Section 202

Appraisal and Valuation

202.01

Lender Appraisal Function

Requirements

You must not allow your:

  • Lender Loan Origination Functions Lender Loan Origination FunctionsAny: Lender internal roles or job functions reporting up to the Chief Production Officer; Lender employees who receive a commission or bonus if the Mortgage Loan closes, including any employees or functions that report up to these roles and/or their immediate supervisor; Mortgage Loan… to be involved or participate in any of your Lender Appraisal Functions Lender Appraisal FunctionsThe Lender: internal roles or job functions, including any employees that report up to the Chief Underwriter (but excluding any Lender Loan Origination Functions), involved with the following Appraisal-related responsibilities: engaging the Appraiser; defining the Appraisal’s scope… , including:
    • selecting an Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. or ordering an Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. for a specific Mortgage Loan Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 ; or
    • maintaining lists of Appraisers AppraisersPerson engaged to estimate a Property’s market value per USPAP. approved or forbidden to perform Appraisals AppraisalsWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. for you; and
  • Lender Appraisal Functions Lender Appraisal FunctionsThe Lender: internal roles or job functions, including any employees that report up to the Chief Underwriter (but excluding any Lender Loan Origination Functions), involved with the following Appraisal-related responsibilities: engaging the Appraiser; defining the Appraisal’s scope… to be involved in, or combined with, any Lender Loan Origination Functions Lender Loan Origination FunctionsAny: Lender internal roles or job functions reporting up to the Chief Production Officer; Lender employees who receive a commission or bonus if the Mortgage Loan closes, including any employees or functions that report up to these roles and/or their immediate supervisor; Mortgage Loan… .

Your Lender Loan Origination Functions Lender Loan Origination FunctionsAny: Lender internal roles or job functions reporting up to the Chief Production Officer; Lender employees who receive a commission or bonus if the Mortgage Loan closes, including any employees or functions that report up to these roles and/or their immediate supervisor; Mortgage Loan… are considered to be “Restricted Parties” who are prohibited from:

  • ordering, managing, or defining the scope of work for an Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. assignment;
  • selecting, retaining, recommending, or influencing whether an Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. is selected for:
    • a particular Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. assignment; or
    • a list of Appraisers AppraisersPerson engaged to estimate a Property’s market value per USPAP. approved or forbidden to perform Appraisals AppraisalsWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. for you; and
  • communicating with an Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. or Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. management company without the Lender Appraisal Function Lender Appraisal FunctionThe Lender: internal roles or job functions, including any employees that report up to the Chief Underwriter (but excluding any Lender Loan Origination Functions), involved with the following Appraisal-related responsibilities: engaging the Appraiser; defining the Appraisal’s scope… included.
202.02

Appraisals
202.02A

Appraiser Selection

Requirements

You must:

