Section 2001 | |
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2001.01 | |
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Requirements
You must DeliverDeliverSubmission of all correct, accurate, and certifiable documents, data, and information with all applicable documents properly completed, executed, and recorded as needed, and any deficiencies resolved to Fannie Mae’s satisfaction. a permanent 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. that complies with the Forward Commitment Confirmation.
2001.02 | |
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Requirements
A PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). undergoing new construction or substantial rehabilitation is eligible for a Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. . PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). substitutions are not permitted.
Section 2002 | |
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Guidance
You may contact the Fannie Mae Deal TeamFannie Mae Deal TeamTeam responsible for reviewing Pre-Review Mortgage Loans, waivers, etc. for funded Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. information.
Section 2003 | |
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2003.01A | |
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Requirements
Terms | Unfunded Forward Commitment Requirements |
---|---|
Forward Commitment Term | 30-month maximum for construction and lease up, unless extended per Part III, Chapter 20: Forward Commitments, Section 2003.05C: Forward Commitment Extensions. |
Borrower Commitment |
Must:
|
Loan Type |
Must be a fixed rate or variable rate:
|
Expiration or Termination |
You must not DeliverDeliverSubmission of all correct, accurate, and certifiable documents, data, and information with all applicable documents properly completed, executed, and recorded as needed, and any deficiencies resolved to Fannie Mae’s satisfaction. 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. as an immediate DeliveryDeliverySubmission of all correct, accurate, and certifiable documents, data, and information with all applicable documents properly completed, executed, and recorded as needed, and any deficiencies resolved to Fannie Mae’s satisfaction. if the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property.
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Guidance
The interest rate for a permanent 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. is determined:
- with a Rate LockRate LockAgreement between you and the Investor containing the terms of the Lender-Arranged Sale or Multifamily Trading Desk trade of the Mortgage Loan and the MBS terms and conditions relating to the underlying MBS, if applicable, which may be documented via a recorded telephone conversation. as of the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. date; or
- for a Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. on a Credit Enhancement Mortgage LoanCredit Enhancement Mortgage LoanMortgage Loan financed by a Bond issuance where Fannie Mae provides credit enhancement by a Credit Enhancement Instrument, or an MBS for Bonds. , at BondBondTax-exempt or taxable multifamily revenue bonds, or other tax-exempt or taxable bonds, issued to finance 1 or more Credit Enhancement Mortgage Loan Properties. pricing per Part IV, Chapter 8: Bond Transactions and Credit Enhancement Mortgage Loans, Section 801.04: Rate Lock.
Operating Procedures
You must
- set the Guaranty FeeGuaranty FeeFee retained by Fannie Mae for credit enhancing a Mortgage Loan or assuming credit risk on a Mortgage Loan, and which may be expressed as a percentage. and Servicing FeeServicing FeeFee a Servicer receives for collecting payments, managing operational procedures, and assuming your portion of credit risk for a Mortgage Loan, and which may be expressed as a percentage. at Rate LockRate LockAgreement between you and the Investor containing the terms of the Lender-Arranged Sale or Multifamily Trading Desk trade of the Mortgage Loan and the MBS terms and conditions relating to the underlying MBS, if applicable, which may be documented via a recorded telephone conversation. , and
- ensure they are paid only on the permanent 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. .
No Guaranty FeeGuaranty FeeFee retained by Fannie Mae for credit enhancing a Mortgage Loan or assuming credit risk on a Mortgage Loan, and which may be expressed as a percentage. or Servicing FeeServicing FeeFee a Servicer receives for collecting payments, managing operational procedures, and assuming your portion of credit risk for a Mortgage Loan, and which may be expressed as a percentage. will be charged during the construction period.
2003.02 | |
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2003.02A | |
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Requirements
You must collect the Good Faith DepositGood Faith DepositAmount you collect from the Borrower when originating a Mortgage Loan per Part IV, Chapter 2: Rate Lock and Committing, Section 203: Good Faith Deposits. from the BorrowerBorrowerPerson who is the obligor per the Note. per
2003.02B | |
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Requirements
The following fees apply to Forward CommitmentsForward CommitmentsCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. .
