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6. Be an active member of a nationally recognized appraisal organization (the American <br /> Institute of Real Estate Appra.isers or the American Society of Appraisers); and <br /> 7. Include a statement on the Opinion stating, "The appraiser has no interest in the property <br /> appraised, or in any contract for the rehabilitation thereof or in any business relationship <br /> with the prospective bonower or members of his/her family, other than the appraisals <br /> fee." <br /> LOAN UNDERWRITING GUIDELINES <br /> This section briefly covers the requirements for underwriting deferred loans, that is, for <br /> determining if the project is an acceptable risk and for making a final decision on whether or not <br /> the loan is to be made. Policies set forth in this procedures manual will be used to make a final <br /> decision on a loan. <br /> There are two key principles that EUD must evaluate when underwriting loans to determine if <br /> the borrower is an accepta.ble risk: <br /> 1. Value of the Securitv-The property's After-Rehab Value. I <br /> 2. Scope of the rehabilitation work - to proceed, work must be sound, and it must be <br /> adequate to extend the useful life of the property and to protect the value of the security <br /> for the term of the loan. <br /> CONTRACTING FOR REHABILITATION WORK FOR DEFERRED FORGIVABLE <br /> LOANS <br /> A. General <br /> This section sets forth requirements and procedures with respect to construction <br /> contracts for rehabilitation fmanced through a loan. <br /> For rehabilitation loans, construction will be undertaken only through a written contract <br /> between the contractor and the borrower. <br /> B. Form of Contract <br /> The construction contract shall consist of a single agreement signed by the contractor and <br /> accepted by the borrower. It shall contain the proposal amount, all general conditions, <br /> and a description of all rehabilitation work to be performed. The contract may be <br /> changed as federal, state and local laws,regulations or policies require. <br /> C. Specifications and Drawings <br /> Specifications (based on the work write-up and illustrative sketches covering the specific <br /> rehabilitation work for each property on which a rehabilitation loan will be made) shall <br /> be prepared by the owner and/or azchitect. Drawings shall be prepazed when its essential <br /> to show the scope and detail of the work involved, to insure clarity for a fair bid and to <br /> 10 <br />