  • maintain a list of Appraisers AppraisersPerson engaged to estimate a Property’s market value per USPAP. generally approved to perform Appraisals AppraisalsWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. ;
  • document the selection and approval of an Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. , per your Lender Appraisal Function Lender Appraisal FunctionThe Lender: internal roles or job functions, including any employees that report up to the Chief Underwriter (but excluding any Lender Loan Origination Functions), involved with the following Appraisal-related responsibilities: engaging the Appraiser; defining the Appraisal’s scope… processes, who is:
    • a Certified General Appraiser (or licensed or certified per state law, if that state does not use the Certified General Appraiser designation);
    • listed in good standing on the state roster per Title XI of FIRREA FIRREAFinancial Institutions Reform, Recovery, and Enforcement Act of 1989. ; and
    • actively prepares multifamily appraisals in the Property’s Property’sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). market;
  • if an in-house Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. is used, ensure your Lender Loan Origination Function Lender Loan Origination FunctionAny: Lender internal roles or job functions reporting up to the Chief Production Officer; Lender employees who receive a commission or bonus if the Mortgage Loan closes, including any employees or functions that report up to these roles and/or their immediate supervisor; Mortgage Loan… is separated from and cannot in any way influence (i.e., an ethical wall) the in-house Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. to:
    • prevent conflicts of interest; and
    • maintain Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. independence;
  • require the Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. to:
    • be in a narrative format, using only objective factors;
    • be signed by the Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. ;
    • be certified by the Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. to conform with current USPAP USPAPUniform Standards of Professional Appraisal Practice requirements; and
    • comply with:
      • Instructions for Appraisers ( Form 4827 ); and
      • any governmental regulations in effect when the Mortgage Loan Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 was originated, including
        • FIRREA FIRREAFinancial Institutions Reform, Recovery, and Enforcement Act of 1989. , 
        • all fair lending laws, and
        • all fair housing laws;
  • provide the Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. all applicable documents needed to accurately assess Property's Property'sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). value, including:
    • the most recent PCA Report PCA ReportProperty Condition Assessment Report documenting the findings of a PCA. , or any other inspection reports (e.g., a structural engineering report);
    • a rent roll dated within 60 days of the Appraiser’s Appraiser’sPerson engaged to estimate a Property’s market value per USPAP. inspection date;
    • Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). operating statements detailing
      • income and expenses for the previous year (if available, for the previous 2 years), and
      • year-to-date income and expenses;
    • copies of:
      • the Borrower's Borrower'sPerson who is the obligor per the Note. standard form of residential lease;
      • any executed commercial leases, including all amendments and attachments;
      • any ground leases;
      • any easements or regulatory agreements; and
      • any PSA PSAFinal fully executed purchase or sales contract or agreement (including all amendments, assignments, extensions, joinders/acknowledgements, and related documents) for an Acquisition.  executed within 3 years before the Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. date;
    • any Environmental Site Assessments Environmental Site AssessmentsInvestigation and resulting report (Phase I ESA or Phase II ESA) conducted per Environmental Due Diligence Requirements (Form 4251), identifying if a Property has Recognized Environmental Conditions or Business Environmental Risks. ;
    • architectural plans, if the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). is not yet completed;
    • site plans/surveys, if available;
    • for a Moderate Rehabilitation Property Moderate Rehabilitation PropertyProperty that will undergo at least $8,000 per unit of Rehabilitation Work. , details of the
      • capital expenditures incurred, and
      • total construction costs; and
    • any information that may affect the Appraiser’s Appraiser’sPerson engaged to estimate a Property’s market value per USPAP. estimate of the Property’s Property’sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). value; and
  • not accept any Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. completed by an Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. selected, retained, or compensated by:
    • the Borrower BorrowerPerson who is the obligor per the Note. ;
    • the Sponsor SponsorPrincipal equity owner and/or primary decision maker of the Borrower (often the Key Principal or the Person Controlling the Key Principal). ;
    • any Key Principal Key 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. ;
    • any Guarantor GuarantorKey Principal or other Person executing a Payment Guaranty, Non-Recourse Guaranty, or any other Mortgage Loan guaranty. ;
    • for an Acquisition AcquisitionAny Purchase of either the: Property’s fee simple or leasehold interest via a deed transfer; or Controlling Interest in the Borrower. , the seller or any related party; or
    • any third party, including Mortgage Loan Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2
      • Brokers BrokersThird-party Person who arranges Mortgage Loan financing on the Borrower’s behalf, or Transfers/Assumptions on behalf of the new Borrower for an assumption, or transferee for a transfer. , or
      • Correspondents.

Guidance

If final reports are unavailable, you may send draft versions of the

  • PCA Report PCA ReportProperty Condition Assessment Report documenting the findings of a PCA. , and
  • Environmental Site Assessments Environmental Site AssessmentsInvestigation and resulting report (Phase I ESA or Phase II ESA) conducted per Environmental Due Diligence Requirements (Form 4251), identifying if a Property has Recognized Environmental Conditions or Business Environmental Risks. .

If the final reports differ materially from the drafts sent to the Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. , you must:

  • forward the final reports to the Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. ; and
  • inquire whether the Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. should be updated based on the final reports.
202.02B

Permissible Appraiser Communications

Requirements

When communicating with an Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. , you must comply with the Appraiser Communications table.

Appraiser Communications
You may... You must not... 
  • obtain supporting information for a specific market, including:
    • sales or rental comparable properties;
    • rent or expense data;
    • capitalization rate data;
    • recent sales; or
    • price per unit or square footage ranges;
  • provide all documents needed to accurately assess the Property's value per this Chapter;
  • share or request additional supporting comparable property information; and
  • request additional documents supporting the Appraiser’s conclusions.

provide any Mortgage Loan Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 data, such as

 

  • LTV LTVRatio of the actual aggregate UPB of the Mortgage Loan, plus any Pre-Existing Mortgage Loans, plus any Hard Pay Preferred Equity, plus any Mezzanine Financing, to the value of the Property, expressed as a percentage.  ,
  • 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. ,
  • amount, or
  • Underwritten NCF NCFAt underwriting or for any specified period, the amount calculated per Part II, Chapter 2: Valuation and Income, Section 203: Income Analysis and the applicable products and features in Part III. .
202.02C

Appraiser Independence

Requirements

You must ensure no Person PersonLegal person, including an individual, estate, trust, corporation, partnership, limited liability company, financial institution, joint venture, association, or other organization or entity (whether governmental or private). influences, or attempts to influence, the development, reporting, result, or review of an Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. through coercion, extortion, collusion, compensation, inducement, intimidation, bribery, or any other manner including:

