10, it is used in Criterion 5, \"Amount Based on

Debt Service Ratio,\" of Form HUD-92264-A, in accordance

with instructions in paragraph 9-4B and with mortgage

credit instructions in Chapter 10 of this handbook.

H. Estimated Replacement Cost

Complete as for rental processing (See paragraph 9-4 B.8),

with the following exceptions:

1\) The replacement cost loan ratio percentage will be 98%.

2\) If the debt service criterion is not controlling, the

unit charges will have to be reduced to conform with

the cooperative rent formula. (Exhibit 11, page 9-48)

3\) Development Services Allowance and Marketing

a\) Development Services Allowance. Modify Line 77 on

the Form HUD-92264B, entitled \"Other\", to read:

\"Development Service Allowance.\" Enter the estimate

there.

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9-27 6/85

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4561.1

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(9-9) Consider the following development requirements

that are generally unique to cooperatives.

1\. Effort by the professional group initiating

the project - i.e., analysis, evaluation and/or

negotiation of market, site and design.

2\. Extra forms and other exhibits, both for legal

and administrative needs. Examples are:

a\. Form FHA 3265 - (Agreement for Commencement

of Early Construction)

b\. Information Bulletin (Prospectus)

c\. Occupancy Agreement (Differs from a Lease)

d\. Form of Balance Sheet of Cooperatives

e\. Minutes - Membership Meeting of Cooperatives

f\. Agreement for Reimbursement of Certain

Expenses of Developer Hold Back Escrow

Agreement

3\. Development and execution of procedures usually

needed for building separately and later combining

model units and various sections into one

project.

4\. Development of procedures for additional escrow

requirements for funds received from subscribers.

5\. Development of the procedures and setting up the

provisional board of directors to function on

behalf of the cooperative until it can elect

its own board.

6\. Additional advice and assistance, both legal and

administrative, to newly elected board of resident

members for 90 days after final closing.

The above is not intended to be a total listing of

items that may be acceptable for this allowance, but

to illustrate types of service that qualify.

b\) Item 75 - Marketing. Marketing expense, based on

data reflecting the location, size and type project,

includes the amounts necessary to:

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6/85 9-28

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4561.1

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(9-9) 1. Hire professional real estate sales agencies or

individuals to qualify applicants.

2\. Cover the usual advertising and promotion expenses

for a reasonable sale period.

c\) Item 81 - Value of Leased Fee. See Chapter 3 of

4465.1 concerning leaseholds. In general, the

ground rent capitalized cannot exceed the as-is

value of the site.

I. Estimated Expenses Not Included in Common Expense

Personal benefit expenses are those housing expenses not

included in the unit charges and are an obligation of the

individual cooperator. For each type unit, make estimates

for all essential services and equipment not provided for.

J. Total Requirements for Settlement

This section is reserved. Leave blank.

K. Estimated Annual Operating Statement. Not applicable.

L. Cost Not Attributable to Dwelling Use

Obtain data from cost analyst.

M. Calculation of Budgeted Construction Cost. Not applicable.

O. Project Site Analysis and Appraisal. Same as rental

(See paragraph 9-4 B.11.).

9-10 Commitment Processing, Investor-Sponsor-Proposed Construction

A. Complete sections A through F and section I on Form HUD-92264

as if the project were operated as a rental. Determine

the mortgage amount that could be supported by 90 percent

of the net income. That mortgage amount will be deducted

from the cooperative mortgage as determined below

in 9-10-B. An escrow in the amount of the difference will

be established. In case the cooperative is unsuccessful,

the escrow will be deducted from the cooperative mortgage.

B. Process Form HUD-92264B according to instructions for

management-type proposed construction, with the following

exceptions:

Section H. Estimated Replacement Cost

1\) Item 66 - Interest. Base the amount on a 98% loan

ratio.

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9-29 6/85

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4561.1

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(9-10) 2) Items 62, 65, 67, and 68 - Base on the mortgage

amount applicable to the investor sponsor, which will

be the lesser of 90 percent of estimated replacement

cost or the debt service mortgage from A above.

3\) Items 73 and 74 - Indicate separately the amounts

applicable first to a rental project and second the

additional amounts applicable to the cooperatives

Make these entries to the left of the totals.

9-11 Management Type - Rehabilitation for Conversion

In processing rental projects for conversion to cooperatives,

complete Form HUD-92264B, using instructions for management-type

proposed construction, with the following exceptions:

Section E. Item 21 - Replacement Reserve. Enter .004 times the

amount of the mortgage. (.006 if replacement refrigerators and

ranges are a cooperative expense.)

Section H. Estimated Replacement Cost. The cost analyst will

complete items 43 through 61 based on the amount of rehabilitation.

Item 62 - Interest. Base on half the sum of the as-is value

and the mortgage.

Item 67 - Inspection Fee. Enter .5% of the amount of the

rehabilitation recorded in Item 59.

Item 73 and 74 - Legal and Organization. Include only that

amount required to effect conversion from a rental to a

cooperative project.

Item 77(a) - Contingency Reserve. Interline \"Contingency Reserve\"

between Items 77 and 78. Enter the amount of the reserve,

which may vary from 0 to 10 percent of the sum of Items

45, 50 and 51. The chief underwriter will tell the appraiser

the exact percentage to use for this reserve for each project.

Item 79 - Warranted Price of Land. Amend to read \"as-is\"

value - value before rehabilitation.

Item 80 - Total Estimated Replacement Cost of Project.

Amend to read \"Summation Estimate.\" This is the sum of the:

as-is value of the property; the rehabilitation cost and

carrying charges; legal, organization and marketing expense

of the cooperative mortgagor.

The sum will be the lender\'s estimate of project replacement

cost.

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6/85 9-30

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4561.1

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9-12 Investor Sponsor - Rehabilitation

In processing rehabilitation projects as investor sponsor

cooperatives, complete Form HUD-92264-B, HUD-92264 and

HUD-92264-A as for Investor Sponsor Cooperatives, New Construction.

with the following exceptions:

Section H. Estimated Replacement Cost

Items 43 through 61 will be completed by the cost analyst

based on the amount of rehabilitation.

Item 62 - Interest. Base on half the sum of the as-is value

and the mortgage.

