401.03

Validating Rent Collections, Bad Debt, and Secondary Income

Requirements

When validating rent collections, you must:

  • review 1 of the following:
    • a cash ledger;
    • receipts journal;
    • at least 3 months of bank statements confirming the rent deposits; or
    • similar documents;
  • meet with the site manager to obtain and discuss:
    • an accounts receivable report; or
    • past rent due report;
  • compile a lease audit form or record to validate the lease terms against the Property’sProperty’sMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). rent roll;
  • include your lease audit form with your underwriting documents delivered to DocWayDocWayBusiness-to-business electronic documentation delivery application, or any successor system. ; and
  • document your findings in the Transaction Approval Memo.

You must use the AppraisalAppraisalWritten 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. , other comparable PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). information, or third-party data sources to validate secondary income related to:

  • ratio utility billing system (RUBS);
  • cable;
  • laundry;
  • parking; or
  • any other tenant income.

Guidance

You should confirm the management company uses:

  • acceptable practices for day-to-day operations; and
  • industry-standard software systems to generate detailed reports.

You may obtain sample management company reports, such as

  • rent rolls,
  • operating statements,
  • operating budgets,
  • capital improvement plans, and
  • marketing.