Section 301

Zoning and Legally Non-Conforming Status

Requirements

For each PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). , you must:

  • Identify the current zoning or land use designation.
  • Determine whether the use 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). characteristics conform to those designations.
  • Confirm the zoning and land use laws and regulations permit the applicable
    • multifamily housing, or
    • manufactured housing community.

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). use and/or characteristics are legally non-conforming under applicable zoning or land use laws and regulations and 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). cannot be rebuilt to the pre-casualty condition per current zoning requirements and building codes, you must:

  • 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 under current law.
  • If non-conformance 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, confirm the 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 reconstructed per current zoning requirements and building codes 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. in case of
    • partial casualty or condemnation, or
    • full casualty and assuming the insurance proceeds are insufficient to fully prepay 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. .
  • 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).

If you order a Zoning Report for 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). from a zoning consultant, you must:

  • deliver structured data per the Zoning Report Data Supplement (Form 4089); and
  • include a report narrative.

Guidance

To assess the BorrowerBorrowerPerson who is the obligor per the Note. ’s 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 PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). ’s 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; and
  • 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 from
    • building code changes,
    • Americans with Disabilities Act compliance, and
    • the municipality's local zoning requirements (e.g., green compliance for new buildings, etc.).