Item 67 - Inspection Fee. Enter .5% of the amount of the

rehabilitation recorded in Item 59.

9-13 Retirement Service Centers (ReSC) - Valuation Considerations

For final determination of overall feasibility of any ReSC

proposal, the total cost of the shelter and services will

have to be analyzed to determine the depth and availability

of the potential market.

Consider the following when processing a ReSC in conjunction

with Section 221(d) program.

A. Shelter Budget Income - Represents the funds for:

1\) Shelter in the living unit

2\) Equipment such as range and refrigerator in the

living unit

3\) Maintenance

4\) Utilities included in the rent

The total of the above for a feasible ReSC should exceed

rent in a noncongregate project by cost of debt service

on congregate facilities.

This income is reflected in Section C, Form HUD-92264,

and net income from this budget supports the mortgage on

the realty.

B. Nonshelter Budget Income - Represents the funds for:

1\) Meals in a congregate dining room

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9-31 6/85

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4561.1

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(9-13) 2) Maid service

3\) Furniture in individual living units (if any)

4\) Entertainment

5\) Recreational or social services

6\) Medical services (only with prior approval of HUD

Headquarters\' Office of Insured Multifamily Housing

Development).

C. Nonshelter Budget for Meals in Congregate Kitchen and

Dining Facilities. (Identity-of-Interest between the

ReSC Sponsor and the Provider of the Food Service.)

1\) Show expenses for meals on Form HUD-92013E as

follows:

a\) Food Service Employees

\- cooks

\- servers

\- cleaners

b\) Food and other related supplies

c\) Maintenance and repair

d\) Reserve for replacement of dining furniture

e\) Any other related cost

2\) The meal charge to the tenant must be sufficient to:

a\) Cover expenses listed above

b\) Provide a small profit

3\) The meals may be mandatory in order to:

a\) Provide a stability of income

b\) Ensure a reasonable charge

D. Commercial Leases of Space to Provide Food Service

Facilities (Nonidentity-of-interest between the ReSC

sponsor and the provider of the food service.)

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6/85 9-32

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4561.1

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(9-13) 1) The expenses will not be shown on HUD Form-92013-E.

Instead, a statement similar to the following must

be entered on the form:

\"Three (mandatory/nonmandatory) meals a day are

available from a commercial restaurant on the

premises. The initial average cost of meals is

expected to be:

Breakfast
\$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Lunch
\$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Dinner
\$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.\"

2\) The meals may be mandatory provided the sponsor has

the right to concur on:

a\) Meal charges which:

\-- cover expenses

\-- provide reasonable profit

b\) Changes in service.

These rights must be transferable to the mortgagor\'s

successors in the event of foreclosure or

deed in lieu.

3\) Income from lease of congregate kitchen and dining

areas can be included in Section C of Form HUD-92264

when supported by an adequate market study. Such rent

must be enough to pay:

a\) Debt-service on the cost of kitchen and dining

facilities

b\) Any operating expense of the facilities, including

but not limited to their share of taxes and

insurance.

4\) Leases that have escape clauses not requiring the

lessee to begin payments at completion, or by a

certain date, cannot be used to increase the occupancy

above the normal 80 percent used in processing

commercial space (see paragraph 9-6).

To avoid duplication of income, the shelter rent

estimate should not give any recognition to the cost

of debt-service on the commercial congregate facilities.

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9-33 6/85

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4561.1

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(9-13) E. Contract Food Service

A \"Meals on Wheels\" approach to providing meal service

can also be used in conjunction with a ReSC. This should

cause little or no additional rent in Section C, Form

HUD-92264 either for shelter or commercial space, but

will still require identification of the average meal

costs added to tenant charges.

F. Income Comparables

Retirement Service Center comparables that include

Founder\'s fees or initial admission fees cannot be used

as income comparables to determine rental charges. However,

fees paid for meals and other ancillary services,

if they can be determined on these type comparables, can

be used in analyzing the ancillary-type service cost.

G. Processing Changes on Form HUD-92264

1\) Insert between Items G-70 and G-71 an Item titled

G-70a, Movable Equipment. The figure will be furnished

by the cost estimator.

2\) Insert between Items E-21 and E-22 an Item titled

E-21a, Replacement Reserve Movable Equipment. Calculate

on the basis of .10 of line G-70a, Movable

Equipment.

9-14 Section 103(b)(4)(A) - Valuation Considerations.

Section 103(b)(4)(A) bond financed projects have income

restrictions. The appraiser, when directed by the lender, will

complete Form HUD-92264-TE (see Exhibit 12, page 9-49).

The Form HUD-92264-TE is self-explanatory with the exception

of the following:

A. Line 3 - Applicable Section 8 Eligibility Income Limit.

Use four-person income, eligibility limit on all unit

types.

B. Line 4 - Estimated Maximum Affordable Monthly Rent

for Restricted Units is predicated on:

1\) Tenant incomes at the top of the eligibility limit

2\) Tenant\'s payment of up to 30 percent of gross income

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6/85 9-34

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4561.1

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(9-14) C. Market. When the rent for the restricted unit is less

than market, the appraiser will determine if there is

sufficient market for the restricted units, based on

what eligible families are willing to pay.

D. Operating Deficit. If the appraiser determines the

project is marketable with this restriction, an

operating deficit may still be required in order to

provide time to attract qualifying families.

E. Covenant Review. The appraiser shall also review the

special deed covenants or other long-term restrictions

recorded to run with the land that are imposed to comply

with the requirements of Section 103(b)(4)(A). The

appraiser must ascertain that:

1\) Covenants are subordinate to the mortgage

2\) Covenants will automatically terminate in the event

of foreclosure or transfer of title by deed in lieu

if foreclosure

3\) Covenant provisions are subordinate to all applicable

coinsurance regulations and related administrative

requirements

State and local restrictions shall also be reviewed for

their impact on the project.

9-15 Section 8 Moderate Rehabilitation - Valuation Consideration

A. Rents. In processing rehabilitation cases with

Section 8 Moderate Rehabilitation funds, the rents will

be determined by one of two methods:

1\) Market Rents or

2\) Market Rents plus up to 20 percent if required for

feasibility (only applies to Section 8 assisted

units). Feasibility refers to the maximum rent required

to have the debt-service criteria equal the

controlling mortgage criteria.

