Properties with Both HAP Contracts and LIHTC Units

Requirements

For a 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. secured by an MAH PropertyMAH PropertyProperty encumbered by a regulatory agreement, land use restriction agreement, extended use agreement, or similar restriction that limits rents that can be charged to tenants, or imposes income limits on tenants. or a Credit Enhancement Mortgage LoanCredit Enhancement Mortgage LoanMortgage Loan underwritten and serviced by the Lender and financed by the issuance of Bonds where Fannie Mae is providing a Credit Enhancement Instrument., if the PropertyPropertyMultifamily residential property securing the Mortgage Loan and including the land (or Leasehold interest in land), Improvements, and personal property (as defined in the Uniform Commercial Code). has both HAPHAPHousing assistance payment provided to a Borrower by HUD in connection with a HUD Section 8 Property. contracts and LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. units, you must underwrite 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. using 1 of the following options.

Choice	Requirements
Option 1	Underwrite the rents from HAPHAPHousing assistance payment provided to a Borrower by HUD in connection with a HUD Section 8 Property. contract units using the lowest of market rents, HAPHAPHousing assistance payment provided to a Borrower by HUD in connection with a HUD Section 8 Property. contract rents, or Applicable LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. rents.
Option 2	Underwrite the rents from HAPHAPHousing assistance payment provided to a Borrower by HUD in connection with a HUD Section 8 Property. contract units using the additional income above the LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. rents (LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. overage) if the HAPHAPHousing assistance payment provided to a Borrower by HUD in connection with a HUD Section 8 Property. contract rents are less than market rents. If the HAPHAPHousing assistance payment provided to a Borrower by HUD in connection with a HUD Section 8 Property. contract expires 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 amounts due and owing under the Mortgage Loan become fully due and payable per the Loan Documents., you must ensure that: the Underwritten DSCRUnderwritten DSCRRatio of Underwritten Net Cash Flow to the annual debt service for a Mortgage Loan amount based on a level debt service payment with the applicable amortization, and calculated per Part II: Property, Section 202, as adjusted for the applicable products and features in Part III. is greater than or equal to 1.05 based on the LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. rents; and the PropertyPropertyMultifamily residential property securing the Mortgage Loan and including the land (or Leasehold interest in land), Improvements, and personal property (as defined in the Uniform Commercial Code). has an Underwritten DSCRUnderwritten DSCRRatio of Underwritten Net Cash Flow to the annual debt service for a Mortgage Loan amount based on a level debt service payment with the applicable amortization, and calculated per Part II: Property, Section 202, as adjusted for the applicable products and features in Part III. greater than or equal to 1.10 based on the LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. rents when the HAPHAPHousing assistance payment provided to a Borrower by HUD in connection with a HUD Section 8 Property. contract expires.

Choice

Requirements

Option 1

Underwrite the rents from HAPHAPHousing assistance payment provided to a Borrower by HUD in connection with a HUD Section 8 Property. contract units using the lowest of

market rents,
HAPHAPHousing assistance payment provided to a Borrower by HUD in connection with a HUD Section 8 Property. contract rents, or
Applicable LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. rents.

Option 2

Underwrite the rents from HAPHAPHousing assistance payment provided to a Borrower by HUD in connection with a HUD Section 8 Property. contract units using the additional income above the LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. rents (LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. overage) if the HAPHAPHousing assistance payment provided to a Borrower by HUD in connection with a HUD Section 8 Property. contract rents are less than market rents. If the HAPHAPHousing assistance payment provided to a Borrower by HUD in connection with a HUD Section 8 Property. contract expires 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 amounts due and owing under the Mortgage Loan become fully due and payable per the Loan Documents., you must ensure that:

the Underwritten DSCRUnderwritten DSCRRatio of Underwritten Net Cash Flow to the annual debt service for a Mortgage Loan amount based on a level debt service payment with the applicable amortization, and calculated per Part II: Property, Section 202, as adjusted for the applicable products and features in Part III. is greater than or equal to 1.05 based on the LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. rents; and
the PropertyPropertyMultifamily residential property securing the Mortgage Loan and including the land (or Leasehold interest in land), Improvements, and personal property (as defined in the Uniform Commercial Code). has an Underwritten DSCRUnderwritten DSCRRatio of Underwritten Net Cash Flow to the annual debt service for a Mortgage Loan amount based on a level debt service payment with the applicable amortization, and calculated per Part II: Property, Section 202, as adjusted for the applicable products and features in Part III. greater than or equal to 1.10 based on the LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. rents when the HAPHAPHousing assistance payment provided to a Borrower by HUD in connection with a HUD Section 8 Property. contract expires.

You may use Option 2, or eliminate the Restabilization Reserve under either option, if you meet all of the following:

all LIHTCLIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. rents are at least 10% below market;
the MAH PropertyMAH PropertyProperty encumbered by a regulatory agreement, land use restriction agreement, extended use agreement, or similar restriction that limits rents that can be charged to tenants, or imposes income limits on tenants. is located in a market or submarket with 90% or greater economic occupancy; and
the SponsorSponsorPrincipal equity owner and/or the primary decision maker of the Borrower (often the Key Principal or the Person Controlling the Key Principal). is experienced and successful in owning and operating properties with HAPHAPHousing assistance payment provided to a Borrower by HUD in connection with a HUD Section 8 Property. contracts.