  • withholding, or threatening to withhold:
    • timely payment; or
    • future business;
  • demoting or terminating, or threatening to demote or terminate, the Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. or any Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. employee;
  • promising, either expressly or implicitly, the Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. or any Person PersonLegal person, including an individual, estate, trust, corporation, partnership, limited liability company, financial institution, joint venture, association, or other organization or entity (whether governmental or private). related to the Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. :
    • future business;
    • promotions; or
    • increased compensation, including
      • financial benefits, or
      • non-financial benefits;
  • conditioning the Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. order, or any bonus payment on
    • the Appraisal’s Appraisal’sWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. opinion of the Property's Property'sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). value, or
    • a requested preliminary value estimate;
  • any Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. communications (other than providing a copy of the PSA PSAFinal fully executed purchase or sales contract or agreement (including all amendments, assignments, extensions, joinders/acknowledgements, and related documents) for an Acquisition.  for an Acquisition AcquisitionAny Purchase of either the: Property’s fee simple or leasehold interest via a deed transfer; or Controlling Interest in the Borrower. ) regarding the Property’s Property’sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). anticipated, estimated, encouraged, or desired:
    • comparable properties;
    • capitalization rates; or
    • value or value range;
  • providing the Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. a proposed or targeted loan amount;
  • impairing, or attempting to impair, through any other act or practice, the Appraiser’s Appraiser’sPerson engaged to estimate a Property’s market value per USPAP.
    • independence,
    • objectivity, or
    • impartiality; or
  • violating compliance with any law or regulation, including the USPAP USPAPUniform Standards of Professional Appraisal Practice .

To ensure the Appraiser’s Appraiser’sPerson engaged to estimate a Property’s market value per USPAP. independence, you must:

  • implement written policies and procedures;
  • ensure any Outside Parties Outside PartiesPerson you retain to perform services for multifamily Mortgage Loans (e.g., Appraisers, inspectors, Correspondents, law firms, engineers, environmental consultants, and Brokers, title companies, or title agents). involved in your Lender Appraisal Functions Lender Appraisal FunctionsThe Lender: internal roles or job functions, including any employees that report up to the Chief Underwriter (but excluding any Lender Loan Origination Functions), involved with the following Appraisal-related responsibilities: engaging the Appraiser; defining the Appraisal’s scope… maintain Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. independence by confirming they do not also participate in your Lender Loan Origination Functions Lender Loan Origination FunctionsAny: Lender internal roles or job functions reporting up to the Chief Production Officer; Lender employees who receive a commission or bonus if the Mortgage Loan closes, including any employees or functions that report up to these roles and/or their immediate supervisor; Mortgage Loan… ; and
  • if requested, provide evidence confirming your Lender Loan Origination Functions Lender Loan Origination FunctionsAny: Lender internal roles or job functions reporting up to the Chief Production Officer; Lender employees who receive a commission or bonus if the Mortgage Loan closes, including any employees or functions that report up to these roles and/or their immediate supervisor; Mortgage Loan… are separate from your Lender Appraisal Functions Lender Appraisal FunctionsThe Lender: internal roles or job functions, including any employees that report up to the Chief Underwriter (but excluding any Lender Loan Origination Functions), involved with the following Appraisal-related responsibilities: engaging the Appraiser; defining the Appraisal’s scope… .

Guidance

Appraisal Independence
To ensure compliance, your written policies should include... That describe...
Procedures

how you maintain independence between the Lender Appraisal Function Lender Appraisal FunctionThe Lender: internal roles or job functions, including any employees that report up to the Chief Underwriter (but excluding any Lender Loan Origination Functions), involved with the following Appraisal-related responsibilities: engaging the Appraiser; defining the Appraisal’s scope… and Lender Loan Origination Functions Lender Loan Origination FunctionsAny: Lender internal roles or job functions reporting up to the Chief Production Officer; Lender employees who receive a commission or bonus if the Mortgage Loan closes, including any employees or functions that report up to these roles and/or their immediate supervisor; Mortgage Loan… through

 

  • organizational measures (e.g., an ethical wall),
  • staffing, and
  • written documentation.
Disciplinary Rules

the consequences for not complying with the requirements, including

 

  • promotion delays,
  • compensation reductions, or
  • termination, in very severe cases.
Training Programs

in-person or online training:

 

  • designed to aid compliance with the requirements; and
  • detailing policies outlining mandatory training
    • types,
    • content,
    • audiences, and
    • frequency.
202.02D

Valuation Date

Requirements

Valuation Date
If the Appraisal Date is more than... You must...
6 months before the Commitment Date Instruct the Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. to update the Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. per Instructions for Appraisers ( Form 4827 ).
12 months before the Commitment Date Order a new Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. .