NOTE: If the market rents exceed the rents needed

to support the controlling mortgage criteria,

the rents must be reduced to that rent or to

the Moderate Rehabilitation Fair Market Limit

as described below, whichever is lower.

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9-35 6/85

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4561.1

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(9-15) B. Fair Market Rent. The total charge to tenant (rent

plus personal benefit expense) will be limited by the

Moderate Rehabilitation Fair Market Rent Limits which

are 120 percent of the Existing Fair Market Rents in

effect on the date the Section 8 Moderate Rehabilitation

Agreement is signed.

C. Exception Before Construction. The above Fair Market

Rent Limits may be increased by up to 110 percent, if

the HUD local Field Office determines that median

rents for units of a given size in a specific area are

more than 10 percent higher than the Existing Fair Market

Rents.

D. Execution of Section 8 Moderate Rehabilitation Agreement.

On all projects, the agreement must be signed after

issuance of the firm commitment but on

1\) Insured Advances Cases. Before the date of initial

endorsement or start of construction, whichever is

first.

2\) Insurance on Completion Cases. Before the start of

construction.

E. Required HUD Field Review. In all cases, the rents must

be reviewed and approved by the local HUD Office.

F. Exception to Fair Market Rent Limits After Cost Certification.

After cost certification, the limits can be

raised an additional 10 percent, if necessary, for the

following reasons:

1\) Contingency type construction change orders

a\) Changes that reasonably could not have been

anticipated or are required by HUD or by local

codes or ordinances, and

b\) were not listed in the PHA or HUD approved work

write-up

2\) Unforeseen factors beyond the owner\'s control

a\) strikes

b\) weather delay

c\) unexpected delays caused by local government

d\) temporary relocation costs

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6/85 9-36

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4561.1

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(9-15) NOTE: (The above procedure varies from the

noninsured Section 8 Moderate Rehabilitation

procedures which allow rent increases

for changes in financing, and PHA

rent computation errors.)

G. Approval. If the additional 10 percent is required,

that processing must be reviewed and approved by HUD

Central Office.

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9-37 (and 9-38) 6/85

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4561.1

EXHIBIT 1

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REPLACEMENT COST - BY FORMULA

PROPOSED CONSTRUCTION

(WITH BSPRA) / (WITHOUT BSPRA)

Consultant Fee (If Lump Sum)(NP Projects Only)
\$\_\_\_\_\_\_\_\_\_\_\_\_

Supplemental Management Fund \_\_\_\_\_\_\_\_\_\_\_\_

Warranted Price of Land \_\_\_\_\_\_\_\_\_\_\_\_

Movable Equipment \_\_\_\_\_\_\_\_\_\_\_\_

TOTAL KNOWNS ON WHICH BSPRA MAY NOT BE ALLOWED
\$\_\_\_\_\_\_\_\_\_\_\_\_=A

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

Total For All Improvements \$\_\_\_\_\_\_\_\_\_\_\_\_

Taxes \_\_\_\_\_\_\_\_\_\_\_\_

Insurance \_\_\_\_\_\_\_\_\_\_\_\_

Title and Recording \_\_\_\_\_\_\_\_\_\_\_\_

Legal \_\_\_\_\_\_\_\_\_\_\_\_

Organization \_\_\_\_\_\_\_\_\_\_\_\_

Cost Certification Audit Fee \_\_\_\_\_\_\_\_\_\_\_\_

TOTAL KNOWNS ON WHICH BSPRA MAY BE ALLOWED =
\$\_\_\_\_\_\_\_\_\_\_\_\_=B

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

Interest Rate: 2 x Construction Period (Years) \_\_\_\_\_\_\_\_\_\_\_\_

Mortgage Insurance Premium \_\_\_\_\_\_\_\_\_\_\_\_

Examination Fee \_\_\_\_\_\_\_\_\_\_\_\_

Inspection Fee \_\_\_\_\_\_\_\_\_\_\_\_

Financing Fee \_\_\_\_\_\_\_\_\_\_\_\_

AMPO (NP Projects Only) \_\_\_\_\_\_\_\_\_\_\_\_

FNMA/GNMA Fee \_\_\_\_\_\_\_\_\_\_\_\_

Consultant Fee (If An Unknown)(NP Projects Only)
\_\_\_\_\_\_\_\_\_\_\_\_

Subtotal \_\_\_\_\_\_\_\_\_\_ x \_\_\_\_\_\_\_\_\_ Loan Ratio =
\$\_\_\_\_\_\_\_\_\_\_\_\_

Marketing Expense (Cooperative or Condominium

Project Only) \_\_\_\_\_\_\_\_\_\_\_\_

TOTAL UNKNOWNS \_\_\_\_\_\_\_\_\_\_\_\_=C

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

WITH BSPRA:

A + 1.1B

\_\_\_\_\_\_\_\_\_\_= \$ \_\_\_\_\_\_\_\_\_\_\_\_\_ Total Project Cost =
X

1.0 - 1.1C

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

WITHOUT BSPRA:

A + B

\_\_\_\_\_\_\_\_ = \$ \_\_\_\_\_\_\_\_\_\_\_\_\_ Total Project Cost = X

1.0 - C

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

X = \$\_\_\_\_\_\_\_\_\_\_\_ X \_\_\_\_\_\_\_\_\_\_ Loan Ratio = \$
\_\_\_\_\_\_\_\_\_\_\_\_ Maximum Mortgage

Complete Part G of Form HUD-92264 using the above determined \"maximum

mortgage\" rounded to the next lower \$100 multiple. The resulting
\"Total

Estimated Replacement Cost of Project\" should correspond approximately
to

the total project cost found by the formula.

