603.01

Borrower and the MH Community

603.01A

Borrower Ownership

Requirements

If the BorrowerBorrowerPerson who is the obligor per the Note. is a non-profit entity, then you must ensure that each of the following complies with Part I, Chapter 3: Borrower, Guarantor, Key Principals, and Principals:

  • the BorrowerBorrowerPerson who is the obligor per the Note. ;
  • Key PrincipalsKey PrincipalsPerson who controls and/or manages the Borrower or the Property, is critical to the successful operation and management of the Borrower and the Property, and/or may be required to provide a Guaranty. ;
  • GuarantorsGuarantorsKey Principal or other Person executing a Payment Guaranty, Non-Recourse Guaranty, or any other Mortgage Loan guaranty. ; and
  • PrincipalsPrincipalsPerson who owns or controls specified interests in the Borrower per Part I, Chapter 3: Borrower, Guarantor, Key Principals, and Principals, Section 303: Key Principals, Principals, and Guarantors. .

Guidance

If the BorrowerBorrowerPerson who is the obligor per the Note. is a non-profit entity, you may reimburse the BorrowerBorrowerPerson who is the obligor per the Note. from the Origination FeeOrigination FeeFee you charge the Borrower for underwriting and originating the Mortgage Loan. for up to a combined total of $10,000 for the cost of any required MH CommunityMH CommunityResidential real estate development with lots on which manufactured homes are located, together with amenities, utility services, landscaping, roads, and other infrastructure. 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. third-party reports (e.g., AppraisalAppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. , Environmental Site AssessmentEnvironmental Site AssessmentInvestigation and resulting report (Phase I ESA or Phase II ESA) conducted per Environmental Due Diligence Requirements (Form 4251), identifying if a Property has Recognized Environmental Conditions or Business Environmental Risks. ).

Operating Procedures

Fannie Mae will reimburse the cost of any third-party report within 2 months after the delivery of 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. .  To receive reimbursement, you must:

  • request an invoice from the vendor with the report cost listed as a separate line item from any ancillary charges (Fannie Mae will not reimburse other costs such as fees for expediting a report);
  • within 1 month after the Mortgage Loan Origination DateMortgage Loan Origination DateDate you fund a Mortgage Loan to the Borrower. :
    • complete Form 4829, detailing the Lender’sLender’sPerson Fannie Mae approved to sell or service Mortgage Loans. information, the commitment number or loan number, PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). information, wiring instructions, and listing the third-party cost as “Other” (note that any fields related to servicing may be left blank); and
    • manually sign or e-sign Form 4829, scan or save it as a PDF file, and email the signed PDF Form 4829 and the third-party report invoice to: [email protected].
603.01B

Collateral; Tenant-Occupied and Affiliate-Owned Homes

Requirements

The collateral for an MH CommunityMH CommunityResidential real estate development with lots on which manufactured homes are located, together with amenities, utility services, landscaping, roads, and other infrastructure. 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. consists of

  • the MH Community'sMH Community'sResidential real estate development with lots on which manufactured homes are located, together with amenities, utility services, landscaping, roads, and other infrastructure. land and infrastructure,
  • the rents for the MH SitesMH SitesDeveloped lot within an MH Community on which a Manufactured Home can be located. , and
  • any other BorrowerBorrowerPerson who is the obligor per the Note. -owned property used for the MH CommunityMH CommunityResidential real estate development with lots on which manufactured homes are located, together with amenities, utility services, landscaping, roads, and other infrastructure. .

The percentage of tenant-occupied Manufactured HomesManufactured HomesFactory-built home complying with the Manufactured Home HUD Code. must not exceed 35%.  If the percentage of tenant-occupied Manufactured HomesManufactured HomesFactory-built home complying with the Manufactured Home HUD Code. is greater than 25%, then:

  • the Borrower’sBorrower’sPerson who is the obligor per the Note. business plan must reflect the conversion of tenant-occupied Manufactured HomesManufactured HomesFactory-built home complying with the Manufactured Home HUD Code. to owner-occupied over time; and
  • ongoing business related to the sale, financing, or rental of a Manufactured HomeManufactured HomeFactory-built home complying with the Manufactured Home HUD Code. located on 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). must be performed by an AffiliateAffiliateWhen referring to an affiliate of a Lender, any other Person or entity that Controls, is Controlled by, or is under common Control with, the Lender. When referring to an affiliate of a Borrower or Key Principal: any Person that owns any direct ownership interest in Borrower or Key….

If any Affiliate-Owned Manufactured HomesAffiliate-Owned Manufactured HomesManufactured Home or park model home located on an MH Site that is owned by an Affiliate of the Borrower. are leased to tenants by an AffiliateAffiliateWhen referring to an affiliate of a Lender, any other Person or entity that Controls, is Controlled by, or is under common Control with, the Lender. When referring to an affiliate of a Borrower or Key Principal: any Person that owns any direct ownership interest in Borrower or Key… of either the BorrowerBorrowerPerson who is the obligor per the Note. or a Key PrincipalKey PrincipalPerson who controls and/or manages the Borrower or the Property, is critical to the successful operation and management of the Borrower and the Property, and/or may be required to provide a Guaranty. , then:

