Section 704

Third-Party Financing

704.01

Interest Rate and Payments

Requirements

You must ensure any Third-Party FinancingThird-Party FinancingAny loan to, or indebtedness of, a Borrower that: is not a Supplemental Mortgage Loan or Pre-Existing Mortgage Loan; and either: requires repayment by the Borrower; or is forgiven (over time or at maturity) subject to Borrower compliance with certain covenants or conditions. …:

  • has a fixed interest rate or no interest payable; and
  • for non-Soft Financing, interest:
    • is payable on a current basis; and
    • does not defer or accrue.
704.02

Loan Term

Requirements

You must ensure any Third-Party FinancingThird-Party FinancingAny loan to, or indebtedness of, a Borrower that: is not a Supplemental Mortgage Loan or Pre-Existing Mortgage Loan; and either: requires repayment by the Borrower; or is forgiven (over time or at maturity) subject to Borrower compliance with certain covenants or conditions. … that does not fully amortize, including any Soft Financing, matures at least 180 days after the Maturity DateMaturity DateDate all Mortgage Loan amounts become fully due and payable per the Loan Documents. 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. , and
  • any Pre-Existing Mortgage LoansPre-Existing Mortgage LoansMultifamily residential real estate loan secured by Liens against the Property having higher priority than the Lien securing the Subordinate Loan purchased by Fannie Mae. .

Guidance

Third-Party FinancingThird-Party FinancingAny loan to, or indebtedness of, a Borrower that: is not a Supplemental Mortgage Loan or Pre-Existing Mortgage Loan; and either: requires repayment by the Borrower; or is forgiven (over time or at maturity) subject to Borrower compliance with certain covenants or conditions. … may:

  • if it fully amortizes, mature before the Maturity DateMaturity DateDate all Mortgage Loan amounts become fully due and payable per the Loan Documents. 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. , and
    • any Pre-Existing Mortgage LoansPre-Existing Mortgage LoansMultifamily residential real estate loan secured by Liens against the Property having higher priority than the Lien securing the Subordinate Loan purchased by Fannie Mae. ; and/or
  • be fully or partially forgiven before 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. Maturity DateMaturity DateDate all Mortgage Loan amounts become fully due and payable per the Loan Documents. .
704.03

Collateral and Credit Support

Requirements

You must ensure 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. is secured by the same credit support and collateral as any Third-Party FinancingThird-Party FinancingAny loan to, or indebtedness of, a Borrower that: is not a Supplemental Mortgage Loan or Pre-Existing Mortgage Loan; and either: requires repayment by the Borrower; or is forgiven (over time or at maturity) subject to Borrower compliance with certain covenants or conditions. …, including any

  • recourse to the BorrowerBorrowerPerson who is the obligor per the Note. or any guarantor, or
  • additional collateral.

You may secure the Third-Party FinancingThird-Party FinancingAny loan to, or indebtedness of, a Borrower that: is not a Supplemental Mortgage Loan or Pre-Existing Mortgage Loan; and either: requires repayment by the Borrower; or is forgiven (over time or at maturity) subject to Borrower compliance with certain covenants or conditions. … with a LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. 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). if the LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. :

704.04

Soft Financing

Requirements

Provision To be considered Soft Financing...
Financing Terms Third-Party FinancingThird-Party FinancingAny loan to, or indebtedness of, a Borrower that: is not a Supplemental Mortgage Loan or Pre-Existing Mortgage Loan; and either: requires repayment by the Borrower; or is forgiven (over time or at maturity) subject to Borrower compliance with certain covenants or conditions. … terms must comply with Part III, Chapter 7: Multifamily Affordable Housing Properties, Section 704: Third-Party Financing.
Payments

Any Third-Party FinancingThird-Party FinancingAny loan to, or indebtedness of, a Borrower that: is not a Supplemental Mortgage Loan or Pre-Existing Mortgage Loan; and either: requires repayment by the Borrower; or is forgiven (over time or at maturity) subject to Borrower compliance with certain covenants or conditions. … payments due during 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 (excluding ongoing fees which are addressed separately) must be payable only from Excess NCFExcess NCFFor any specified period, the Net Cash Flow remaining after subtracting, in order of priority: first, all amounts due and owing on the Mortgage Loan, including: principal and interest; and any other funding obligations per the Loan Documents;  second, any payments due on any…, with up to:

 