Guidance

You may be required to obtain a new or updated Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. if Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! determines the market deteriorated between the

  • Appraisal Date Appraisal DateEffective date of value in the Appraisal. , and
  • Commitment Date Commitment DateDate a Commitment is confirmed by Fannie Mae per Part IV, Chapter 2: Rate Lock and Committing, Section 204: Commitments. .
202.02E

Appraisals Ordered by Another Lender

Requirements

If you Deliver DeliverSubmission 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. a Mortgage Loan Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 with an Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. prepared by an Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. selected by another lender, you must:

  • make all representations and warranties to Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! regarding the Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. ; and
  • confirm it complies with this Guide GuideMultifamily Selling and Servicing Guide controlling all Lender and Servicer requirements unless a Lender Contract specifies otherwise. .
202.02F

Lender Appraisal Review

Requirements

Your Lender Appraisal Functions Lender Appraisal FunctionsThe Lender: internal roles or job functions, including any employees that report up to the Chief Underwriter (but excluding any Lender Loan Origination Functions), involved with the following Appraisal-related responsibilities: engaging the Appraiser; defining the Appraisal’s scope… must:

  • review and approve each Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. for adequacy and compliance; and
  • ensure the Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. includes:
    • an accurate description of the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). and the market, including:
      • the Property’s Property’sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). complete legal description;
      • any information you provided the Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. ;
      • color photographs of the Property’s Property’sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code).
        • exterior,
        • interior common areas,
        • typical unit interiors,
        • surrounding area,
        • rental comparables,
        • sales comparables, and
        • commercial rental comparables;
      • maps showing the Property’s Property’sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). location relative to the location of the
        • land comparables,
        • current rental comparables,
        • future rental comparables, and
        • sales comparables;
      • qualifications of the
        • Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. , and
        • any supervising Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. ; and
      • a copy of your
        • complete signed engagement letter with the Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. , and
        • communications with the Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. regarding the Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. scope;
    • an opinion of the Property's Property'sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). value per  Part II, Chapter 2: Valuation and Income, Section 202.03A: Appraised Value , and supported by
      • market data,
      • logical analysis, and
      • sound professional judgment;
    • an opinion of the Property’s Property’sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). insurable value; and
    • an industry standard form of Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. appropriate for the Mortgage Loan’s Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2
      • size, and
      • structure.

Your Lender Appraisal Functions Lender Appraisal FunctionsThe Lender: internal roles or job functions, including any employees that report up to the Chief Underwriter (but excluding any Lender Loan Origination Functions), involved with the following Appraisal-related responsibilities: engaging the Appraiser; defining the Appraisal’s scope… must:

  • return any report to the Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. that:
    • is incomplete; or
    • lacks credibility; and
  • ensure your Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. review:
    • is documented in the Transaction Approval Memo;
    • is accompanied by all other Appraisals AppraisalsWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. you ordered on the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). during the past 3 years;
    • includes a statement describing how the PCA PCAAssessment of the Property's physical condition and historical operation. conclusions impacted your determination of the Underwriting Value Underwriting ValueValue of the Property determined by the Lender to size the Mortgage Loan per Part II, Chapter 2: Valuation and Income, Section 202: Appraisal and Valuation. ; and
    • uses supporting data from
      • your multifamily mortgage loan portfolio,
      • verified third-party valuations,
      • DUS Insights, or
      • other industry standard sources; and
  • includes all information per the following Appraisal Analysis table.
Appraisal Analysis
For... You must...
Market Conditions

Confirm the Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. accounts for current market conditions, including

 

  • supply and demand dynamics,
  • interest rates, and
  • economic factors.
Data Accuracy

Verify the Appraisal’s Appraisal’sWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. data accuracy, including

 

  • Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). details,
  • recent sales prices, and
  • relevant market data.
Property Inspections Determine if the Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. conducted a thorough inspection of the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). , including random sampling of occupied and vacant units per Instructions for Appraisers ( Form 4827 ).
Sales/Rental Comparable Analysis
  • Determine if the Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. used appropriate comparable properties similar in:
    • size and/or unit count (on both a per-unit and a per-square foot basis);
    • type (e.g., high-rise, mid-rise, garden, etc.);
    • age;
    • condition;
    • in-unit finishes;
    • amenities;
    • location, including
      • market,
      • submarket, and
      • distance to subject; and
    • sales of comparable properties, with at least 1
      • being a listing/pending sale, or
      • sold within 24 months of the Appraisal Date Appraisal DateEffective date of value in the Appraisal. .
  • If appropriate comparable properties were not used, either:
    • coordinate with the Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. to obtain additional comparable properties; or
    • provide the Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. additional comparable properties from Appraisals AppraisalsWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information.
      • for any prior transactions you originated within the last 12 months before the Appraisal Date Appraisal DateEffective date of value in the Appraisal. , or
      • from any industry standard sources verifiable by the Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. .
Market Rents and Expense Analysis If the Appraiser’s Appraiser’sPerson engaged to estimate a Property’s market value per USPAP. proforma income or expenses substantially differ from the Property's Property'sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). income and expenses used to calculate the Underwritten NCF NCFAt underwriting or for any specified period, the amount calculated per Part II, Chapter 2: Valuation and Income, Section 203: Income Analysis and the applicable products and features in Part III. , provide additional supporting comparable property data or rationale supporting your conclusions.
Capitalization Rate Analysis

Provide your assessment that the capitalization rate:

 

  • supports your final Underwriting Value Underwriting ValueValue of the Property determined by the Lender to size the Mortgage Loan per Part II, Chapter 2: Valuation and Income, Section 202: Appraisal and Valuation. ; and
  • is within comparable capitalization rates compared to
    • your portfolio data, or
    • any other industry standard sources you use to review appraisals.
Value Reconciliation
  • Review how the Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. reconciled the values obtained from different approaches to determine the final opinion of value.
  • Document your assessment.