Fees | Requirements |
---|---|
Standby Fee |
For the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. term, the fee is:
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Standby Extension Fee |
For each extension contemplated in the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. , the fee is:
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Rate Lock Extension Fee | For a Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. not involving a Credit Enhancement Mortgage LoanCredit Enhancement Mortgage LoanMortgage Loan financed by a Bond issuance where Fannie Mae provides credit enhancement by a Credit Enhancement Instrument, or an MBS for Bonds. , per Part IV, Chapter 2: Rate Lock and Committing, Section 204.03B: Rate Lock Extensions and the Pricing MemoPricing MemoApplicable DUS Pricing Memo or non-DUS Pricing Memo communicating pricing for various products and features. . |
Non-Delivery Fee |
If the conversion conditions are not met or the permanent 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. is not DeliveredDeliveredSubmission of all correct, accurate, and certifiable documents, data, and information with all applicable documents properly completed, executed, and recorded as needed, and any deficiencies resolved to Fannie Mae’s satisfaction. per the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. , the fee is:
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Shortfall Fee |
For a Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. not involving a Credit Enhancement Mortgage LoanCredit Enhancement Mortgage LoanMortgage Loan financed by a Bond issuance where Fannie Mae provides credit enhancement by a Credit Enhancement Instrument, or an MBS for Bonds. , if the permanent 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. closes, but its original principal amount is less than 90% of the maximum 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. amount, the fee is:
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Origination Fee; Construction Loan Administration Fee |
You must:
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2003.03 | |
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2003.03A | |
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Requirements
You must:
- Underwrite, originate, and service a Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. 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. as if it were an immediate funding 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. .
- Agree to issue the Borrower CommitmentBorrower CommitmentYour written commitment with the Borrower to originate a Mortgage Loan, and any separate written or oral rate lock agreements between you and the Borrower to rate lock the Mortgage Loan. .
- Determine the construction lender has
- completed its underwriting, and
- agreed to issue a construction financing commitment.
- Confirm the InvestorInvestorMBS Investor for an MBS Mortgage Loan, or Fannie Mae for a Cash Mortgage Loan.
will
- issue its commitment to purchase the MBSMBSMortgage-Backed Security , and
- meet the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. conditions, including timing.
2003.03B | |
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Guidance
You should:
- Assess the:
- construction lender’s capacity to fund and monitor the construction loan; and
- ability of the development team and general contractor to
- complete the project, and
- post an acceptable bond or letter of credit for the construction lender.
- Review and approve the:
- project budget, including construction contingencies, and align any deferred development fee to market rates;
- LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. equity funding schedule;
- pro forma underwriting;
- feasibility of repaying the construction loan at conversion, including:
- evaluating several stress-test scenarios such as a decline in rents, an increase in operating expenses, or other circumstances;
- having the LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. investor or construction lender retain an appropriate portion of the development fee until specified construction and lease up milestones are met;
- the sufficiency of the LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. investor’s equity funding; and
- the availability of other capital sources such as grants or subordinate debt;
- absorption schedule, including a capture band analysis of submarket income;
- BorrowerBorrowerPerson who is the obligor per the Note. organizational documents;
- Affordable Regulatory Agreements; and
- Subordinate LoanSubordinate LoanMultifamily residential real estate loan secured by a Lien against the Property having a lesser priority than the Lien securing another multifamily residential real estate loan on the same Property. documents.
- Ensure the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property.
term is sufficient to allow for:
- 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). to be completed and leased;
- you to submit the conversion package;
- Fannie Mae to approve the conversion; and
- you to DeliverDeliverSubmission of all correct, accurate, and certifiable documents, data, and information with all applicable documents properly completed, executed, and recorded as needed, and any deficiencies resolved to Fannie Mae’s satisfaction. the permanent 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. .
2003.03C | |
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Requirements
If you and the construction lender use a single set of third-party reports for underwriting, the reports
- must be addressed to both lenders, but
- can be contracted and paid for by either lender.
Operating Procedures
You must obtain the following reports.