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

9-39 6/85

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

4561.1

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

EXHIBIT 2

REPLACEMENT COST - BY FORMULA

PROPOSED CONSTRUCTION WITH SPRA

Item 36c - Total Land Improvements \$\_\_\_\_\_\_\_\_\_\_\_

Item 41 - Total Structures \_\_\_\_\_\_\_\_\_\_\_

Item 42 - General Requirements \_\_\_\_\_\_\_\_\_\_\_

Item 43 - Builder\'s General Overhead \_\_\_\_\_\_\_\_\_\_\_

Item 44 - Builder\'s Profit \_\_\_\_\_\_\_\_\_\_\_

Item 47 - Bond Premium \_\_\_\_\_\_\_\_\_\_\_

Item 48 - Other Fees \_\_\_\_\_\_\_\_\_\_\_

Item 69 - Consultant Fee \_\_\_\_\_\_\_\_\_\_\_

Item 70 - Supplement Management Fund \_\_\_\_\_\_\_\_\_\_\_

Item 70a - Movable Equipment \_\_\_\_\_\_\_\_\_\_\_

Item 71 - Contingency Reserve \_\_\_\_\_\_\_\_\_\_\_

Item 73 - Warranted Price of Land \_\_\_\_\_\_\_\_\_\_\_

Total Knowns on Which SPRA may not be allowed \$\_\_\_\_\_\_\_\_\_\_\_ =
Quantity A

Item 45 - Arch Fee - Design \$\_\_\_\_\_\_\_\_\_\_\_

Item 46 - Arch Fee - Supervisory \_\_\_\_\_\_\_\_\_\_\_

Item 54 - Taxes \_\_\_\_\_\_\_\_\_\_\_

Item 55 - Insurance \_\_\_\_\_\_\_\_\_\_\_

Item 58 - Inspection Fee (on Line G 50) \_\_\_\_\_\_\_\_\_\_\_

Item 62 - Title and Recording \_\_\_\_\_\_\_\_\_\_\_

Item 67 - Total Legal, Organization & Audit \_\_\_\_\_\_\_\_\_\_\_

Total Knowns on which SPRA may be allowed \$\_\_\_\_\_\_\_\_\_\_\_ =
Quantity B

Item 53 - Interest x 1/2 x Construction Time \_\_\_\_\_\_\_\_\_\_\_ %

Item 56 - MIP \_\_\_\_\_\_\_\_\_\_\_

Item 57 - Exam Fee \_\_\_\_\_\_\_\_\_\_\_

Item 59 - Financing Fee \_\_\_\_\_\_\_\_\_\_\_

Item 60 - AMPO \_\_\_\_\_\_\_\_\_\_\_

Item 61 - FNMA/GNMA Fee \_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_% = Quantity C

A + 1.1B

\_\_\_\_\_\_\_\_\_\_\_=\_\_\_\_\_\_\_\_\_\_\_= \$\_\_\_\_\_\_\_\_\_\_\_
Total Project Cost = X

1.0 - .99C

X - A

\_\_\_\_\_\_\_\_ = \_\_\_\_\_\_\_\_\_\_ = \$ \_\_\_\_\_\_\_\_\_\_\_\_ =
SPRA

11 11

Total Project Cost \$ \_\_\_\_\_\_\_\_ x .9 = \$ \_\_\_\_\_\_\_\_\_ Max.
Mtge. (If

Based on Cost)

Check by completing Section G of Form HUD-92264 using the above

\"maximum mortgage\" amount rounded to the next lower \$100 multiple.

The resulting total project cost Item 71 should correspond

approximately to the total project cost found by the formula.

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

6/85 9-40

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

4561.1

EXHIBIT 3

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

REPLACEMENT COST - BY FORMULA

PROPOSED CONSTRUCTION

(WITH GROUND LEASE)

(WITH BSPRA) / (WITHOUT BSPRA)

Consultant Fee (If lump sum NP projects only) \$\_\_\_\_\_\_\_\_\_\_

Supplemental Management Fund \_\_\_\_\_\_\_\_\_\_

Warranted Price of Land \_\_\_\_\_\_\_\_\_\_

Ground Rent During Construction \_\_\_\_\_\_\_\_\_\_

Movable Equipment \_\_\_\_\_\_\_\_\_\_

TOTAL KNOWNS ON WHICH BSPRA MAY NOT BE ALLOWED \$\_\_\_\_\_\_\_\_\_\_= A

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

Total For All Improvements \$\_\_\_\_\_\_\_\_\_\_

Taxes \_\_\_\_\_\_\_\_\_\_

Insurance \_\_\_\_\_\_\_\_\_\_

Title and Recording \_\_\_\_\_\_\_\_\_\_

Legal \_\_\_\_\_\_\_\_\_\_

Organization \_\_\_\_\_\_\_\_\_\_

Cost Certification Audit Fee \_\_\_\_\_\_\_\_\_\_

TOTAL KNOWNS ON WHICH BSPRA MAY BE ALLOWED = \$\_\_\_\_\_\_\_\_\_\_= B

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

Interest Rate Divided By 2 x Construction Period (years)
\_\_\_\_\_\_\_\_\_\_

Mortgage Insurance Premium \_\_\_\_\_\_\_\_\_\_

Examination Fee \_\_\_\_\_\_\_\_\_\_

Inspection Fee \_\_\_\_\_\_\_\_\_\_

Financing Fee \_\_\_\_\_\_\_\_\_\_

AMPO (NP Projects Only) \_\_\_\_\_\_\_\_\_\_

FNMA/GNMA Fee \_\_\_\_\_\_\_\_\_\_

Consultant Fee (If An Unknown) (NP Projects Only) \_\_\_\_\_\_\_\_\_\_

Subtotal \_\_\_\_\_\_\_\_\_\_\_\_ x \_\_\_\_\_\_\_\_\_\_\_\_\_ Loan
Ratio = \_\_\_\_\_\_\_\_\_\_

Marketing Expense (Cooperative or Condominium Projects

Only) \_\_\_\_\_\_\_\_\_\_

TOTAL UNKNOWNS = \_\_\_\_\_\_\_\_\_\_= C

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

VALUE OF LEASED FEE (From Section K, Form HUD-92264)
\_\_\_\_\_\_\_\_\_\_= L

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

WITH BSPRA:

A + 1.1B - 1.1CL

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ = \$
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Total Project Cost = X

1.0 - 1.1C

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

WITHOUT BSPRA:

A + B - CL

\_\_\_\_\_\_\_\_\_\_\_ = \$
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Total Project Cost = X

1.0 - C

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

(X - L) x \_\_\_\_\_\_\_\_\_\_ Loan Ratio = \$
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Maximum Mortgage

Complete Part G of Form HUD-92264 using the above determined \"maximum

mortgage\" rounded to the next lower \$100 multiple. The resulting
\"Total

Estimated Replacement Cost of Project\" should correspond approximately
to

the total project cost found by the formula.