For each Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. , your Lender Appraisal Functions Lender Appraisal FunctionsThe Lender: internal roles or job functions, including any employees that report up to the Chief Underwriter (but excluding any Lender Loan Origination Functions), involved with the following Appraisal-related responsibilities: engaging the Appraiser; defining the Appraisal’s scope… must ensure all:

202.02G

Subsequent Appraisals

Requirements

For any Mortgage Loan Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 , you must not order, obtain, use, or pay for a subsequent Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. unless:

  • you document in your Transaction Approval Memo that the initial Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. :
    • was not credible; or
    • violated legal and/or professional standards related to
      • USPAP USPAPUniform Standards of Professional Appraisal Practice , or
      • nondiscrimination; and
  • the subsequent Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. :
    • is required per your pre-established written pre- or post-funding Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. review policy;
    • adheres to a policy of selecting the most reliable Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. rather than the Appraisal AppraisalWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. with the highest value; or
    • is required by law.
202.02H

Appraiser Discontinuance or Misconduct

Requirements

You must promptly notify:

  • Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! if you discontinue using any Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. who completed Appraisals AppraisalsWritten statement independently and impartially prepared by a qualified Appraiser stating an opinion of the Property's market value as of a specific date, and supported by the presentation and analysis of relevant market information. within the past 12 months for Mortgage Loans Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 you Delivered DeliveredSubmission 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
  • Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! and the applicable state Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. certifying and licensing agency, or other regulatory body, if you believe an Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. is:
    • violating USPAP USPAPUniform Standards of Professional Appraisal Practice , fair lending, fair housing, or other applicable laws;
    • not complying with Instructions for Appraisers ( Form 4827 ) in violation of its engagement with you; or
    • engaging in unethical conduct.
202.03

Valuation
202.03A

Appraised Value

Requirements

You must ensure:

  • the Appraiser's Appraiser'sPerson engaged to estimate a Property’s market value per USPAP. engagement letter requires compliance with Instructions for Appraisers ( Form 4827 );
  • the Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. provides an opinion of the market value on an "as is" basis;
  • the Appraiser's Appraiser'sPerson engaged to estimate a Property’s market value per USPAP. opinion of the market value covers:
    • each separate Project ProjectMultifamily 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.  per  Part II, Chapter 1: Attributes and Characteristics, Section 103.01: Single Borrower Ownership ; and
    • the aggregate market value of all Projects ProjectsMultifamily 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.  ; and
  • regardless of any allocation in the PSA PSAFinal fully executed purchase or sales contract or agreement (including all amendments, assignments, extensions, joinders/acknowledgements, and related documents) for an Acquisition. , the Appraiser’s Appraiser’sPerson engaged to estimate a Property’s market value per USPAP. opinion of the market value excludes any value from any
    • Personal Property Personal PropertyFurniture, fixtures, equipment, and other tangible personal property located on or used in connection with the Property. (only including fixtures if customarily valued as real estate in the market), and/or
    • Intangible Property Intangible PropertyBusiness value, goodwill, and any other intangible value attributed to the Property being operated as a multifamily housing development. (only including business value for Seniors Housing Properties Seniors Housing PropertiesMultifamily residential rental property with any combination of Independent Living, Assisted Living, Alzheimer’s/Dementia Care, or Skilled Nursing units. ).

You may also request the Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. provide an opinion of the Property's Property'sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). market value on an "as completed" basis, but you must only use an "as completed" value if all of the following apply:

  • less than 12 months have passed between the
    • Borrower's Borrower'sPerson who is the obligor per the Note. Acquisition AcquisitionAny Purchase of either the: Property’s fee simple or leasehold interest via a deed transfer; or Controlling Interest in the Borrower. , and
    • Commitment Date Commitment DateDate a Commitment is confirmed by Fannie Mae per Part IV, Chapter 2: Rate Lock and Committing, Section 204: Commitments. ;
  • for any capital improvements completed after the Mortgage Loan Origination Date Mortgage Loan Origination DateDate you fund a Mortgage Loan to the Borrower. to be considered in an "as completed" value, they must be:
    • Immediate Repairs listed in the PCA PCAAssessment of the Property's physical condition and historical operation. ; or
    • improvements identified by the Borrower BorrowerPerson who is the obligor per the Note. , if you agree the improvements will add Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). value;
  • all capital improvements are included in either the
    • Completion/Repair Schedule Completion/Repair ScheduleThe Required Repair Schedule to the Multifamily Loan Agreement (Form 6001 series) and the applicable parts of the Multifamily Loan Agreement, or other Fannie Mae-approved agreement, evidencing: the Borrower’s agreement to fund the Completion/Repair Escrow, and perform Completion… , or
    • Rehabilitation Reserve Agreement Rehabilitation Reserve AgreementBorrower’s agreement to undertake identified Rehabilitation Work, the terms for funding the Rehabilitation Work, and the disbursement of funds from the Rehabilitation Reserve Account (e.g., Form 6222 or Form 4523). ;
  • sufficient funds to complete all capital improvements are deposited into either the Completion/Repair Escrow Completion/Repair EscrowCustodial Account funded on the Mortgage Loan Origination Date for Completion/Repairs or capital improvements per the Loan Documents. or the Rehabilitation Reserve Account Rehabilitation Reserve AccountCustodial Account established by the Lender and funded by deposits from the Borrower per the Rehabilitation Reserve Agreement to fund the Rehabilitation Work. :
    • for capital improvements identified as Immediate Repairs, the funds must cover any higher funding percentage you require; and
    • for capital improvements identified by the Borrower BorrowerPerson who is the obligor per the Note. , the funds must cover the estimated cost (including a cost overrun allowance); and
  • all capital improvements must be completed within:
202.03B