Report | Timing | You must... |
---|---|---|
Property Condition Assessment | Before Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. | Complete a PCAPCAAssessment of the Property's physical condition and historical operation. for all substantial rehabilitation properties. |
Before conversion | Obtain a PCAPCAAssessment of the Property's physical condition and historical operation. and complete the Replacement Reserve ScheduleReplacement Reserve ScheduleThe Required Replacement Schedule to the Multifamily Loan Agreement (Form 6001 series) and the applicable parts of the Multifamily Loan Agreement (or other agreement approved by Fannie Mae), that evidence the: Borrower’s agreement to replace identified capital items and perform required… per Part II, Chapter 4: Inspections and Reserves. | |
Environmental Site Assessment | Before construction | Obtain a Phase I ESAPhase I ESAEnvironmental Site Assessment conducted per the current ASTM E-1527 standard and the resulting report. . |
Before conversion |
|
|
Architectural Review | Before Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. |
From an independent consulting architect, obtain an architectural review assessing the Property'sProperty'sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code).
|
During construction | Use a consulting architect for in-field inspections. | |
Final inspection |
Require the consulting architect to conduct a final inspection confirming 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). :
|
|
Appraisal | Before CommitmentCommitmentContractual agreement between you and Fannie Mae where Fannie Mae agrees to buy a Mortgage Loan at a future date in exchange for an MBS, or at a specific price for a Cash Mortgage Loan, and you agree to Deliver that Mortgage Loan. | Obtain an AppraisalAppraisalWritten statement independently and impartially prepared by a qualified appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. per Part II, Chapter 2: Valuation and Income. |
Before conversion |
Obtain a new or updated AppraisalAppraisalWritten statement independently and impartially prepared by a qualified appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. if
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Guidance
You may use the same consulting architect as the construction lender if the consulting architect:
- is independent and not an employee of the construction lender;
- is retained directly by you and engaged separately by the construction lender; and
- acknowledges they may be required to make recommendations that do not align with those of the construction lender.
2003.04 | |
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Requirements
All:
- Forward CommitmentsForward CommitmentsCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. must comply with Part IV, Chapter 2: Rate Lock and Committing.
- Borrower CommitmentsBorrower CommitmentsYour written commitment with the Borrower to originate a Mortgage Loan, and any separate written or oral rate lock agreements between you and the Borrower to rate lock the Mortgage Loan. must comply with Part IV, Chapter 2: Rate Lock and Committing, Section 201.01: Borrower Commitment.
Operating Procedures
You must
- complete the steps in the following table, and
- submit the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. in C&DC&DElectronic committing and delivery system used for issuing and confirming Commitments for acquiring Mortgage Loans, or any such successor system. per the Committing & Delivery of Unfunded Forwards Job Aid.
Step | You must... |
---|---|
For All Mortgage Loans | |
1 |
Obtain an executed Borrower CommitmentBorrower CommitmentYour written commitment with the Borrower to originate a Mortgage Loan, and any separate written or oral rate lock agreements between you and the Borrower to rate lock the Mortgage Loan. including:
|
2 | Pay all fees or submit acceptable collateral to Fannie Mae. |
3 |
Ensure the BorrowerBorrowerPerson who is the obligor per the Note.
|
4 |
Obtain evidence that state and local authorities issued the BorrowerBorrowerPerson who is the obligor per the Note. all
|
Additionally, for all non-Credit Enhancement Mortgage Loans | |
5 | Obtain a Rate LockRate LockAgreement between you and the Investor containing the terms of the Lender-Arranged Sale or Multifamily Trading Desk trade of the Mortgage Loan and the MBS terms and conditions relating to the underlying MBS, if applicable, which may be documented via a recorded telephone conversation. . |
6 | Obtain the signed Delivery Assurance Agreement (Unfunded Forwards) (Form 6488). |
7 | Ensure any Delivery Assurance Security InstrumentDelivery Assurance Security InstrumentThe applicable Security Instrument (Form 6025 series). covers any permitted Borrower CommitmentBorrower CommitmentYour written commitment with the Borrower to originate a Mortgage Loan, and any separate written or oral rate lock agreements between you and the Borrower to rate lock the Mortgage Loan. extension terms. |
8 | Record any Delivery Assurance Security InstrumentDelivery Assurance Security InstrumentThe applicable Security Instrument (Form 6025 series). on 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). before the construction loan closing. |
Additionally, for all Credit Enhancement Mortgage Loans | |
9 | Ensure BondBondTax-exempt or taxable multifamily revenue bonds, or other tax-exempt or taxable bonds, issued to finance 1 or more Credit Enhancement Mortgage Loan Properties. pricing complies with Part IV, Chapter 8: Bond Transactions and Credit Enhancement Mortgage Loans, Section 801.04: Rate Lock. |
10 | Obtain the Credit Enhancement Commitment Letter. |
After you complete these steps, Fannie Mae will confirm the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. in C&DC&DElectronic committing and delivery system used for issuing and confirming Commitments for acquiring Mortgage Loans, or any such successor system. .
