417.04C

Requirements and Monitoring

For a Seniors Housing Expansion/Conversion Request approved by Fannie Mae, the following requirements will apply:

  • Escrow:
    • the Borrower BorrowerPerson who is the obligor per the Note. must escrow 25% of the estimated construction costs with the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. , who will administer the funds through a standard construction draw process; and
    • the Borrower BorrowerPerson who is the obligor per the Note. must demonstrate to the Servicer’s Servicer’sPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. satisfaction that it has sufficient liquid assets to complete the construction;
  • Minimum DSCR DSCROn 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 Pay Preferred Equity payments.  during the expansion/conversion period cannot fall below 1.15x;
  • Completion of construction must occur no later than 18 months from the date of commencement;
  • Construction monitoring requirements will be set forth in the approval letter;
  • Fannie Mae will charge a construction monitoring fee which does not cover the expenses associated with third-party inspections;
  • Completion Guaranty ( Form 6018 ,  Form 6632 , or  Form 6633 ) and, if determined applicable by Fannie Mae, an Agreement and Assignment Regarding General Contractor’s Contract ( Form 6473 ), and an Omnibus Assignment of Contracts, Plans, Permits, and Approvals ( Form 6473 ), will be required;
  • Fannie Mae will charge a change in use fee, and the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. may charge additional fees at its discretion, subject to approval by Fannie Mae;
  • The Borrower BorrowerPerson who is the obligor per the Note. must reimburse all legal costs incurred by Fannie Mae; and
  • A fixed-price general construction contract provided by a general contractor, together with a payment and performance bond issued by an acceptable surety, will be required.