Property's Ownership History

Requirements

You must:

  • analyze the Property’s Property’sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). financing and sale history for the last 3 years;
  • for any Acquisition AcquisitionAny Purchase of either the: Property’s fee simple or leasehold interest via a deed transfer; or Controlling Interest in the Borrower. , review:
    • the PSA PSAFinal fully executed purchase or sales contract or agreement (including all amendments, assignments, extensions, joinders/acknowledgements, and related documents) for an Acquisition. and deed; or
    • for the transfer of a Controlling Interest Controlling InterestFor any entity, ownership or control of 50% or more of the ownership interests in the entity or the power or right to control or modify, directly or indirectly, the management and operations of the entity. in the Borrower BorrowerPerson who is the obligor per the Note. , the document conveying the ownership interest;
  • address the following in your Transaction Approval Memo:
    • if an Acquisition AcquisitionAny Purchase of either the: Property’s fee simple or leasehold interest via a deed transfer; or Controlling Interest in the Borrower.  occurred within the last 24 months, document the
      • circumstances of the sale, and
      • support for any increased Appraised Value Appraised ValueAppraiser’s opinion of the Property's market value documented in the Appraisal, on an “as is” basis, unless use of an “as completed” basis is specifically permitted per the Guide. by analyzing any
        • Net Cash Flow Net Cash FlowAt underwriting or for any specified period, the amount calculated per Part II, Chapter 2: Valuation and Income, Section 203: Income Analysis and the applicable products and features in Part III. increases,
        • capitalization rate compression, and
        • value-add market drivers; and
    • if any stated sales price per the PSA PSAFinal fully executed purchase or sales contract or agreement (including all amendments, assignments, extensions, joinders/acknowledgements, and related documents) for an Acquisition.  differs from the transfer price per the public records or third-party reports, investigate and document the discrepancy;
  • if an Acquisition AcquisitionAny Purchase of either the: Property’s fee simple or leasehold interest via a deed transfer; or Controlling Interest in the Borrower. occurred, confirm the seller was the Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). owner in the real estate records when the PSA PSAFinal fully executed purchase or sales contract or agreement (including all amendments, assignments, extensions, joinders/acknowledgements, and related documents) for an Acquisition.  was signed;
  • evaluate the PSA PSAFinal fully executed purchase or sales contract or agreement (including all amendments, assignments, extensions, joinders/acknowledgements, and related documents) for an Acquisition.  to:
    • clearly identify the
      • seller, and
      • purchaser; and
    • confirm the:
      • PSA PSAFinal fully executed purchase or sales contract or agreement (including all amendments, assignments, extensions, joinders/acknowledgements, and related documents) for an Acquisition. is complete with no redactions, and deliver a copy to the Appraiser AppraiserPerson engaged to estimate a Property’s market value per USPAP. ;
      • parties identified in the PSA PSAFinal fully executed purchase or sales contract or agreement (including all amendments, assignments, extensions, joinders/acknowledgements, and related documents) for an Acquisition. match the parties in the deed (or for the transfer of a Controlling Interest Controlling InterestFor any entity, ownership or control of 50% or more of the ownership interests in the entity or the power or right to control or modify, directly or indirectly, the management and operations of the entity. in the Borrower BorrowerPerson who is the obligor per the Note. , the document conveying the ownership interest); and
      • sale was an arm's-length transaction where no affiliation or identity of interest exists between the seller and purchaser;
  • review the deed and other Acquisition AcquisitionAny Purchase of either the: Property’s fee simple or leasehold interest via a deed transfer; or Controlling Interest in the Borrower. documents to confirm the individuals signing on behalf of the seller and Borrower BorrowerPerson who is the obligor per the Note. are authorized to do so;
  • review the final title company settlement statement on or before the Mortgage Loan Origination Date Mortgage Loan Origination DateDate you fund a Mortgage Loan to the Borrower. (including any adjustments to escrows and deposits made before closing) to confirm accuracy of the:
    • purchase price per the PSA PSAFinal fully executed purchase or sales contract or agreement (including all amendments, assignments, extensions, joinders/acknowledgements, and related documents) for an Acquisition. ;
    • closing costs; and
    • any cash in/out to the seller and purchaser; and
  • in the Mortgage Loan Delivery Package Mortgage Loan Delivery PackageLoan Documents and underwriting material required in connection with the Delivery of a Mortgage Loan. , submit a copy of the:
    • PSA PSAFinal fully executed purchase or sales contract or agreement (including all amendments, assignments, extensions, joinders/acknowledgements, and related documents) for an Acquisition. ; 
    • final deed (or for the transfer of a Controlling Interest Controlling InterestFor any entity, ownership or control of 50% or more of the ownership interests in the entity or the power or right to control or modify, directly or indirectly, the management and operations of the entity. in the Borrower BorrowerPerson who is the obligor per the Note. , the document conveying the ownership interest); and
    • final title company settlement statement.
202.03C