Within 30 days after the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. is confirmed, you must DeliverDeliverSubmission of all correct, accurate, and certifiable documents, data, and information with all applicable documents properly completed, executed, and recorded as needed, and any deficiencies resolved to Fannie Mae’s satisfaction. the documents listed in:
- steps 4, 6, 8, and 10; and
- the Pre-Construction Monitoring Package (Form 4543).
2003.05 | |
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2003.05A | |
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Requirements
You must monitor the construction process to ensure that when the permanent 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. is converted it will comply with the
- Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. , and
- permanent 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. CommitmentCommitmentContractual agreement between you and Fannie Mae where Fannie Mae agrees to buy a Mortgage Loan at a future date in exchange for an MBS, or at a specific price for a Cash Mortgage Loan, and you agree to Deliver that Mortgage Loan. .
Guidance
During the construction or substantial rehabilitation period:
Responsible Party | Activities |
---|---|
You |
|
Consulting Architect |
|
You and the construction lender may both use the same consulting architect for the
- preliminary and final plans,
- specification reviews, and
- construction period inspections.
2003.05B | |
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Requirements
You must provide quarterly reports to Fannie Mae via DUS GatewayDUS GatewayMultifamily pre-acquisition system, or any successor systems, recording deal registration, Pre-Review and/or waiver tracking, Mortgage Loan Commitments, and decision records. using Construction Period Monitoring (Form 4211).
2003.05C | |
|
Requirements
You must inform the Fannie Mae Deal TeamFannie Mae Deal TeamTeam responsible for reviewing Pre-Review Mortgage Loans, waivers, etc. and the Forwards TeamForwards TeamTeam that can be contacted at [email protected]. if conversion may be delayed.
Guidance
If the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. permits, you may approve a maximum delegated Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. extension up to:
- for MBS for BondsMBS for BondsFannie Mae MBS: issued to credit enhance tax-exempt Bonds; or exchanged for Bonds redeemed at MBS issuance. , two 6-month periods; or
- for any other 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. , one 6-month period.
Operating Procedures
The delegated Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. extension will become effective when all of the following occur:
- you submit the following extension documentation to Fannie Mae at least 30 days before the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property.
expiration:
- the Borrower'sBorrower'sPerson who is the obligor per the Note. extension request;
- a project status report, including reasons for the delay;
- verification the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. is likely to convert to a permanent 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. within the extension period;
- anticipated shortfall analysis of 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. amount at conversion and the source of funds for filling the shortfall;
- confirmation there has been no material adverse change in the BorrowerBorrowerPerson who is the obligor per the Note. or PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). ; and
- confirmation the Borrower'sBorrower'sPerson who is the obligor per the Note. construction loan will be extended by the same extension period as the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. term.
- Fannie Mae processes the extension request; and
- at least 1 business day before the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property.
expiration:
- you enter all fees into C&DC&DElectronic committing and delivery system used for issuing and confirming Commitments for acquiring Mortgage Loans, or any such successor system. ;
- Fannie Mae receives the fees;
- you submit a C&DC&DElectronic committing and delivery system used for issuing and confirming Commitments for acquiring Mortgage Loans, or any such successor system. request to adjust the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. expiration date; and
- you are notified the adjustment has been completed.
Requirements
Fannie Mae must approve all Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. extensions beyond the maximum delegated term. To request Fannie Mae approval:
- you must submit
- all extension documentation required for a delegated extension, and
- any requested revised stabilization analysis; and
- the BorrowerBorrowerPerson who is the obligor per the Note. must pay any required fees.
2003.06 | |
|
Reqiurements
You must ensure that all ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). on 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 completed, including
- amenities,
- landscaping,
- signage,
- parking, etc.
If sufficient funds will be reserved in a Completion/Repair EscrowCompletion/Repair EscrowCustodial Account funded on the Mortgage Loan Origination Date for Completion/Repairs or capital improvements per the Loan Documents. , minor punch list and weather-sensitive items may be incomplete.
Guidance
Use the following table for confirming construction completion and occupancy.
Responsible Party | Activities |
---|---|
Consulting Architect |
|
You |
Ensure all ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). :
Obtain:
|
2003.07A | |
|
Requirements
Before converting, you must complete the permanent 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. final underwriting.
