417.04C

Requirements and Monitoring

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

  • Escrow:
    • the BorrowerBorrowerPerson who is the obligor per the Note. must escrow 25% of the estimated construction costs with the ServicerServicerPrimary 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 BorrowerBorrowerPerson who is the obligor per the Note. must demonstrate to the Servicer’sServicer’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 DSCRDSCROn 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 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 ServicerServicerPrimary 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 BorrowerBorrowerPerson 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.