1904.02

Credit Enhancement Instrument

Guidance

Fannie MaeFannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! ’s Credit Enhancement InstrumentCredit Enhancement InstrumentAgreement between Fannie Mae and a Bond Trustee where Fannie Mae provides credit enhancement of a Credit Enhancement Mortgage Loan, Bonds issued to finance a Credit Enhancement Mortgage Loan, or an Interest Rate Hedge Agreement; and if applicable, a Bond liquidity facility. Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. presume the 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. IssuerIssuerEntity that: issues Bonds for a Credit Enhancement Mortgage Loan; packages mortgages for sale as a Security for an MBS; or issues a Letter of Credit. will:

  • be the initial lender and secured party under the Security InstrumentSecurity InstrumentInstrument creating a lien or encumbrance on 1 or more Properties and securing the Loan Document obligations. ; and
  • immediately assign the Multifamily Bond Note and Security InstrumentSecurity InstrumentInstrument creating a lien or encumbrance on 1 or more Properties and securing the Loan Document obligations. to Fannie MaeFannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! and the Bond TrusteeBond TrusteeTrustee for a Credit Enhancement Instrument. , as co-assignees.

Requirements

You must ensure that Fannie MaeFannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! (not you or the 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. IssuerIssuerEntity that: issues Bonds for a Credit Enhancement Mortgage Loan; packages mortgages for sale as a Security for an MBS; or issues a Letter of Credit. ) is named as the counterparty or beneficiary in the Credit Enhancement Mortgage LoanCredit Enhancement Mortgage LoanMortgage Loan financed by a Bond issuance where Fannie Mae provides credit enhancement by a Credit Enhancement Instrument, or an MBS for Bonds. agreements and collateral assignments.

Operating Procedures

Fannie MaeFannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! and its counsel will:

  • prepare the
    • Credit Enhancement Commitment Letter,
    • credit enhancement documents,
    • multifamily NoteNoteInstrument evidencing a Mortgage Loan obligation, including  Form 6010 series,  any other Fannie Mae-approved note, and  all applicable addenda, schedules, and exhibits.  ; and
  • review and approve all 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. documents.

You may ask Fannie MaeFannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! ’s counsel to also prepare other Loan DocumentsLoan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. , or your counsel may prepare these documents.