  • 100% of the available Excess NCFExcess NCFFor any specified period, the Net Cash Flow remaining after subtracting, in order of priority: first, all amounts due and owing on the Mortgage Loan, including: principal and interest; and any other funding obligations per the Loan Documents;  second, any payments due on any… (after subtracting amounts payable per Subsections 1 and 2 of the definition) for all Soft Financing payments to the SponsorSponsorPrincipal equity owner and/or primary decision maker of the Borrower (often the Key Principal or the Person Controlling the Key Principal). 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…; or
  • 75% of the available Excess NCFExcess NCFFor any specified period, the Net Cash Flow remaining after subtracting, in order of priority: first, all amounts due and owing on the Mortgage Loan, including: principal and interest; and any other funding obligations per the Loan Documents;  second, any payments due on any… (after subtracting amounts payable per Subsections 1 and 2 of the definition) for all other Soft Financing.
Ongoing Mandatory Fees

The loan documents for any Third-Party FinancingThird-Party FinancingAny loan to, or indebtedness of, a Borrower that: is not a Supplemental Mortgage Loan or Pre-Existing Mortgage Loan; and either: requires repayment by the Borrower; or is forgiven (over time or at maturity) subject to Borrower compliance with certain covenants or conditions. … may require paying ongoing mandatory fees, such as facility fees, servicing fees, and fees for monitoring compliance with an Affordable Regulatory AgreementAffordable Regulatory AgreementRecorded or unrecorded regulatory, land use, extended use, restrictive covenant, or similar agreement or restriction that is imposed by a Public Entity, placing rent, income, or other affordability restrictions on the use or occupancy of the Property, but which does not include a HAP Contract. or any Private Affordability AgreementPrivate Affordability AgreementRecorded or unrecorded regulatory, land use, extended use, restrictive covenant, agreement, or restriction that is imposed by any non-Public Entity, placing rent, income, or other affordability restrictions on the use or occupancy of the Property. , provided you:

 

  • include any ongoing mandatory fees as an expense in calculating NCFNCFAt underwriting or for any specified period, the amount calculated per Part II, Chapter 2: Valuation and Income, Section 203: Income Analysis and the applicable products and features in Part III. ; and
  • at 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. closing, escrow at least 12 months of ongoing mandatory fees, which must be funded from a source other than 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. proceeds.
Events of Default

Failure to pay principal and/or interest due to lack of available Excess NCFExcess NCFFor any specified period, the Net Cash Flow remaining after subtracting, in order of priority: first, all amounts due and owing on the Mortgage Loan, including: principal and interest; and any other funding obligations per the Loan Documents;  second, any payments due on any… must not be an event of default per the Third-Party FinancingThird-Party FinancingAny loan to, or indebtedness of, a Borrower that: is not a Supplemental Mortgage Loan or Pre-Existing Mortgage Loan; and either: requires repayment by the Borrower; or is forgiven (over time or at maturity) subject to Borrower compliance with certain covenants or conditions. … loan documents.
Subordination Subordination must comply with Part III, Chapter 7: Multifamily Affordable Housing Properties, Section 704.07: Subordination Agreement.

To determine the acceptability of Soft Financing if multiple Soft Financing loans exist, you must:

  • consider the maximum aggregate Soft Financing payments during 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;
  • if the Borrower’sBorrower’sPerson who is the obligor per the Note. agreements (including Subordinate LoanSubordinate LoanMultifamily residential real estate loan secured by a Lien against the Property having a lesser priority than the Lien securing another multifamily residential real estate loan on the same Property. documents, any other documents evidencing any Soft Financing, and Borrower’sBorrower’sPerson who is the obligor per the Note. organizational documents) do not specify Soft Financing payment priority, ensure intercreditor arrangements document payment priority among Soft Financing creditors; and
  • confirm the Excess NCFExcess NCFFor any specified period, the Net Cash Flow remaining after subtracting, in order of priority: first, all amounts due and owing on the Mortgage Loan, including: principal and interest; and any other funding obligations per the Loan Documents;  second, any payments due on any… requirements are not exceeded in the aggregate among the applicable intercreditor provisions.

