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.