302.01

Single-Asset Entity

Requirements

You must ensure that

  • the BorrowerBorrowerPerson who is the obligor per the Note. is a domestic single-asset entity, and
  • if the BorrowerBorrowerPerson who is the obligor per the Note. is ultimately owned by foreign persons or entities, it has at least 1 domestic tier of ownership.

Guidance

As you analyze the BorrowerBorrowerPerson who is the obligor per the Note. and its organizational documents to confirm that it is a single-asset entity, consider the following questions:

  • Can the BorrowerBorrowerPerson who is the obligor per the Note. acquire any additional real property, personal property, or assets?
  • Can the BorrowerBorrowerPerson who is the obligor per the Note. participate in any business other than managing and operating the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). ?
  • Are the Borrower’sBorrower’sPerson who is the obligor per the Note. assets or funds commingled with anyone else’s?  If so, can these assets or funds be separated and identified?
  • Are the Borrower’sBorrower’sPerson who is the obligor per the Note. financial statements, accounting records, and other organizational documents maintained with anyone else’s?
  • Except for the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. , has the BorrowerBorrowerPerson who is the obligor per the Note. assumed, guaranteed, or obligated itself to cover anyone else’s liabilities?

Requirements

If the BorrowerBorrowerPerson who is the obligor per the Note. owns more than a single asset, the BorrowerBorrowerPerson who is the obligor per the Note. may still qualify as a single asset entity if you:

  • Obtain an operating statement for each real property owned.
  • Obtain proof that the BorrowerBorrowerPerson who is the obligor per the Note. has no existing debt secured by a LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. on any of the Borrower’sBorrower’sPerson who is the obligor per the Note. real property, other than a Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. purchased by Fannie Mae.
  • Obtain proof that the BorrowerBorrowerPerson who is the obligor per the Note. does not have any direct or indirect equity interest subject to mezzanine financing.
  • Ensure that the Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. prohibit the BorrowerBorrowerPerson who is the obligor per the Note. from
    • acquiring any additional debt (except for supplemental debt on existing Fannie Mae loans),
    • increasing any existing debt, or
    • acquiring any additional real property.

Guidance

As you analyze the BorrowerBorrowerPerson who is the obligor per the Note. that owns more than a single asset, you should consider whether its other real estate assets are only

  • multifamily properties, or
  • other types of real estate that do not pose an environmental risk to the BorrowerBorrowerPerson who is the obligor per the Note. .