Guidance

Soft Financing may have:

  • a nominal interest rate;
  • principal payments that do not fully amortize the Third-Party FinancingThird-Party FinancingAny loan to, or indebtedness of, a Borrower that: is not a Supplemental Mortgage Loan or Pre-Existing Mortgage Loan; and either: requires repayment by the Borrower; or is forgiven (over time or at maturity) subject to Borrower compliance with certain covenants or conditions. … over its term; 
  • optional principal payments;
  • a covenant to comply with an Affordable Regulatory AgreementAffordable Regulatory AgreementRecorded or unrecorded regulatory, land use, extended use, restrictive covenant, or similar agreement or restriction that is imposed by a Public Entity, placing rent, income, or other affordability restrictions on the use or occupancy of the Property, but which does not include a HAP Contract. ;
  • an event of default resulting from non-compliance with an Affordable Regulatory AgreementAffordable Regulatory AgreementRecorded or unrecorded regulatory, land use, extended use, restrictive covenant, or similar agreement or restriction that is imposed by a Public Entity, placing rent, income, or other affordability restrictions on the use or occupancy of the Property, but which does not include a HAP Contract. ; and
  • a loan term significantly longer than 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, with the Third-Party FinancingThird-Party FinancingAny loan to, or indebtedness of, a Borrower that: is not a Supplemental Mortgage Loan or Pre-Existing Mortgage Loan; and either: requires repayment by the Borrower; or is forgiven (over time or at maturity) subject to Borrower compliance with certain covenants or conditions. … either
    • being forgiven over time or at its maturity date, or
    • due only upon a PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code).  sale.
704.05

Third-Party Lender

Requirements

If the lender type1 is...

 Then a Third-Party Financing...
  • Public Entity; or
  • non-profit

Can:

 

  • be Soft Financing; or
  • require mandatory payments of
    • P&IP&IPrincipal and interest , or
    • interest only.

Affiliate of the Borrower that is not a:

 

  • Public Entity; or
  • non-profit
 Must qualify as Soft Financing per Part III, Chapter 7: Multifamily Affordable Housing Properties, Section 704.04: Soft Financing.

Any other lender

Is not permitted.
1 For a Third-Party Financing structured as a bond financing, the bondholder is the lender for this analysis.
704.06

Developer's Notes

Requirements

You must ensure any developer note or advance due the SponsorSponsorPrincipal equity owner and/or primary decision maker of the Borrower (often the Key Principal or the Person Controlling the Key Principal). 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… is Soft Financing per Part III, Chapter 7: Multifamily Affordable Housing Properties, Section 704.04: Soft Financing.

704.07

Subordination Agreement

Requirements

For all Third-Party FinancingThird-Party FinancingAny loan to, or indebtedness of, a Borrower that: is not a Supplemental Mortgage Loan or Pre-Existing Mortgage Loan; and either: requires repayment by the Borrower; or is forgiven (over time or at maturity) subject to Borrower compliance with certain covenants or conditions. …, including Soft Financing, you, the BorrowerBorrowerPerson who is the obligor per the Note. , and the third-party lender must enter into:

  • if the third-party lender is a Public EntityPublic EntityA federal, state, or local government entity, or an entity that: is created by state statute, or one or more governmental entities acting pursuant to applicable statutory authority; has a governing body that is elected by voters in the applicable jurisdiction, or …, a Fannie Mae form
    • Subordination and Standstill Agreement (Public Entity) (Form 6456), or
    • Subordination and Standstill Agreement (Public Entity) (Form 6456.SUB); or
  • if the third-party lender is not a Public EntityPublic EntityA federal, state, or local government entity, or an entity that: is created by state statute, or one or more governmental entities acting pursuant to applicable statutory authority; has a governing body that is elected by voters in the applicable jurisdiction, or …, a Fannie Mae form Subordination and Standstill Agreement (Non-Public Entity) (Form 6414).

If a Public Entity, as issuer of a bond financing…

 Then you must enter into…
Assigns its Third-Party Financing documents to a bond trustee
 

Form 6414 with the

 

  • BorrowerBorrowerPerson who is the obligor per the Note. ,
  • Public EntityPublic EntityA federal, state, or local government entity, or an entity that: is created by state statute, or one or more governmental entities acting pursuant to applicable statutory authority; has a governing body that is elected by voters in the applicable jurisdiction, or …,
  • bond trustee, and
  • bondholder.
Reserves certain rights under the Third-Party Financing documents that remain unassigned

Form 6456, but only as to the reserved rights, with the

 

