2003.05

Construction Period

2003.05A

Monitoring

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
  • Evaluate inspections and change orders.
  • Reject any change orders that would:
    • change 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).  main design or asset quality features;
    • make material changes; or
    • result in combined hard and contingency costs greater than the construction loan budget (i.e., the construction loan must remain in balance).
  • Review the consulting architect’s progress reports and provide them to Fannie Mae upon request.
  • Monitor the construction loan and lease-up status.
Consulting Architect
  • Regularly perform on-site construction progress inspections.
  • Ensure the time between inspections is not more than 2 months.
  • Issue a progress report after each
    • inspection, and
    • whenever the construction lender approves a disbursement. 

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

Reporting

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

Forward Commitment Extensions

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.