Topic | You must... |
---|---|
DSCR and LTV | Ensure 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). complies with the committed DSCRDSCROn an annual basis or any specified period, the ratio of Net Cash Flow to the total of: principal, interest, and required Mezzanine Financing or Hard Preferred Equity payments. and LTVLTVRatio of the actual aggregate UPB of the Mortgage Loan, plus any Pre-Existing Mortgage Loans, plus any Hard Preferred Equity, plus any Mezzanine Financing, to the value of the Property, expressed as a percentage. . |
Eligibility |
Ensure:
|
Construction Loan Status |
Ensure the BorrowerBorrowerPerson who is the obligor per the Note.
|
Certification of Rent Roll | On the permanent Mortgage Loan Origination DateMortgage Loan Origination DateDate you fund a Mortgage Loan to the Borrower. , certify with the BorrowerBorrowerPerson who is the obligor per the Note. there has been no material adverse change in the Certification of ProjectProjectMultifamily buildings on multiple Properties, owned by the same Borrower, and that comply with Part II, Chapter 1: Attributes and Characteristics, Section 102.01: Single Borrower Ownership. Rent Roll. |
Equity Contributions |
As of the permanent 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. DeliveryDeliverySubmission of all correct, accurate, and certifiable documents, data, and information with all applicable documents properly completed, executed, and recorded as needed, and any deficiencies resolved to Fannie Mae’s satisfaction. , obtain a BorrowerBorrowerPerson who is the obligor per the Note. certificate, or other Fannie Mae-accepted evidence, that all funds reflected on the Borrower'sBorrower'sPerson who is the obligor per the Note. sources and uses of funds statement were:
|
LIHTC Reservation or Allocation | If 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). is eligible for LIHTCsLIHTCsFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. , verify the Borrower'sBorrower'sPerson who is the obligor per the Note. IRS Form 8609 issued by the state housing finance agency reflects the required LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. amount. |
Guidance
Fannie Mae may defer the requirement to obtain IRS Form 8609 before conversion based on factors such as whether:
- the Property'sProperty'sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). financials exceed the pro-forma underwriting per the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. ;
- all other conversion criteria were met;
- the BorrowerBorrowerPerson who is the obligor per the Note. certified 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). complies with the LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. requirements;
- you and the tax accountant approved the cost certification;
- the BorrowerBorrowerPerson who is the obligor per the Note. submitted the cost certification to the state, with no anticipated significant adjustments;
- the LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions.
investor contributed at least 90% of their equity, with the remaining 10% withheld for any minor adjustments to 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). tax depreciable basis,
- adjusters, or
- developer fee;
- the sources and uses of funds are in balance, and all required funds were received to complete and lease-up 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). ;
- you have documentation confirming the IRS Form 8609 application and the state’s acknowledgement of receipt;
- you expect to receive the IRS Form 8609 timely post-conversion;
- you will monitor receipt of IRS Form 8609 as a post-closing matter and deliver a copy to Fannie Mae; and
- the BorrowerBorrowerPerson who is the obligor per the Note. has experience complying with IRS Form 8609 in the specific state.
2003.07B | |
|
Requirements
You must:
- Confirm 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).
will qualify for the full CommitmentCommitmentContractual agreement between you and Fannie Mae where Fannie Mae agrees to buy a Mortgage Loan at a future date in exchange for an MBS, or at a specific price for a Cash Mortgage Loan, and you agree to Deliver that Mortgage Loan.
by
- evaluating its performance, and
- assessing whether it meets the projected
- income,
- expenses, and
- NCFNCFOn an annual basis or any specified period, the total Net Operating Income, minus the full amount underwritten for Replacement Reserve expense, regardless of whether deposits will be made (per Part II, Chapter 2: Valuation and Income, Section 202: Income Analysis and the applicable products and….
- Use the Forward Loan Conversion Analysis (Form 4212) to
- annualize the certified project rent rolls,
- compare pro forma and actual operating expenses, and
- calculate the Property'sProperty'sMultifamily residential real estate securing the Mortgage Loan, including the
fee simple or Leasehold interest,
Improvements, and
personal property (per the Uniform Commercial Code).
stabilized NCFNCFOn an annual basis or any specified period, the total Net Operating Income, minus the full amount underwritten for Replacement Reserve expense, regardless of whether deposits will be made (per Part II, Chapter 2: Valuation and Income, Section 202: Income Analysis and the applicable products and… per
- this Chapter, and
- Part II, Chapter 2: Valuation and Income, Section 202: Income Analysis or the applicable Part III chapter based on the specific product.