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

9-41 6/85

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

4561.1

EXHIBIT 4

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

REPLACEMENT COST - BY FORMULA

REHAB PROJECTS

(WITH BSPRA) / (WITHOUT BSPRA)

Consultant Fee (If lump sum) \$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Supplemental Management Fund \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Off-Site Costs (If Any) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\"As Is\" Value \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Relocation Cost (If Any) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Movable Equipment \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

TOTAL KNOWNS ON WHICH BSPRA MAY NOT BE ALLOWED
\$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ = A

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

Total For All Improvements \$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Interest on 1/2 of either the \"As Is\" Value or

Existing Indebtedness \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Taxes \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Insurance \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Inspection Fee (On \"TOT. for All Imprmts.\")
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Title and Recording \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Legal \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Organization \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Cost Certification Audit Fee \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

TOTAL KNOWNS ON WHICH BSPRA MAY BE ALLOWED =
\$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ = B

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

Interest Rate Divided By 2 x Construction

Period (years) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Mortgage Insurance Premium \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Examination Fee \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Financing Fee \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

AMPO (NP Rental Projects Only) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

FNMA/GNMA Fee \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Consultant Fee (When Dollar Amount Is Unknown)
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Subtotal \_\_\_\_\_\_\_\_\_\_\_\_ x \_\_\_\_\_\_\_\_\_\_\_\_ Loan Ratio
= \$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Marketing Expense (Cooperative or Condominium

Projects Only) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

TOTAL UNKNOWNS = \$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ = C

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

WITH BSPRA:

A + 1.10055B

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ = \$
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Total Project Cost = X

1.0 1.10055C

X - A

\_\_\_\_\_\_\_\_\_ = \$ \_\_\_\_\_\_\_\_\_\_\_\_\_\_ BSPPA

11

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

WITHOUT BSPRA:

A + B

\_\_\_\_\_\_\_\_\_ = \$ \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_Total
Project Cost = X

1.0 - C

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

X = \$\_\_\_\_\_\_\_\_\_\_\_ x \_\_\_\_\_\_\_\_\_\_\_ Loan Ratio = \$
\_\_\_\_\_\_\_\_\_\_\_\_ Maximum Mortgage

Recalculate the interest based on 1/2 of the sum of the mortgage and
either

\"As Is\" Value or existing indebtedness. Enter the result on line
titled

\"Int.\_\_\_\_ Mos. @ \_\_\_\_\_\_, Part G of Form HUD-92264.

For projects with BSPRA only, recalculate the inspection fee based on

\"Tot. For All Imprmts,\" plus rounded to the next higher \$100
multiple.

Enter the result on line titled \"FHA Inspec. Fee\", Part G of Form

HUD-92264.

Complete Section G of Form HUD-92264 using the above \"maximum
mortgage\"

amount rounded to the next lower \$100 multiple. The resulting \"Total

Estimated Replacement Cost of Project\" should correspond approximately
to

the total project cost found by the formula.

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

6/85 9-42

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

4561.1

EXHIBIT 5

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

REHABILITATION

REPLACEMENT COST - BY FORMULA WITH SPRA

Item 36c - Total Land Improvements \$\_\_\_\_\_\_\_\_\_

Item 41 - Total Structures \_\_\_\_\_\_\_\_\_

Item 42 - General Requirements \_\_\_\_\_\_\_\_\_

Item 43 - Builder\'s General Overhead \_\_\_\_\_\_\_\_\_

Item 44 - Builder\'s Profit \_\_\_\_\_\_\_\_\_

Item 47 - Bond Premium \_\_\_\_\_\_\_\_\_

Item 48 - Other Fees \_\_\_\_\_\_\_\_\_

Item 69 - Consultant Fee \_\_\_\_\_\_\_\_\_

Item 70 - Supplement Management Fund \_\_\_\_\_\_\_\_\_

Item 70a - Movable Equipment \_\_\_\_\_\_\_\_\_

Item 71 - Contingency Reserve \_\_\_\_\_\_\_\_\_

Item 73 - \"As Is\" Value \_\_\_\_\_\_\_\_\_

Total Knowns on Which SPRA may not be allowed \$\_\_\_\_\_\_\_\_\_ =
Quantity A

Item 45 - Arch Fee - Design \$\_\_\_\_\_\_\_\_\_

Item 46 - Arch Fee - Supervisory \_\_\_\_\_\_\_\_\_

Item 53 - Interest on 1/2 of \"As Is\" or Ex Ind \_\_\_\_\_\_\_\_\_

Item 54 - Taxes \_\_\_\_\_\_\_\_\_

Item 55 - Insurance \_\_\_\_\_\_\_\_\_

Item 58 - Inspection Fee (on Line G 50) \_\_\_\_\_\_\_\_\_

Item 62 - Title and Recording \_\_\_\_\_\_\_\_\_

Item 67 - Total Legal, Organization & Audit \_\_\_\_\_\_\_\_\_

Total Knowns on which SPRA may be allowed \$\_\_\_\_\_\_\_\_\_ =
Quantity B

Item 53 - Interest x 1/2 x Construction Time \_\_\_\_\_\_\_\_\_ %

Item 56 - MIP \_\_\_\_\_\_\_\_\_

Item 57 - Exam Fee \_\_\_\_\_\_\_\_\_

Item 59 - Financing Fee \_\_\_\_\_\_\_\_\_

Item 60 - AMPO \_\_\_\_\_\_\_\_\_

Item 61 - FNMA/GNMA Fee \_\_\_\_\_\_\_\_\_

Subtotal \_\_\_\_\_\_\_\_\_\_ x 90% = Unknowns \_\_\_\_\_\_\_\_\_%=
Quantity C

A + 1.10055B

\_\_\_\_\_\_\_\_\_\_\_\_\_\_ = \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Total Project Cost = X

1 - 1.10055C

X - A

\_\_\_\_\_\_\_ = \_\_\_\_\_\_\_\_\_\_\_\_\_\_ SPRA

11

X = \$ \_\_\_\_\_\_\_\_\_\_ x \_\_\_\_\_\_\_\_\_\_ Loan Ratio = \$
\_\_\_\_\_\_\_\_\_\_\_\_\_ Maximum Mortgage

Recalculate the interest based on 1/2 of the sum of the mortgage and
either

\"As Is\" Value or existing indebtedness. Enter the result on line
titled

\"Int. Mos. \@\_\_\_\_\_ %, Part G of Form HUD-92264.

