Section 711
| 711.01 | |
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Guidance
Fannie Mae and the HUDHUDU.S. Department of Housing and Urban Development have a risk sharing agreement to share risk on Mortgage LoansMortgage LoansMortgage 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 certain MAHMAHProperty that: complies with Part III, Chapter 7: Multifamily Affordable Housing Properties, Section 702: MAH Property Eligibility; and is underwritten per Part III, Chapter 7: Multifamily Affordable Housing Properties. PropertiesPropertiesMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). . HUD’sHUD’sU.S. Department of Housing and Urban Development risk sharing is in the form of mortgage insurance from FHAFHAFederal Housing Administration . HUDHUDU.S. Department of Housing and Urban Development takes 50% of the risk of loss, and the remaining 50% of the loss is shared by you and Fannie Mae.
| 711.02 | |
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Requirements
You must ensure that the BorrowerBorrowerPerson who is the obligor per the Note. , and each 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. , GuarantorGuarantorKey Principal or other Person executing a Payment Guaranty, Non-Recourse Guaranty, or any other Mortgage Loan guaranty. , and PrincipalPrincipalPerson who owns or controls, in the aggregate, directly or indirectly (together with that Person's Immediate Family Members, if an individual), specified interests in the Borrower per Part I, Chapter 3: Borrower, Guarantor, Key Principals, and Principals, Section 303: Key Principals, Principals,… are not on the most current “List of Parties Excluded from Federal Procurement or Nonprocurement Programs”.
| 711.02B | |
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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 fixed rate with no interest-only period;
- has a loan term with a
- minimum of 15 years, and
- maximum of 40 years;
- is either:
- fully amortizing; or
- requires a balloon payment of the outstanding principal no sooner than the end of the 15th year, calculated on an amortization term of no more than 30 years;
- is secured by a:
- single first LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. on real property; and
- project consisting of at least 5 or more dwelling units located on
- a single parcel of land, or
- 2 or more non-contiguous parcels comprising a readily marketable ProjectProjectMultifamily buildings on multiple Properties, owned by the same Borrower, and that comply with Part II, Chapter 1: Attributes and Characteristics, Section 103.01: Single Borrower Ownership. within an area small enough for convenient and efficient management; and
- is free of all LiensLiensLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. other than the LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. in favor of Fannie Mae and any subordinate LiensLiensLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. approved by Fannie Mae;
- at least 50% of the units are leased at rents:
- at or above the underwritten rents; or
- that can sustain 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.
owns a leasehold interest in 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).
, on the Mortgage Loan Origination DateMortgage Loan Origination DateDate you fund a Mortgage Loan to the Borrower.
, the lease term:
- is at least 40 years; and
- exceeds the amortization period by at least 10 years;
- 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). has affordability restrictions recorded against 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). monitored for compliance by a third party other than HUDHUDU.S. Department of Housing and Urban Development or Fannie Mae (except for a Section 8 HAP ContractHAP ContractAn agreement providing a HUD Section 8 rental subsidy for the Property in the form of a: project-based voucher contract (PBV), or project-based rental assistance contract (PBRA). or Section 236 transaction for which HUDHUDU.S. Department of Housing and Urban Development may monitor compliance);
- the affordability restrictions require that at least:
- 20% of the units are rent-restricted and occupied by families with incomes no more than 50% of AMI, as adjusted for family size; or
- 40% (25% in New York City) of the units are rent-restricted and occupied by families with incomes no more than 60% of AMI, as adjusted for family size;
- the residential unit's gross rent is restricted to no more than 30% of the unit's Imputed Income Limitation per Section 42 of the Internal Revenue Code;
- the affordability restrictions are in effect for at least 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;
- for an MAH PropertyMAH PropertyProperty that: complies with Part III, Chapter 7: Multifamily Affordable Housing Properties, Section 702: MAH Property Eligibility; and is underwritten per Part III, Chapter 7: Multifamily Affordable Housing Properties. , if the remaining affordability restrictions are less than 18 years, enforcement of those restrictions is considered senior to the Mortgage Loan’sMortgage Loan’sMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or a mortgage debt obligation with a Fannie Mae credit enhancement. LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. ;