Underwriting Value

Requirements

Your Underwriting Value Underwriting ValueValue of the Property determined by the Lender to size the Mortgage Loan per Part II, Chapter 2: Valuation and Income, Section 202: Appraisal and Valuation. must not exceed the Appraised Value Appraised ValueAppraiser’s opinion of the Property's market value documented in the Appraisal, on an “as is” basis, unless use of an “as completed” basis is specifically permitted per the Guide. , as reduced by necessary adjustments, accounting for:

  • your analysis of the Property's Property'sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). sales history; and/or
  • Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). deficiencies that cannot be cured within 6 months after the Appraisal Date Appraisal DateEffective date of value in the Appraisal. .

If less than 12 months have passed between the Borrower's Borrower'sPerson who is the obligor per the Note. Acquisition AcquisitionAny Purchase of either the: Property’s fee simple or leasehold interest via a deed transfer; or Controlling Interest in the Borrower. and the Commitment Date Commitment DateDate a Commitment is confirmed by Fannie Mae per Part IV, Chapter 2: Rate Lock and Committing, Section 204: Commitments. , your Underwriting Value Underwriting ValueValue of the Property determined by the Lender to size the Mortgage Loan per Part II, Chapter 2: Valuation and Income, Section 202: Appraisal and Valuation. must not exceed the lower of the

  • Appraised Value Appraised ValueAppraiser’s opinion of the Property's market value documented in the Appraisal, on an “as is” basis, unless use of an “as completed” basis is specifically permitted per the Guide. , or
  • sum of the:
    • Property's Property'sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). Acquisition AcquisitionAny Purchase of either the: Property’s fee simple or leasehold interest via a deed transfer; or Controlling Interest in the Borrower. price per the title company settlement statement;
    • cost of capital improvements or repairs that increase the Property's Property'sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). value, if:
      • completed and fully paid; or
      • sufficient funds for completion are deposited in the Completion/Repair Escrow Completion/Repair EscrowCustodial Account funded on the Mortgage Loan Origination Date for Completion/Repairs or capital improvements per the Loan Documents. or the Rehabilitation Reserve Account Rehabilitation Reserve AccountCustodial Account established by the Lender and funded by deposits from the Borrower per the Rehabilitation Reserve Agreement to fund the Rehabilitation Work. for a Moderate Rehabilitation Moderate RehabilitationProperty that will undergo at least $8,000 per unit of Rehabilitation Work. Mortgage Loan Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 per  Part III, Chapter 3: Moderate Rehabilitation Mortgage Loans :
    • actual Acquisition AcquisitionAny Purchase of either the: Property’s fee simple or leasehold interest via a deed transfer; or Controlling Interest in the Borrower. costs, not exceeding 3% of the Acquisition AcquisitionAny Purchase of either the: Property’s fee simple or leasehold interest via a deed transfer; or Controlling Interest in the Borrower. price (but excluding all costs or fees paid to a Borrower BorrowerPerson who is the obligor per the Note. Affiliate AffiliateWhen referring to an affiliate of a Lender, any other Person or entity that Controls, is Controlled by, or is under common Control with, the Lender. When referring to an affiliate of a Borrower or Key Principal: any Person that owns any direct ownership interest in Borrower or Key… ), including:
      • Origination Fee Origination FeeFee you charge the Borrower for underwriting and originating the Mortgage Loan. ;
      • arm's length Acquisition AcquisitionAny Purchase of either the: Property’s fee simple or leasehold interest via a deed transfer; or Controlling Interest in the Borrower. fee (generally 1% - 2%) paid to an unrelated Person PersonLegal person, including an individual, estate, trust, corporation, partnership, limited liability company, financial institution, joint venture, association, or other organization or entity (whether governmental or private). if documented in the settlement statement;
      • third-party report fees;
      • Borrower BorrowerPerson who is the obligor per the Note. -paid legal fees incurred on your behalf;
      • title search and title insurance fees;
      • survey fees;
      • real estate and stamp taxes;
      • deed-recording fees; and
      • credit report charges.