For projects with SPRA only, recalculate the inspection fee based on

\"Tot. For All Imprmts.\" plus SPRA rounded to the next higher \$100
multiple.

Enter the result on line titled \"FHA Inspec. Fee,\" Part G of Form

HUD-92264.

Complete Section G of Form HUD-92264 using the above \"maximum
mortgage\"

amount rounded to the next lower \$100 multiple. The resulting \"Total

Estimated Replacement Cost of Project\" should correspond approximately
to

the total project cost found by the formula.

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

9-43 6/85

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

4561.1

EXHIBIT 6

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

CRITERION 4, TRIAL Form HUD-92264A Without BSPRA

No. of 0BR LU \_\_\_\_\_\_\_\_\_\_\_ x \$ \_\_\_\_\_\_\_\_\_\_\_ = \$
\_\_\_\_\_\_\_\_\_\_

No. of 1BR LU \_\_\_\_\_\_\_\_\_\_\_ x \$ \_\_\_\_\_\_\_\_\_\_\_ = \$
\_\_\_\_\_\_\_\_\_\_

No. of 2BR LU \_\_\_\_\_\_\_\_\_\_\_ x \$ \_\_\_\_\_\_\_\_\_\_\_ = \$
\_\_\_\_\_\_\_\_\_\_

No. of 3BR LU \_\_\_\_\_\_\_\_\_\_\_ x \$ \_\_\_\_\_\_\_\_\_\_\_ = \$
\_\_\_\_\_\_\_\_\_\_

No. of 4+BR LU \_\_\_\_\_\_\_\_\_\_\_ x \$ \_\_\_\_\_\_\_\_\_\_\_ = \$
\_\_\_\_\_\_\_\_\_\_

Total Statutory Mortgage Knowns \$(A) \_\_\_\_\_\_\_\_\_\_\_\_\_

Value of Site Not Attributable to

Dwelling Use \$ \_\_\_\_\_\_\_\_ x Loan to Value Ratio\_\_\_\_\_\_% =
\$(B) \_\_\_\_\_\_\_\_\_\_\_\_\_

Item 50 - Total For All Improvements = \$ \_\_\_\_\_\_\_\_\_\_

Item 54 - Taxes = \$ \_\_\_\_\_\_\_\_\_\_

Item 55 - Insurance = \$ \_\_\_\_\_\_\_\_\_\_

Item 62 - Title & Recording = \$ \_\_\_\_\_\_\_\_\_\_

Item 64 - Legal = \$ \_\_\_\_\_\_\_\_\_\_

Item 65 - Organization = \$ \_\_\_\_\_\_\_\_\_\_

Item 66 - Cost Certification audit = \$ \_\_\_\_\_\_\_\_\_\_

Item 69 - Consultant Fee = \$ \_\_\_\_\_\_\_\_\_\_

Item 70 - Supplemental Management Fund = \$ \_\_\_\_\_\_\_\_\_\_

Item 70a - Movable Equipment = \$ \_\_\_\_\_\_\_\_\_\_

Item 71 - Contingency Reserve = \$ \_\_\_\_\_\_\_\_\_\_

Total Knowns = \$ \_\_\_\_\_\_\_\_\_\_

Total Knowns \$ \_\_\_\_\_\_\_\_ x Loan to Value Ratio\_\_\_\_\_\_% =
\$(C) \_\_\_\_\_\_\_\_\_\_\_\_\_

Cost Not Attributable to Dwelling Use \$(D) \_\_\_\_\_\_\_\_\_\_\_\_%

Item 53 - Interest Rate Divided By 2 x Construction

Time in Months Divided by 12 \_\_\_\_\_\_\_\_\_\_%

Item 56 - Mortgage Insurance Premium \_\_\_\_\_\_\_\_\_\_%

Item 57 - FHA Exam Fee \_\_\_\_\_\_\_\_\_\_%

Item 58 - FHA Inspection Fee \_\_\_\_\_\_\_\_\_\_%

Item 59 - Financing Fee \_\_\_\_\_\_\_\_\_\_%

Item 60 - AMPO \_\_\_\_\_\_\_\_\_\_%

Item 61 - FNMA/GNMA Fee \_\_\_\_\_\_\_\_\_\_%

Total Unknowns \_\_\_\_\_\_\_\_\_\_%

Total Unknowns \_\_\_\_\_ % x Loan to Value Ratio \_\_\_\_\_ % = (E)
\_\_\_\_\_\_\_\_\_\_\_\_%

Step 1 - A \$ \_\_\_\_\_\_\_ + B \$ \_\_\_\_\_\_\_\_\_\_ = \$
\_\_\_\_\_\_\_\_\_

Step 2 - D \_\_\_\_\_\_\_ % x C \$ \_\_\_\_\_\_\_\_\_\_ = \$
\_\_\_\_\_\_\_\_\_

Step 3 - Total of Steps 1 and 2 \$ \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Step 4 - D \_\_\_\_\_\_\_ % x E \_\_\_\_\_\_\_\_\_\_ % =
\_\_\_\_\_\_\_\_\_\_\_

Step 5 - 1.0 - Step 4 \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Step 3

Mortgage Amount = \_\_\_\_\_\_\_\_ = \$
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Step 5

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

6/85 9-44

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

4561.1

EXHIBIT 7

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

CRITERION 4, TRIAL Form HUD-92264A With BSPRA

No. of 0BR LU \_\_\_\_\_\_\_\_\_\_\_ x \$ \_\_\_\_\_\_\_\_\_\_\_ = \$
\_\_\_\_\_\_\_\_\_\_

No. of 1BR LU \_\_\_\_\_\_\_\_\_\_\_ x \$ \_\_\_\_\_\_\_\_\_\_\_ = \$
\_\_\_\_\_\_\_\_\_\_

No. of 2BR LU \_\_\_\_\_\_\_\_\_\_\_ x \$ \_\_\_\_\_\_\_\_\_\_\_ = \$
\_\_\_\_\_\_\_\_\_\_

