HUD MAP Market Studies and Appraisals

HUD MAP market studies and appraisals are prepared as a part of the underwriting process for financing multi-family housing provided by HUD. Financing provided by HUD (or FHA - Federal Home Administration) is a meaningful portion of the financing for multifamily properties. This includes both existing properties and proposed apartments. While the non-recourse aspects of HUD financing are attractive, some apartment investors are reluctant to seek HUD financing due to stories regarding extended periods to close HUD loans. HUD is an acronym for Housing and Urban Development, a department of the U.S. Government. MAP is an acronym for multi-family accelerated processing.

HUD’s MAP program was implemented to expedite HUD 221 d 4 lending programs for existing and proposed multi-family. Apartment developers particularly appreciate the non-recourse aspects of HUD financing. They also appreciate the relatively high level of leverage possible with HUD financing. Some real estate investors and mortgage brokers had become disenchanted with the time necessary to complete a HUD financing transaction. Because they had a very unfavorable experience in the past, they are unwilling to consider seeking HUD financing. This is unfortunate since the HUD loan application process has changed substantially. They were delighted with the non-recourse provisions, interest rates, loan to value ration and amortization period. Traditional bank loans require full recourse for the term of the loan. Conduit lenders have absorbed a portion of the multifamily lending previously serviced by HUD. However, the time required to close a loan made it impractical for many transactions. Financing for acquisitions must be completed in a limited period of time with a high level of certainty. Consequences for not timely closing an apartment acquisition can include loss of earnest money and loss of an attractive investment opportunity.

HUD MAP has revised the process to have borrowers obtain and organize all documentation prior to submitting an application. The previous application process was split into several stages. This bifurcated approach extended the time to approve and close a HUD apartment loan. Once HUD MAP revised the complete application and it has been submitted, the local HUD office has 30 days to review and accept or reject the application. The MAP application process has improved the time required to obtain funding for a HUD apartment loan.

Market studies and appraisals for HUD MAP are similar in concept to other market studies and appraisals. Many lenders have specific criteria for performing appraisals and market studies. Appraisers and market analysts generally perform engagements consistently with the lender's criteria. However, it is unlikely a loan closing would be deferred due to a technical oversight in complying with the lenders appraisal or market study instructions. However in HUD MAP, there are numerous detailed criteria. Strict compliance with these criteria is mandatory. Precise and complete adherence to the HUD criteria is required. Final loan approval will not be obtained until any issues regarding the appraisal and or market study have been resolved.

O'Connor and Associates has prepared over 4,000 appraisals and market studies for apartments. Many of these have been prepared in conjunction with HUD financing.

O’Connor and Associates is the largest independent appraisal firm in the southwestern US and has over 40 full-time staff members engaged full-time in valuation and market study assignments. Their expertise includes HUD MAP market studies and appraisals, HUD mark to market studies, HUD rent comparability market studies, feasibility studies, valuing real estate, business personal property, business enterprise valuation, purchase price allocation for businesses, valuation for property tax assignments, partial interest valuation, estate tax valuation, expert witness testimony, and valuation for condemnation.

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