Section 101

Eligible Properties

101.01

Generally

Requirements

For 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. to be eligible for purchase, it must be secured by a multifamily residential property that meets all of the following:

  • contains at least 5 dwelling units;
  • does not include a stand-alone building containing less than 5 dwelling units (e.g., a single-family structure), unless it:
    • was originally constructed as part of a single multifamily development; or
    • is situated on the same tax parcel, or shares a tax parcel boundary, with a
      • multifamily property, or
      • MH CommunityMH CommunityResidential real estate development with lots on which manufactured homes are located, together with amenities, utility services, landscaping, roads, and other infrastructure. ;
  • has suitable bathroom and cooking facilities within each unit;
  • is located in 1 of the 50 states of the United States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, or Guam;
  • is located on a publicly dedicated, all-weather road, or is accessible by a satisfactory easement from this type of road;
  • consists of either a single parcel or multiple parcels per Part II, Chapter 1: Attributes and Characteristics, Section 102.01: Single Borrower Ownership;
  • any commercial space is:
    • physically part of, and connected to, the multifamily space; or
    • a stand-alone building that is on the same tax parcel;
  • has adequate water and sewer service, which may be delivered by a public utility or, where commercially acceptable for the market area, by a private system or utility;
  • offers a suitable level of utility service (e.g., electrical, natural gas, refuse removal, etc.) for the market area;
  • either complies with all applicable statutes, rules, regulations, and housing and building codes, or is being appropriately remediated;
  • does not contain any Modular HousingModular HousingProperty on which the multifamily Improvements are constructed of sections built off-site, such as modular, prefabricated, panelized, or sectional housing, and then assembled and installed on-site on a permanent foundation (and not a chassis). ; and
  • has access to police and emergency services.

Guidance

To determine if a single-family structure was originally constructed as part of a single multifamily development, you should consider if all buildings:

  • were originally constructed at the same time;
  • were historically bought, operated, and sold as 1 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.  since originally constructed;
  • are generally consistent in physical appearance, with distinct boundaries such as
    • signage,
    • gates/fencing,
    • shared parking, or
    • dedicated streets;
  • are located on a single tax parcel or adjacent tax parcels;
  • are configured without any non-BorrowerBorrowerPerson who is the obligor per the Note. owned parcels or buildings separating/splitting or within the multifamily development; and
  • are not part of a predominately homeowner development.
101.02

Expanded Housing Choice

Guidance

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. is eligible for a pricing incentive if the BorrowerBorrowerPerson who is the obligor per the Note. and PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). comply with this Section.

Requirements

For Expanded Housing Choice pricing incentive eligibility, all of the following must be met:

  • The BorrowerBorrowerPerson who is the obligor per the Note. agrees to:
    • accept Housing Choice VouchersHousing Choice VouchersAny rental assistance payment or voucher to an eligible tenant under Section 8 of the United States Housing Act of 1938, 42 U.S.C. § 1437f, as amended. throughout 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. term;
    • not discriminate against applicants, tenants, their family members, and occupants for using Housing Choice VouchersHousing Choice VouchersAny rental assistance payment or voucher to an eligible tenant under Section 8 of the United States Housing Act of 1938, 42 U.S.C. § 1437f, as amended. to pay rent and other lawful fees, including
      • applying stricter screening standards,
      • charging larger security deposits, rent, or fees, or
      • subjecting them to additional community rules;
    • advertise 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). and/or available units 
      • with participating Public Housing Agencies, and 
      • on https://www.affordablehousing.com (or successor site); and
    • execute a 
      • Modification to Multifamily Loan and Security Agreement (Expanded Housing Choice) (Form 6273), and 
      • Payment Guaranty (Pricing Incentive Recapture) (Form 6020.PIR).
  • 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 located in
      • Texas, or
      • North Carolina;
    • is not already required to accept Housing Choice VouchersHousing Choice VouchersAny rental assistance payment or voucher to an eligible tenant under Section 8 of the United States Housing Act of 1938, 42 U.S.C. § 1437f, as amended. as a financing condition, such as per
      • an Affordable Regulatory AgreementAffordable Regulatory AgreementRegulatory, land use, extended use, or similar agreement or recorded restriction limiting rents, imposing maximum income restrictions on tenants, or placing other affordability restrictions on the use or occupancy of the Property (whether imposed by a government entity or self-imposed by a Borrower…,
      • Sponsor-Initiated Affordability Agreement, or
      • LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. agreement; and
    • on the Mortgage Loan Origination DateMortgage Loan Origination DateDate you fund a Mortgage Loan to the Borrower. , has at least 20% of its units within the applicable HUDHUDU.S. Department of Housing and Urban Development Fair Market Rent or Small Area Fair Market Rent, as adjusted per the applicable Public Housing Agency payment standard, with the qualifying unit mix being in proportion to 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). overall unit mix.

Operating Procedures

Use the Housing Choice Vouchers: Expanded Housing Choice (EHC) Job Aid to commit and 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. qualifying for an Expanded Housing Choice pricing incentive.

Guidance

For an acceptable unit mix within the applicable HUDHUDU.S. Department of Housing and Urban Development Fair Market Rent or Small Area Fair Market Rent, the qualifying units must be proportional to 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). overall unit mix.  An acceptable unit mix at a sample 100-unit building would be:

Sample 100-Unit Building
Apartment Type Number of Units Minimum 20% Unit Mix
Studio 10 2
1 Bedroom 50 10
2 Bedroom 30 6
3 Bedroom 10 2
Total 100 20