- Submit the Forward Conversion Analysis Summary (Form 4618) that verifies your Chief Underwriter’s involvement and agreement with the analysis.
The permanent Mortgage Loan Delivery PackageMortgage Loan Delivery PackageLoan Documents and underwriting material required in connection with the Delivery of a Mortgage Loan. documentation must include:
- the percentage of the Property'sProperty'sMultifamily residential real estate securing the Mortgage Loan, including the
fee simple or Leasehold interest,
Improvements, and
personal property (per the Uniform Commercial Code).
occupied units categorized by
- bedroom configuration,
- square footage, and
- rent type (low income or market rate) delineating any Section 8 or other subsidized rental program tenants;
- the Property'sProperty'sMultifamily residential real estate securing the Mortgage Loan, including the
fee simple or Leasehold interest,
Improvements, and
personal property (per the Uniform Commercial Code).
actual Effective Gross IncomeEffective Gross IncomeOn an annual basis or any specified period, the total of Net Rental Income plus other income per Part II, Chapter 2: Valuation and Income, Section 202: Income Analysis and the applicable products and features in Part III.
for each of the previous 3 months, including only rental income and permitted other income from the units less any
- rent concessions,
- reductions,
- inducements, or
- forbearance; and
- rental income by rent type (low income or market rate).
You must use the following table to calculate stabilized NCFNCFOn an annual basis or any specified period, the total Net Operating Income, minus the full amount underwritten for Replacement Reserve expense, regardless of whether deposits will be made (per Part II, Chapter 2: Valuation and Income, Section 202: Income Analysis and the applicable products and….
STABILIZED NCF | ||
---|---|---|
Item | Function | Description |
1 |
For each of the most recent trailing 3 months before conversion:
|
|
EQUALS | GROSS POTENTIAL RENT | |
2 | MINUS |
|
3 | PLUS | For an MAH PropertyMAH PropertyProperty encumbered by a regulatory agreement, land use restriction agreement, extended use agreement, or similar restriction that limits rents that can be charged to tenants, or imposes income limits on tenants. , include annualized other income per Part III, Chapter 7: Multifamily Affordable Housing Properties, Section 703.01: Underwritten NCF. |
4 | PLUS | Commercial income per Part II, Chapter 2: Valuation and Income, Section 202.01: Underwritten Net Cash Flow (Underwritten NCF). |
EQUALS | EFFECTIVE GROSS INCOME | |
5 | MINUS |
Line-by-line operating expenses using the higher of:
|
6 | MINUS | Replacement ReserveReplacement ReserveCustodial Account the Borrower funds during the Mortgage Loan term for Replacements. expense per Part II, Chapter 2: Valuation and Income, Section 202.01: Underwritten Net Cash Flow (Underwritten NCF). |
EQUALS | STABILIZED NCF | |
1 Assess if there was any decline in NRI per Part II, Chapter 2: Valuation and Income, Section 202: Income Analysis. |
2003.07C | |
|
Requirements
You must ensure the permanent 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. amount is less than or equal to the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. .
