Legal Non-Conforming Characteristics
Requirements
You must confirm 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). characteristics (e.g., building height, density, set-back lines, etc.):
- conform to current zoning requirements and land use designations; or
- are legally non-conforming per applicable zoning or land use laws and regulations.
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). characteristics are legally non-conforming, you must:
- Require the BorrowerBorrowerPerson who is the obligor per the Note. to execute Modifications to Multifamily Loan and Security Agreement (Legal Non-Conforming Status) (Form 6275).
- Confirm whether the affected ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now constructed or hereafter constructed or placed on the land upon which the Property is located, together with all fixtures (as defined in the Uniform Commercial Code).
can be rebuilt to the pre-casualty condition per current laws, zoning requirements, and building codes without conditions or limitations, including any related solely to timing for:
- obtaining permits or approvals; and/or
- commencing or completing construction.
- Analyze the impact on 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. if the BorrowerBorrowerPerson who is the obligor per the Note. is not allowed to rebuild 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). as is per current law, without conditions or limitations.
- Comply with the following.
| If... | You must... |
|---|---|
| Improvements cannot be rebuilt as is per current law, without conditions or limitations, | Prepare an analysis determining if conformance per current zoning law would result in a loss of 20% or more 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). unit count. |
| The analysis determines conformance per current zoning law would result in a loss of 20% or more of the Property’s unit count, | Prepare a threshold analysis confirming the reconstructed ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now constructed or hereafter constructed or placed on the land upon which the Property is located, together with all fixtures (as defined in the Uniform Commercial Code). , per current zoning requirements and building codes, would support a minimum 1.00 amortizing 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. . |
| The reconstructed Improvements, per current zoning requirements and building codes, cannot support a minimum 1.00 amortizing DSCR, | Submit 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. for Pre-ReviewPre-ReviewRequirement that the Lender obtain Fannie Mae’s approval before Rate Lock of a Mortgage Loan. . |
Guidance
To assess the Borrower'sBorrower'sPerson who is the obligor per the Note. ability to rebuild ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now constructed or hereafter constructed or placed on the land upon which the Property is located, together with all fixtures (as defined in the Uniform Commercial Code). on a non-conforming 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 a level that would support a minimum 1.00 amortizing 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. , you should consider:
- the continued marketability and economic viability of 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). ;
- the percentage of damage that could occur before 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). would be forced to comply with current zoning and land use requirements, and how to apply that percentage 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). market value, assessed value, replacement cost, or unit count;
- for PropertiesPropertiesMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). with multiple buildings, whether the percentage of damage would need to apply to a single building or the whole complex before being forced to comply with current zoning and land use requirements;
- the amount and type of insurance coverage maintained by the BorrowerBorrowerPerson who is the obligor per the Note.
and required per Part II, Chapter 5: Property and Liability Insurance, Section 501.02C: Ordinance or Law Insurance, and the insurance loss proceeds payout, compared to increased rebuilding costs, including from:
- building code changes;
- Americans with Disabilities Act compliance; and
- the municipality's local zoning requirements (e.g., green compliance for new buildings, etc.); and
- whether the estimated insurance proceeds from ordinance or law insurance and other coverages will be sufficient to repay 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.
in the event of partial or full
- casualty, or
- condemnation.