  • BorrowerBorrowerPerson who is the obligor per the Note. , and
  • Public EntityPublic EntityA federal, state, or local government entity, or an entity that: is created by state statute, or one or more governmental entities acting pursuant to applicable statutory authority; has a governing body that is elected by voters in the applicable jurisdiction, or …, as third-party lender.
  • Assigns its Third-Party Financing documents to a bond trustee; and
  • Reserves certain rights under the Third-Party Financing documents that remain unassigned

Both: 

 

  • Form 6414 with the
    • BorrowerBorrowerPerson who is the obligor per the Note. ,
    • Public EntityPublic EntityA federal, state, or local government entity, or an entity that: is created by state statute, or one or more governmental entities acting pursuant to applicable statutory authority; has a governing body that is elected by voters in the applicable jurisdiction, or …,
    • bond trustee, and
    • bondholder; and
  •  Form 6456, but only as to the reserved rights, with the
    • BorrowerBorrowerPerson who is the obligor per the Note. , and
    • Public EntityPublic EntityA federal, state, or local government entity, or an entity that: is created by state statute, or one or more governmental entities acting pursuant to applicable statutory authority; has a governing body that is elected by voters in the applicable jurisdiction, or …, as third-party lender.
704.08

Lien Priority and Title Insurance Policy

Requirements

You must ensure:

  • The Third-Party FinancingThird-Party FinancingAny loan to, or indebtedness of, a Borrower that: is not a Supplemental Mortgage Loan or Pre-Existing Mortgage Loan; and either: requires repayment by the Borrower; or is forgiven (over time or at maturity) subject to Borrower compliance with certain covenants or conditions. …, along with any LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. securing the subordinate loan, remains at all times, subordinate to the Security Instrument'sSecurity Instrument'sInstrument creating a lien or encumbrance on 1 or more Properties and securing the Loan Document obligations. LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. , including any refinancing.
  • The Subordination Agreement is recorded in the land records immediately after the subordinate security instrument is recorded.
  • The Lender'sLender'sPerson Fannie Mae approved to sell or service Mortgage Loans. title insurance policy reflects the recordation of the Subordination Agreement.
704.09

Form of Loan Documents for Third-Party Financings

Requirements

You must confirm the loan documents for the Third-Party FinancingThird-Party FinancingAny loan to, or indebtedness of, a Borrower that: is not a Supplemental Mortgage Loan or Pre-Existing Mortgage Loan; and either: requires repayment by the Borrower; or is forgiven (over time or at maturity) subject to Borrower compliance with certain covenants or conditions. …:

  • comply with this Chapter; and
  • do not require the BorrowerBorrowerPerson who is the obligor per the Note. to maximize rents at 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). , even if 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 subject to
    • an Affordable Regulatory AgreementAffordable Regulatory AgreementRecorded or unrecorded regulatory, land use, extended use, restrictive covenant, or similar agreement or restriction that is imposed by a Public Entity, placing rent, income, or other affordability restrictions on the use or occupancy of the Property, but which does not include a HAP Contract. , or
    • any Private Affordability AgreementPrivate Affordability AgreementRecorded or unrecorded regulatory, land use, extended use, restrictive covenant, agreement, or restriction that is imposed by any non-Public Entity, placing rent, income, or other affordability restrictions on the use or occupancy of the Property. .
704.10

Prepayment

Requirements

The BorrowerBorrowerPerson who is the obligor per the Note. may not prepay or redeem the Third-Party FinancingThird-Party FinancingAny loan to, or indebtedness of, a Borrower that: is not a Supplemental Mortgage Loan or Pre-Existing Mortgage Loan; and either: requires repayment by the Borrower; or is forgiven (over time or at maturity) subject to Borrower compliance with certain covenants or conditions. … without Fannie Mae’s consent.