No. of 3BR LU \_\_\_\_\_\_\_\_\_\_\_ x \$ \_\_\_\_\_\_\_\_\_\_\_ = \$
\_\_\_\_\_\_\_\_\_\_

No. of 4+BR LU \_\_\_\_\_\_\_\_\_\_\_ x \$ \_\_\_\_\_\_\_\_\_\_\_ = \$
\_\_\_\_\_\_\_\_\_\_

Total Statutory Mortgage Knowns \$(A) \_\_\_\_\_\_\_\_\_\_\_\_\_

Value of Site Not Attributable to

Dwelling Use \$ \_\_\_\_\_\_\_\_ x Loan to Value Ratio\_\_\_\_\_\_% =
\$(B) \_\_\_\_\_\_\_\_\_\_\_\_\_

Item 50 - Total For All Improvements = \$ \_\_\_\_\_\_\_\_\_\_

Item 54 - Taxes = \$ \_\_\_\_\_\_\_\_\_\_

Item 55 - Insurance = \$ \_\_\_\_\_\_\_\_\_\_

Item 62 - Title & Recording = \$ \_\_\_\_\_\_\_\_\_\_

Item 64 - Legal = \$ \_\_\_\_\_\_\_\_\_\_

Item 65 - Organization = \$ \_\_\_\_\_\_\_\_\_\_

Item 66 - Cost Certification Audit = \$ \_\_\_\_\_\_\_\_\_\_

Subtotal Knowns = \$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Subtotal x 1.1 (10% BSPRA Adj.) = \$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Item 69 - Consultant Fee = \$ \_\_\_\_\_\_\_\_\_\_

Item 70 - Supplemental Management Fund = \$ \_\_\_\_\_\_\_\_\_\_

Item 70a - Movable Equipment = \$ \_\_\_\_\_\_\_\_\_\_

Item 71 - Contingency Reserve = \$ \_\_\_\_\_\_\_\_\_\_

Total Knowns Adjusted for BSPRA \$ \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Total Knowns \$ \_\_\_\_\_\_\_\_ x Loan to Value Ratio\_\_\_\_\_\_% =
\$(C) \_\_\_\_\_\_\_\_\_\_\_\_\_

Cost Not Attributable to Dwelling Use \$(D) \_\_\_\_\_\_\_\_\_\_\_\_%

Item 53 - Interest Rate Divided By 2 x Construction

Time in Months Divided by 12 \_\_\_\_\_\_\_\_\_\_%

Item 56 - Mortgage Insurance Premium \_\_\_\_\_\_\_\_\_\_%

Item 57 - FHA Exam Fee \_\_\_\_\_\_\_\_\_\_%

Item 58 - FHA Inspection Fee \_\_\_\_\_\_\_\_\_\_%

Item 59 - Financing Fee \_\_\_\_\_\_\_\_\_\_%

Item 60 - AMPO \_\_\_\_\_\_\_\_\_\_%

Item 61 - FNMA/GNMA Fee \_\_\_\_\_\_\_\_\_\_%

Total Unknowns \_\_\_\_\_\_\_\_\_\_%

Total Unknowns \_\_\_\_\_ % x Loan to Value Ratio \_\_\_\_\_ % = (E)
\_\_\_\_\_\_\_\_\_\_\_\_%

Step 1 - A \$ \_\_\_\_\_\_\_ + B \$ \_\_\_\_\_\_\_\_\_\_ = \$
\_\_\_\_\_\_\_\_\_

Step 2 - D \_\_\_\_\_\_\_ % x C \$ \_\_\_\_\_\_\_\_\_\_ = \$
\_\_\_\_\_\_\_\_\_

Step 3 - Total of Steps 1 and 2 \$ \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Step 4 - D \_\_\_\_\_\_\_ % x E \_\_\_\_\_\_\_\_\_\_ % =
\_\_\_\_\_\_\_\_\_\_\_

Step 5 - 1.0 - Step 4 \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Step 3

Mortgage Amount = \_\_\_\_\_\_\_\_ = \$
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Step 5

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

9-45 6/85

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

4561.1

EXHIBIT 8

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

SUPPLEMENT TO FORM HUD-92264

Case No. \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

SECTION 221(d)(3) RENT FORMULA

SUPPLEMENT TO FORM HUD-92264

(For 221(d)(3) Rental Projects)

1\. Multiply the replacement cost (from line G74, Form HUD-92264)

\$ \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ by the debt service rate
(interest rate

plus initial curtail rate plus MIP, if any)

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_% = \$\_\_\_\_\_\_\_\_\_\_\_\_\_\_

2\. Divide the result from \"1\" by
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ %

(95% for nonprofit or 100% for limited distribution) =
\$\_\_\_\_\_\_\_\_\_\_\_\_\_\_

3\. Add total amount project expenses (including management

expenses) \$ \_\_\_\_\_\_\_\_\_\_\_\_\_\_ to the result from \"2\" =
\$\_\_\_\_\_\_\_\_\_\_\_\_\_\_

4\. Less annual effective gross commercial income, if any.

(Annual gross commercial income \$ \_\_\_\_\_\_\_\_\_\_\_\_\_\_ x

occupancy expected \_\_\_\_\_\_\_\_\_\_\_\_\_\_ %) =
\$\_\_\_\_\_\_\_\_\_\_\_\_\_\_

5\. Annual effective gross residential rents, parking and

laundry = \$\_\_\_\_\_\_\_\_\_\_\_\_\_\_

6\. Annual gross income to residential units, parking and

laundry (divide line 5 by residential occupancy)

= \$\_\_\_\_\_\_\_\_\_\_\_\_\_\_

7\. Divide the result of line 6 by 12. The result equals

monthly income to residential units, parking and

laundry = \$\_\_\_\_\_\_\_\_\_\_\_\_\_\_

8\. Subtract monthly parking and laundry, if any =
\$\_\_\_\_\_\_\_\_\_\_\_\_\_\_

9\. Rent formula residential total rent per month (enter

in line H 1., Form HUD-92264) = \$\_\_\_\_\_\_\_\_\_\_\_\_\_\_

NOTE: For all calculations (lines 1 through 9), answers

in dollars and cents are to be rounded upward to

the next higher whole dollar amount.

