HUD’s version of a Property Condition Assessment, called aProject Capital Needs Assessment (PCNA), is a much different beastthan the engineering assessments required for other multifamilylenders including Fannie Mae and Freddie Mac.

Low andSlow. HUD/FHA loans will have a lower interest ratebut the financing process will take longer, due to a greater levelof oversight and coordination. The same goes for HUD Project Capital NeedsAssessments. Because many of the integral parts of thePCNA are reliant on various sources of information, it is vitalthat all parties involved (including the Lender, Appraiser andEngineering Consultant) coordinate the flow of information, whichtakes time. For example, the Property Insurance Schedule formHUD-92329 accounts for the appraised/land value based on theengineering consultant’s valuation of the gross square feet perbuilding. Therefore, the appraiser would need thisinformation from the consultant before they could provide theappraised value, which the consultant in turn would use to executethe form (whew!).

Additionally, borrowers may request changes to the anticipatedPCNA reserves based on their historical expenditures. Finally, HUD’s review may also generate questions orrevisions to the PCNA. So, all things considered, HUDprojects may often take 3-6 months or longer.