HUD 223(a)(7) Additional Requirements
Below are some of the additional requirements for HUD Section 223(a)(7) financing:
Third Party Reports: In general, HUD only requires a PCNA (project capital needs assessment) to apply for Section 223(a)(7) refinancing. In addition, HUD requires a PCNA every 10 years after the initial application. HUD does NOT require other third-party reports such as property appraisals, market studies, or environmental assessments.
Sponsor Requirements: HUD requires minimal underwriting by the sponsor.
Post-Closing Reporting: HUD requires annual audited financial statements.
Davis-Bacon Wages: Not required.
Cost Certification: Not required. Although in some instances, HUD may require the borrower to provide details of the costs and completion of both critical and non-critical repairs. On top of that, appropriate minimum documentation regarding, invoices, receipts, and photos in reference to repairs may be required.
Site Visits: For projects with minor repairs, HUD typically doesn’t require visits by HUD staff. The Hub Regional or Satellite Director of the HUD office determines the need for site visits in reference to repairs or escrow draws.