  • The MH SiteMH SiteDeveloped lot within an MH Community on which a Manufactured Home can be located. lease must be at a market rate rent.
  • If the tenant’s rent payment includes both the rent for the Affiliate-Owned Manufactured HomeAffiliate-Owned Manufactured HomeManufactured Home or park model home located on an MH Site that is owned by an Affiliate of the Borrower. and the rent for the MH SiteMH SiteDeveloped lot within an MH Community on which a Manufactured Home can be located. , then either:
    • the check must be payable to and deposited by the BorrowerBorrowerPerson who is the obligor per the Note. , which must pay all required P&IP&IPrincipal and interest , and escrows before remitting the rent payment to the AffiliateAffiliateWhen referring to an affiliate of a Lender, any other Person or entity that Controls, is Controlled by, or is under common Control with, the Lender. When referring to an affiliate of a Borrower or Key Principal: any Person that owns any direct ownership interest in Borrower or Key…; or
    • you must consider whether it is appropriate to require a lockbox arrangement with the BorrowerBorrowerPerson who is the obligor per the Note. and the AffiliateAffiliateWhen referring to an affiliate of a Lender, any other Person or entity that Controls, is Controlled by, or is under common Control with, the Lender. When referring to an affiliate of a Borrower or Key Principal: any Person that owns any direct ownership interest in Borrower or Key…
      • into which all rent checks for the Manufactured HomesManufactured HomesFactory-built home complying with the Manufactured Home HUD Code. and MH SitesMH SitesDeveloped lot within an MH Community on which a Manufactured Home can be located. must be deposited, and
      • from which you can control the disbursement of funds for P&IP&IPrincipal and interest , required escrows, and the Manufactured HomeManufactured HomeFactory-built home complying with the Manufactured Home HUD Code. rentals, with the remainder disbursed to the BorrowerBorrowerPerson who is the obligor per the Note. .
603.01C

MH Community

Requirements

An eligible MH CommunityMH CommunityResidential real estate development with lots on which manufactured homes are located, together with amenities, utility services, landscaping, roads, and other infrastructure. must:

  • have a minimum of 50 MH SitesMH SitesDeveloped lot within an MH Community on which a Manufactured Home can be located. ;
  • consist of contiguous parcels or, if the MH CommunityMH CommunityResidential real estate development with lots on which manufactured homes are located, together with amenities, utility services, landscaping, roads, and other infrastructure. is made up of Non-Contiguous ParcelsNon-Contiguous ParcelsMultiple parcels of land securing a Mortgage Loan that do not share common boundaries or that are separated by dedicated or private streets that are major arterials. :
    • all parcels must be located within the same MSAMSAGeographic delineation for a metropolitan area determined by the U.S. Census Bureau. ; and
    • each separate parcel (individually), and all Non-Contiguous ParcelsNon-Contiguous ParcelsMultiple parcels of land securing a Mortgage Loan that do not share common boundaries or that are separated by dedicated or private streets that are major arterials.  (together), must comply with the GuideGuideMultifamily Selling and Servicing Guide controlling all Lender and Servicer requirements unless a Lender Contract specifies otherwise. ; and
  • achieve at least a Level 3 Quality Rating per the Manufactured Housing Community Quality Rating Standards table in Part III, Chapter 6: Manufactured Housing Communities, Section 603.02: MH Community Score.

An MH CommunityMH CommunityResidential real estate development with lots on which manufactured homes are located, together with amenities, utility services, landscaping, roads, and other infrastructure. must be served by either

  • public underground utilities, or
  • private sewage treatment plants, septic systems, and private water wells which are:
    • common for the market;
    • owned by the BorrowerBorrowerPerson who is the obligor per the Note. or an AffiliateAffiliateWhen referring to an affiliate of a Lender, any other Person or entity that Controls, is Controlled by, or is under common Control with, the Lender. When referring to an affiliate of a Borrower or Key Principal: any Person that owns any direct ownership interest in Borrower or Key…; and
    • in compliance with all applicable government requirements.

Guidance

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. may be secured by either an Age-Restricted MH CommunityAge-Restricted MH CommunityMH Community that limits residents to those who are over a particular age (e.g., persons who are age 62 or older, or at least 80% of the Manufactured Homes occupied by at least 1 person who is age 55 or older). or an All-Age MH CommunityAll-Age MH CommunityMH Community that accepts residents of any age. .

You should consider the following:

  • For an MH CommunityMH CommunityResidential real estate development with lots on which manufactured homes are located, together with amenities, utility services, landscaping, roads, and other infrastructure. that is more than 25 years old, does the BorrowerBorrowerPerson who is the obligor per the Note. have a plan for placing new Manufactured HomesManufactured HomesFactory-built home complying with the Manufactured Home HUD Code. in the MH CommunityMH CommunityResidential real estate development with lots on which manufactured homes are located, together with amenities, utility services, landscaping, roads, and other infrastructure. as MH SitesMH SitesDeveloped lot within an MH Community on which a Manufactured Home can be located. with older Manufactured HomesManufactured HomesFactory-built home complying with the Manufactured Home HUD Code. are vacated?
  • Are the landscaping and entrance signage high quality and well maintained?
  • For an MH CommunityMH CommunityResidential real estate development with lots on which manufactured homes are located, together with amenities, utility services, landscaping, roads, and other infrastructure. served by a private sewage treatment plant, septic system, or a private water well, then:
    • Address the availability and cost of obtaining a backup source for water if the 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 a private water well.
    • Ensure that the operator of the facility, including its employees and contractors, meet all applicable government requirements to perform ongoing operation and maintenance.
    • If the operator is an employee of the BorrowerBorrowerPerson who is the obligor per the Note. , identify a local, qualified vendor that could be retained if substitute services are needed.
    • Exercise reasonable due diligence, including contacting municipal agencies, to confirm that
      • the MH Community’sMH Community’sResidential real estate development with lots on which manufactured homes are located, together with amenities, utility services, landscaping, roads, and other infrastructure. connection to a municipal system has not been mandated, and
      • no mandate is expected to occur during the term of 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 hookup is imminent, determine if an escrow for the cost is appropriate.