- 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. does not have an uncured payment default or performance default upon DeliveryDeliverySubmission of all correct, accurate, and certifiable documents, data, and information with all applicable documents properly completed, executed, and recorded as needed, and any deficiencies resolved to Fannie Mae’s satisfaction. ; and
- 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). qualifies on the Effective Date as an MAH PropertyMAH PropertyProperty that: complies with Part III, Chapter 7: Multifamily Affordable Housing Properties, Section 702: MAH Property Eligibility; and is underwritten per Part III, Chapter 7: Multifamily Affordable Housing Properties. solely per:
You must ensure the ProjectProjectMultifamily buildings on multiple Properties, owned by the same Borrower, and that comply with Part II, Chapter 1: Attributes and Characteristics, Section 103.01: Single Borrower Ownership. :
- is not located in:
- a 500-year floodplain and likely occupied by tenants who may not be sufficiently mobile to avoid injury or death during floods or storms as determined by HUDHUDU.S. Department of Housing and Urban Development (contact the Fannie Mae Deal TeamFannie Mae Deal TeamTeam responsible for reviewing Pre-Review Mortgage Loans, waivers, etc. to establish HUDS’s determination of this factor);
- a Federal Emergency Management Agency-mapped Special Flood Hazard AreaSpecial Flood Hazard AreaSpecial Flood Hazard Area designated by FEMA. 100-year floodplain (except where no buildings or ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). other than minor grubbing will be in the floodplain and the floodplain area will be permanently dedicated to non-development, as determined by HUDHUDU.S. Department of Housing and Urban Development (contact the Fannie Mae Deal TeamFannie Mae Deal TeamTeam responsible for reviewing Pre-Review Mortgage Loans, waivers, etc. to establish HUDS’s determination of this factor);
- the Coastal Barrier Resources System per the Coastal Barrier Resources Act, 16.U.S.C.3501; or
- a Runway Clear Zone (at a civil airport) or Clear Zone (at a military airfield) 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 newly constructed or substantially rehabilitated; and
- is not:
- financed by a loan insured by the Federal Housing Administration or other federal full mortgage insurance, co-insurance, or risk shared insurance or reinsurance under Section 542(c) of the Act;
- used for Transient Housing or Hotel Purposes (as defined in the Fannie Mae/HUD Risk Sharing Agreement); or
- a Nursing Home, Intermediate Care Facility of Board, or Care/Assisted Living Facility (as defined in the Fannie Mae/HUD Risk Sharing Agreement).
| 711.02C | |
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Guidance
There is no limit on the amount of cash out in an FHA Risk SharingFHA Risk SharingMAH Mortgage Loan with mortgage insurance from FHA. transaction.
| 711.03 | |
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Requirements
Your pricing for an FHA Risk SharingFHA Risk SharingMAH Mortgage Loan with mortgage insurance from FHA. 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. must include a sufficient amount to pay the mortgage insurance premium due to FHAFHAFederal Housing Administration .
| 711.04 | |
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Requirements
You must:
- ensure the BorrowerBorrowerPerson who is the obligor per the Note.
:
- obtains a subsidy layering review that meets federal laws; and
- contacts the Housing Finance Agency or Regional HUDHUDU.S. Department of Housing and Urban Development office where 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 located to request a subsidy layering review; and
- contact the Fannie Mae Deal TeamFannie Mae Deal TeamTeam responsible for reviewing Pre-Review Mortgage Loans, waivers, etc. if the BorrowerBorrowerPerson who is the obligor per the Note. is unable to obtain the subsidy layering review.
Operating Procedures
After the subsidy layering review is complete, the applicable reviewing office will issue a certification to the BorrowerBorrowerPerson who is the obligor per the Note. stating the total amount of governmental assistance is not more than is necessary to provide affordable housing after taking into account other government assistance. You must receive the certification before
- Rate LockRate LockAgreement between you and the Investor containing the terms of the Lender-Arranged Sale or Multifamily Trading Desk trade of the Mortgage Loan and the MBS terms and conditions relating to the underlying MBS, if applicable, which may be documented via a recorded telephone conversation. , or
- obtaining a CommitmentCommitmentContractual agreement between you and Fannie Mae where Fannie Mae agrees to buy a Mortgage Loan at a future date in exchange for an MBS, or at a specific price for a Cash Mortgage Loan, and you agree to Deliver that Mortgage Loan. for a tax-exempt BondBondTax-exempt or taxable multifamily revenue bonds, or other tax-exempt or taxable bonds, issued to finance 1 or more Credit Enhancement Mortgage Loan Properties. transaction.
If 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. was approved for FHA Risk SharingFHA Risk SharingMAH Mortgage Loan with mortgage insurance from FHA. , you must indicate an "FHA risk sharing" Mortgage Loan Type on the Mortgage Loan Certificate (Form 6505).