Primary Changes

Renamed and updated the Equity Checklist (Form 6441) to:

• define commonly used equity terms;
• clarify requirements in Part I, Chapter 3, Section 303.01: Generally;
• include examples of Equity structures not subject to Form 6441; 
• consolidate underwriting and Pre-Review requirements;
• reduce required Exhibit submissions;
• clarify modifications to the Limitations on Equity Terms; 
• expand Permitted Equity Default Triggers, adding
  • Anti-Corruption and Know-Your-Customer Policies, and
  • Federal Taxation Treatment (opportunity zone, historic tax credits, etc.); 
• increase delegation to approve similar Permitted Equity Default Triggers;
• permit Equity Investor rights for a Forced Sale beyond a Permitted Equity Default Trigger for Structured Common Equity transactions; and
• for Structured Common Equity and Preferred Equity, identify the Equity Investor as a Principal with additional due diligence requirements if certain features and Control Takeover rights exist.

Updated Preferred Equity requirements to align with the Equity Checklist (Form 6441) in:

• Part I, Chapter 3: Borrower, Guarantor, Key Principals, and Principals, Section 303: Key Principals, Principals, and Guarantors;
• Part III, Chapter 15: Mezzanine Financing; Preferred Equity and Structured Common Equity, Section 1502: Preferred Equity and Structured Common Equity; 
• Multifamily Asset Management Delegated Transaction: Transfer/Assumption (Form 4636.TA); and
• Equity Operating Procedures Job Aid.

Updated the Glossary to:

• include newly defined terms for
  • Control Takeover,
  • Excess Net Cash Flow,
  • Forced Sale,
  • Hard Pay Preferred Equity,
  • Mandatory Pay Preferred Equity,
  • Publicly-Held Entity,
  • Soft Pay Preferred Equity,
  • Structured Common Equity, and
  • Third-Party Financing; 
• delete the term Underwritten Net Cash Flow; and
• revise terms for alignment, including
  • Effective Gross Income,
  • Multifamily Committing and Delivery System,
  • Net Cash Flow,
  • Net Operating Income,
  • Net Rental Income, and
  • Preferred Equity.

Questions

Please contact Kathleen Iscra at (312) 368-6073, or at [email protected], with any questions.