What is BSPRA (Builder and Sponsor’s Profit and Risk Allowance)?

BSPRA (Builder and Sponsor’s Profit and Risk Allowance) Definition

BSPRA (Builder and Sponsor’s Profit and Risk Allowance) is used as a credit to the builder, and consists of 10% of the estimated project cost. The builder’s profit is basically ‘paper equity’ which is exchanged for a certain amount of ownership in the project. BSPRA is used if an identity of interest (joint custody or ownership) between the mortgagor and general contractor exists. In general, it reduces cash due at closing and motivates builders to complete the project on time. Typically, BSPRA can only be used with one kind of HUD multifamily loan, the HUD 221(d)(4) loan.


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