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

6/85 9-46

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

4561.1

EXHIBIT 9

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

BASIC RENT FORMULA SUPPLEMENT TO FORM HUD-92264

MAXIMUM ALLOWABLE GROSS RENTAL - MULTIFAMILY HOUSING

(For Sections 207, 213 Investor-Sponsor, 220, 221(d)(4) and 231 PM)

PROJECT NO. \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

1\. Total estimated cost of property (from Form HUD-92264) \$
\_\_\_\_\_\_\_\_\_\_

2\. Ratio of total cost to Dwelling Unit Cost \_\_\_\_\_\_\_\_\_\_ %

3\. Cost applicable to dwelling use (Line 1 divided by

Line 2) \$ \_\_\_\_\_\_\_\_\_\_

4\. Cash working capital (\_\_\_\_\_\_\_\_\_\_ % of mortgage amount) \$
\_\_\_\_\_\_\_\_\_\_

5\. Total investment in dwelling units (Line 3 plus Line 4) \$
\_\_\_\_\_\_\_\_\_\_

6\. Interest Rate \_\_\_\_\_\_\_\_\_\_%

Initial Curtail \_\_\_\_\_\_\_\_\_\_%

FHA-MIP \_\_\_\_\_\_\_\_\_\_%

Over-ride \_\_\_\_\_\_\_\_\_\_%

Total \_\_\_\_\_\_\_\_\_\_% on Line 5 - Allowable return

on Investment \$ \_\_\_\_\_\_\_\_\_\_

7\. Total annual expense, taxes and reserves (from Part E

of Form HUD-92264) \$ \_\_\_\_\_\_\_\_\_\_

8\. Expense applicable to dwelling units (Line 7 divided

by Line 2) \$ \_\_\_\_\_\_\_\_\_\_

9\. Allowable gross income applicable to dwelling structures

and tenant parking, not including vacancy and collection

losses, (Line 6 plus Line 8) \$ \_\_\_\_\_\_\_\_\_\_

10\. Occupancy estimate \_\_\_\_\_\_\_\_\_\_ %

11\. Maximum allowable annual gross income applicable to

dwelling structures and tenant parking adjusted for

vacancy and collection losses, (Line 9 divided by

Line 10) \$ \_\_\_\_\_\_\_\_\_\_

12\. Maximum allowable monthly gross rental applicable to

dwelling structures and tenant parking \$ \_\_\_\_\_\_\_\_\_\_

13\. Monthly income from tenant parking \$ \_\_\_\_\_\_\_\_\_\_

14\. Maximum allowable monthly rental for all family units

(enter in Part H, Item 1 of Form HUD-92264). \$ \_\_\_\_\_\_\_\_\_\_

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

9-47 6/85

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

4561.1

EXHIBIT 10

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

COOPERATIVE NET INCOME

1\. Total Monthly Rent Roll from Residential Units
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

2\. Total Monthly Income from:

a\. Commercial \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

b\. Parking \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

c\. Laundry \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

d\. Subtotal \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

e\. Line 2d x \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_% of collections

expected \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

3\. Total Monthly Income All Sources

(Line 1 plus Line 2e) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

4\. Annual Income From All Sources

(Line 3 x 12 months) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

5\. Annual Income After Provision for 3% Operating

Reserve and 2% Vacancy Reserve (Line 4 x .95)
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

6\. Total Annual Expense, Replacement Reserves,

and Taxes \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

7\. Annual Net Income (Line 5 minus Line 6)\*
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\*In remarks, enter \"Annual Net Income for

Debt Service Criterion \$ \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.\"

This amount will be used by the mortgage credit processor.

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

6/85 9-48

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

4561.1

EXHIBIT 11

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

COOPERATIVE RENT FORMULA

1\. Mortgage Amount \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

2\. Multiplied by DS Rate of \_\_\_\_\_\_\_\_\_\_\_\_\_

3\. Annual Payments to P, I, MIP \_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

4\. Annual Payments to Ground Lease \_\_\_\_\_\_\_\_\_\_\_\_\_

5\. Total Payments Divided by .95 \_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

6\. Total Annual Expense,

Replacement Reserves & Taxes \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

7\. Total Allowable Annual

Effective Gross Income Before

Vacancy & Operating Reserves

(Sum of Lines 5 and 6)

8\. Total Allowable Annual Gross

Income (Line 6 Divided By .95

To Provide 3% Operating Reserve

and 2% Vacancy Reserve) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

9\. Total Monthly Gross Income

(Divided By 12 Mo.) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

10\. a. Monthly Commercial Income \_\_\_\_\_\_\_\_\_\_\_\_\_

b\. Parking Income \_\_\_\_\_\_\_\_\_\_\_\_\_

c\. Laundry Income \_\_\_\_\_\_\_\_\_\_\_\_\_

d\. Subtotal \_\_\_\_\_\_\_\_\_\_\_\_\_

e\. Effective Gross Income

From Commercial Parking

And Laundry (Line 10d x

Percentage Collected

\_\_\_\_\_\_\_\_%) \_\_\_\_\_\_\_\_\_\_\_\_\_

11\. Monthly Charge To Units

(Residential) (Line 9 minus

Line 10e) \_\_\_\_\_\_\_\_\_\_\_\_\_

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

9-49 6/85

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

4561.1

EXHIBIT 12

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

UNITS IN NON-SECTION 8 PROJECTS

INVOLVING TAX-EXEMPT FINANCING

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

0-BR 1-BR 2-BR 3-BR 4-BR

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

1\. Rent by Market Comparison

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

2\. Personal Benefit Expense

(if any)

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

3\. Applicable Section 8

Eligibility Income Limit

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

4\. Estimated Maximum Affordable

Monthly Rent for Restricted 1/

Units (30 x line 3) - line 2

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

12

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

5\. Monthly Rent Estimate for

Restricted Units (lesser of

line 1 and line 4) 2/

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

NOTES:

1/ Where State or local laws, ordinances or regulations limit rent to an

amount lower than this formula estimate, or the Sponsor\'s proposed

rent is less than this formula estimate, enter the lower amount and

explain below.

2/ Enter in Section C of Form HUD-92264.

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

6/85 9-50