704.11

LIHTC Equity Bridge Loans

Requirements

LIHTC Equity Bridge Loan Requirements
LIHTC Type Must be federal LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. .
Lender Eligibility The LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. equity bridge lender must not be on ACheckACheckLender due diligence performed for the Borrower, Key Principal, and Principal using the ACheckTM application. .
Repayment Must be completely repaid on or before the final LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. equity payment associated with 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). placed-in-service date.
Amount
  • Maximum of 80% of aggregate LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. equity contribution.
  • Per Part III, Chapter 7: Multifamily Affordable Housing Properties, Section 703.02E: Initial LIHTC Equity, you must ensure at least 20% of the aggregate LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. equity that the LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. investor or syndicator must contribute into the limited partnership is received by the Mortgage Loan Origination DateMortgage Loan Origination DateDate you fund a Mortgage Loan to the Borrower. .​​​
Funding Conditions No performance hurdles or PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). performance benchmarks tied to bridge loan payments.
Note
  • Non-recourse to BorrowerBorrowerPerson who is the obligor per the Note. .
  • Fixed or variable rate.
Guaranty (Repayment and/or Completion) Must be subordinated to any GuarantyGuarantyPayment Guaranty, Non-Recourse Guaranty, or other guaranty by a Guarantor for the Mortgage Loan. in favor of Fannie Mae.

 

Bridge Loan Collateral Types (multiple types allowed) Bridge Lender Affiliated with You or LIHTC Investor Bridge Lender Unaffiliated with You, LIHTC Investor, or Sponsor Bridge Lender Affiliated with Sponsor
Assignment of Rights to Capital Contribution from LIHTC Equity Investor Acceptable Acceptable Unacceptable
Assignment of Development Fee Acceptable Acceptable Acceptable
Subordinate Security Instrument

Unacceptable

 Unacceptable Unacceptable
Assignment of General or Limited Partnership Interests (but not both) Acceptable if Bridge Lender has LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. experience Acceptable if Bridge Lender has LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. experience
  • Acceptable for general partnership Interests
  • Unacceptable for limited partnership Interests
Subordination Agreement Form provided by Fannie Mae Form provided by Fannie Mae Form provided by Fannie Mae
704.12

Grant Funding

Requirements

You must determine whether any Grant FundingGrant FundingFunding for the Property’s construction or renovation given to the Borrower, or to a Borrower Affiliate that in turn loans or grants the funds to the Borrower, with no repayment obligation if specified requirements are met. is received:

  • directly by the BorrowerBorrowerPerson who is the obligor per the Note. ; or
  • by any BorrowerBorrowerPerson who is the obligor per the Note. 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 used to fund any:
    • Third-Party FinancingThird-Party FinancingAny loan to, or indebtedness of, a Borrower that: is not a Supplemental Mortgage Loan or Pre-Existing Mortgage Loan; and either: requires repayment by the Borrower; or is forgiven (over time or at maturity) subject to Borrower compliance with certain covenants or conditions. …; or
    • Grant FundingGrant FundingFunding for the Property’s construction or renovation given to the Borrower, or to a Borrower Affiliate that in turn loans or grants the funds to the Borrower, with no repayment obligation if specified requirements are met. from the BorrowerBorrowerPerson who is the obligor per the Note. 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… to the BorrowerBorrowerPerson who is the obligor per the Note. .

If any Grant FundingGrant FundingFunding for the Property’s construction or renovation given to the Borrower, or to a Borrower Affiliate that in turn loans or grants the funds to the Borrower, with no repayment obligation if specified requirements are met. above is subject to clawback, recapture, or other contingent repayment (e.g., upon an event of non-compliance or default), you must:

  • ensure any collateral for the contingent repayment complies with Part III, Chapter 7: Multifamily Affordable Housing Properties, Section 704.03: Collateral and Credit Support; and
  • with the BorrowerBorrowerPerson who is the obligor per the Note. , the BorrowerBorrowerPerson who is the obligor per the Note. 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 applicable), and the grantor, enter into and record the applicable:
    • Subordination Agreement (Affordable) (Form 6456), if the grantor is a Public EntityPublic EntityA federal, state, or local government entity, or an entity that: is created by state statute, or one or more governmental entities acting pursuant to applicable statutory authority; has a governing body that is elected by voters in the applicable jurisdiction, or …; or
    • Subordination Agreement (Conventional) (Form 6414), if the grantor is not a Public EntityPublic EntityA federal, state, or local government entity, or an entity that: is created by state statute, or one or more governmental entities acting pursuant to applicable statutory authority; has a governing body that is elected by voters in the applicable jurisdiction, or ….

If any BorrowerBorrowerPerson who is the obligor per the Note. 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… receives Grant FundingGrant FundingFunding for the Property’s construction or renovation given to the Borrower, or to a Borrower Affiliate that in turn loans or grants the funds to the Borrower, with no repayment obligation if specified requirements are met. and, in turn, loans those funds to the BorrowerBorrowerPerson who is the obligor per the Note. :