Operating Procedures
Steps | Actions |
---|---|
1 | You must determine the permanent 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. amount using the Forward Loan Conversion Analysis (Form 4212). |
2 | If the Property'sProperty'sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). actual stabilized NCFNCFOn an annual basis or any specified period, the total Net Operating Income, minus the full amount underwritten for Replacement Reserve expense, regardless of whether deposits will be made (per Part II, Chapter 2: Valuation and Income, Section 202: Income Analysis and the applicable products and… before permanent 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. DeliveryDeliverySubmission of all correct, accurate, and certifiable documents, data, and information with all applicable documents properly completed, executed, and recorded as needed, and any deficiencies resolved to Fannie Mae’s satisfaction. is less than the original Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. underwriting, reduce the permanent 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. amount to comply with the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. DSCRDSCROn an annual basis or any specified period, the ratio of Net Cash Flow to the total of: principal, interest, and required Mezzanine Financing or Hard Preferred Equity payments. and LTVLTVRatio of the actual aggregate UPB of the Mortgage Loan, plus any Pre-Existing Mortgage Loans, plus any Hard Preferred Equity, plus any Mezzanine Financing, to the value of the Property, expressed as a percentage. . |
3 | If the permanent 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. amount in Step 2 is less than the Forward Commitment Confirmation Mortgage Loan amount, verify the BorrowerBorrowerPerson who is the obligor per the Note. has secured a source of funds, whether debt or equity, to cover the difference. |
4 |
Ensure any additional debt the BorrowerBorrowerPerson who is the obligor per the Note. incurs to cover the difference in Step 3, is only secured by a LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. on 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). if
|
5 |
If the permanent 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. amount in Step 2 results in a loan curtailment,
|
6 |
If 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). qualifies for additional financing beyond the Forward Commitment Confirmation Mortgage Loan amount, submit via DUS GatewayDUS GatewayMultifamily pre-acquisition system, or any successor systems, recording deal registration, Pre-Review and/or waiver tracking, Mortgage Loan Commitments, and decision records. :
|
7 |
Any increase in the permanent 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. amount approved by Fannie Mae will:
|
2003.07D | |
|
Requirements
You must obtain third-party reports per Part III, Chapter 20: Forward Commitments, Section 2003.03C: Third-Party Reports.
2003.08 | |
|
2003.08A | |
|
Requirements
To convert to the permanent 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. , you must confirm:
- construction is complete;
- 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).
achieved the
- minimum occupancy,
- income, and
- debt service coverage;
- the eligibility criteria in Part III, Chapter 20: Forward Commitments, Section 2003.07A: Generally have been met; and
- the permanent 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. is DeliveredDeliveredSubmission of all correct, accurate, and certifiable documents, data, and information with all applicable documents properly completed, executed, and recorded as needed, and any deficiencies resolved to Fannie Mae’s satisfaction. on Fannie Mae Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. .
2003.08B | |
|
Operating Procedures
Timing | You must... |
---|---|
30 days before the Borrower's closing |
|
At Conversion |
|
By the Delivery Deadline |
|
2003.09 | |
|
Operating Procedures
The MBSMBSMortgage-Backed Security will be issued per your delivery instructions after you DeliverDeliverSubmission of all correct, accurate, and certifiable documents, data, and information with all applicable documents properly completed, executed, and recorded as needed, and any deficiencies resolved to Fannie Mae’s satisfaction. the permanent 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. .
2003.10 | |
|
Guidance
Fannie Mae may terminate the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. if:
- You fail to DeliverDeliverSubmission of all correct, accurate, and certifiable documents, data, and information with all applicable documents properly completed, executed, and recorded as needed, and any deficiencies resolved to Fannie Mae’s satisfaction. a permanent 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. per the Forward Commitment Confirmation terms and conditions.
- The BorrowerBorrowerPerson who is the obligor per the Note. does not begin PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). construction or substantial rehabilitation within 180 days after you accept the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. .
- A construction loan default occurs and is not cured within 90 days.
- A substantial construction defect occurs that may threaten tenant life and safety unless:
- the BorrowerBorrowerPerson who is the obligor per the Note. repairs the defect within 90 days;
- the repairs satisfy both you and your consulting architect; and
- after paying all repair costs, the available remaining funds are sufficient to pay for all
- work performed,
- materials used or ordered, and
- other required unpaid project costs per the contract.
Requirements
If Fannie Mae terminates the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. , all applicable fees must be paid per the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. terms.
If the BorrowerBorrowerPerson who is the obligor per the Note. terminates the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. , you must:
- submit a request to collapse the transaction to the Fannie Mae Deal TeamFannie Mae Deal TeamTeam responsible for reviewing Pre-Review Mortgage Loans, waivers, etc. and the Forwards TeamForwards TeamTeam that can be contacted at [email protected]. at least 30 days before the Forward CommitmentForward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property. expiration;
- for BondBondTax-exempt or taxable multifamily revenue bonds, or other tax-exempt or taxable bonds, issued to finance 1 or more Credit Enhancement Mortgage Loan Properties. transactions, coordinate with Fannie Mae’s counsel; and
- contact Multifamily AcquisitionsMultifamily AcquisitionsTeam that can be contacted at [email protected]. to withdraw the transaction in C&DC&DElectronic committing and delivery system used for issuing and confirming Commitments for acquiring Mortgage Loans, or any such successor system. .