Guide Update 19-04
:  Credit Facilities and Rent-Stabilized Properties
Effective:
Retired: 05/02/22
Credit Facilities and Rent-Stabilized Properties (Redline).pdf

HIGHLIGHTS

Effective November 25, 2019, Fannie Mae is increasing the minimum Credit Facility transaction size to $100 million.  In addition, for Rent-Stabilized Properties, Fannie Mae is also:

  • providing new underwriting guidance; and
  • updating the Small Mortgage Loan requirements for 
    • Key Principal Guaranty Obligations,
    • Underwritten Net Cash Flow (Underwritten NCF),
    • Property Condition Assessments (PCAs),
    • Replacement Reserves, and
    • Financial Statements.

 

Changes

The minimum Credit Facility transaction size is increasing from $55 million to $100 million.

The new Rent-Stabilized Properties section in Part II, Valuation and Income,  provides guidance for

  • underwriting Property income,
  • preparing refinance risk analyses,
  • determining the Underwriting Value,
  • reviewing fund Sponsors, and
  • funding Replacement Reserves.

For Small Mortgage Loans:

  • Key Principal Guaranty Obligation:  You must obtain a Non-Recourse Guaranty from each Key Principal for any Small Mortgage Loan.
  • Underwritten NCF:  You must deduct owner-occupied units as an expense unless the Mortgage Loan is Tier 3 or Tier 4, or the Property contains 24 or more units.
  • PCAs:  You must require a PCA if Replacement Reserves are required.
  • Replacement Reserves:  You must require full or alternative funding of Replacement Reserves for any Tier 2 Small Mortgage Loan not located in an Eligible MSA, or on a Rent-Stabilized Property located in the New York-Newark-Jersey City, NY-NJ-PA MSA.
  • Financial Statements:  Clarified the wording to align with the financial requirements in Part I, Chapter 3.  You must obtain a schedule of owned real estate assets and signed financial statements.

 

Questions

Please contact your Deal Team with any questions.