Actual Acquisition AcquisitionAny Purchase of either the: Property’s fee simple or leasehold interest via a deed transfer; or Controlling Interest in the Borrower. costs must exclude any prepaid operating expenses or deposits applied toward future operating expenses or Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). improvements, including:

  • prepaid or escrowed
    • real estate taxes, or
    • insurance premiums;
  • prepaid
    • utilities,
    • Mortgage Loan Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 interest (including any interest rate buydown expense),
    • rents, or
    • security deposits;
  • funded
    • Replacement Reserve Replacement ReserveCustodial Account the Borrower funds during the Mortgage Loan term for Replacements. (including any initial deposit),
    • Interest Rate Cap Interest Rate CapInterest rate agreement between the Borrower and a provider for which the Borrower receives payments at the end of each period when the interest rate exceeds the Cap Strike Rate.  The Interest Rate Cap provides a ceiling (or cap) on the Borrower's Mortgage Loan interest payments. cost,
    • operating or Restabilization Reserve, or
    • Borrower BorrowerPerson who is the obligor per the Note. -controlled Property PropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). operating or capital accounts; and
  • fees included in the Gross Note Rate Gross Note RateInterest rate stated in the Loan Documents. , including any
    • Origination Fee Origination FeeFee you charge the Borrower for underwriting and originating the Mortgage Loan. , or
    • broker fee.
202.03D

Allocated Value to Real Estate and Improvements

Requirements

For any non-Seniors Housing Property Seniors Housing PropertyMultifamily residential rental property with any combination of Independent Living, Assisted Living, Alzheimer’s/Dementia Care, or Skilled Nursing units. Acquisition AcquisitionAny Purchase of either the: Property’s fee simple or leasehold interest via a deed transfer; or Controlling Interest in the Borrower. , you must review the PSA PSAFinal fully executed purchase or sales contract or agreement (including all amendments, assignments, extensions, joinders/acknowledgements, and related documents) for an Acquisition. and the final title company settlement statement to determine if any portion of the Property’s Property’sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). Acquisition AcquisitionAny Purchase of either the: Property’s fee simple or leasehold interest via a deed transfer; or Controlling Interest in the Borrower. price is specifically allocated to Personal Property Personal PropertyFurniture, fixtures, equipment, and other tangible personal property located on or used in connection with the Property. and/or Intangible Property Intangible PropertyBusiness value, goodwill, and any other intangible value attributed to the Property being operated as a multifamily housing development. .

If the Property’s Property’sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). Acquisition AcquisitionAny Purchase of either the: Property’s fee simple or leasehold interest via a deed transfer; or Controlling Interest in the Borrower. price allocates any portion to Personal Property Personal PropertyFurniture, fixtures, equipment, and other tangible personal property located on or used in connection with the Property. and/or Intangible Property Intangible PropertyBusiness value, goodwill, and any other intangible value attributed to the Property being operated as a multifamily housing development. , the allocation is permitted if the Mortgage Loan Mortgage 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. Test Notes-SV Test Again Sub-bullet test1 Sub-bullet test2 amount in the Loan Documents Loan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. , Delivered DeliveredSubmission 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. data, and final title company settlement statement, does not exceed 90.00% of the:

  • Property’s Property’sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). Acquisition AcquisitionAny Purchase of either the: Property’s fee simple or leasehold interest via a deed transfer; or Controlling Interest in the Borrower. price; minus
  • portion allocated to any other Intangible Property Intangible PropertyBusiness value, goodwill, and any other intangible value attributed to the Property being operated as a multifamily housing development. and/or Personal Property Personal PropertyFurniture, fixtures, equipment, and other tangible personal property located on or used in connection with the Property. (excluding fixtures, if customarily valued as real estate in the market).

You must refer to  Part III, Chapter 5: Seniors Housing Properties, Section 502.02: Ineligible Properties  for a Seniors Housing Property Seniors Housing PropertyMultifamily residential rental property with any combination of Independent Living, Assisted Living, Alzheimer’s/Dementia Care, or Skilled Nursing units. .

Guidance

The following table is a sample calculation. 

Sample Calculation
Property's Acquisition price $30,000,000
Appraised Value $30,000,000
Underwritten Value $30,000,000
Maximum 75% LTV $22,500,000
Property's Acquisition price allocation: $30,000,000
  • minus any allocation to Personal Property and/or Intangible Property
 - $5,000,000
  • equals Property's Acquisition price allocated to real estate and Improvements
 $25,000,000
Mortgage Loan amount must not exceed 90.00% of the Property’s Acquisition price allocated to real estate and Improvements $22,500,000
($25,000,000 X 90.00%)