703.02
Requirements
In addition to 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. requirements in Part II, Chapter 2: Valuation and Income, Section 202: Appraisal and Valuation , you must:
- Include 2 separate opinions 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.
based on:
- Restricted Value
Restricted ValueAppraised Value assuming an Affordable Regulatory Agreement or Private Affordability Agreement is in effect.
from the Affordable Regulatory Agreement
Affordable Regulatory AgreementRecorded or unrecorded regulatory, land use, extended use, restrictive covenant, or similar agreement or restriction that is imposed by a Public Entity, placing rent, income, or other affordability restrictions on the use or occupancy of the Property, but which does not include a HAP Contract.
, the Sponsor-Initiated Affordability Agreement ( Form 6490
), or any Private Affordability Agreement
Private Affordability AgreementRecorded or unrecorded regulatory, land use, extended use, restrictive covenant, agreement, or restriction that is imposed by any non-Public Entity, placing rent, income, or other affordability restrictions on the use or occupancy of the Property.
Test Notes added- SV
, using
- comparable multifamily rental properties,
- 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). submarket,
- properties with similar rent or income restrictions, and
- any Tax Abatements Tax AbatementsAny abatement, reduction, lessening, exemption, or deferral of real estate or other taxes levied against a Property, including any PILOT. or programs that reduce 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). assessed value; and
- Unrestricted Value
Unrestricted ValueAppraised Value assuming an Affordable Regulatory Agreement or Private Affordability Agreement is not in effect.
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 without the Affordable Regulatory Agreement
Affordable Regulatory AgreementRecorded or unrecorded regulatory, land use, extended use, restrictive covenant, or similar agreement or restriction that is imposed by a Public Entity, placing rent, income, or other affordability restrictions on the use or occupancy of the Property, but which does not include a HAP Contract.
, the Sponsor-Initiated Affordability Agreement ( Form 6490
), or any Private Affordability Agreement
Private Affordability AgreementRecorded or unrecorded regulatory, land use, extended use, restrictive covenant, agreement, or restriction that is imposed by any non-Public Entity, placing rent, income, or other affordability restrictions on the use or occupancy of the Property.
Test Notes added- SV
(e.g., market rents, occupancy, and operating expenses), using
- comparable multifamily market rate rental properties,
- 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). submarket, and
- full taxes if rental income restrictions are required by a Tax Abatement Tax AbatementAny abatement, reduction, lessening, exemption, or deferral of real estate or other taxes levied against a Property, including any PILOT. or programs that reduce 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). assessed value.
- Restricted Value
Restricted ValueAppraised Value assuming an Affordable Regulatory Agreement or Private Affordability Agreement is in effect.
from the Affordable Regulatory Agreement
Affordable Regulatory AgreementRecorded or unrecorded regulatory, land use, extended use, restrictive covenant, or similar agreement or restriction that is imposed by a Public Entity, placing rent, income, or other affordability restrictions on the use or occupancy of the Property, but which does not include a HAP Contract.
, the Sponsor-Initiated Affordability Agreement ( Form 6490
), or any Private Affordability Agreement
Private Affordability AgreementRecorded or unrecorded regulatory, land use, extended use, restrictive covenant, agreement, or restriction that is imposed by any non-Public Entity, placing rent, income, or other affordability restrictions on the use or occupancy of the Property.
Test Notes added- SV
, using
- Ensure each 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.
is based on a market cap rate without any upward or downward adjustment for:
- special financing (other than adjusted cap rates for Credit Enhancement Mortgage Loans Credit Enhancement Mortgage LoansMortgage Loan financed by a Bond issuance where Fannie Mae provides credit enhancement by a Credit Enhancement Instrument, or an MBS for Bonds. ); or
- tax credit benefits.
- Determine the appropriate 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. for 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. per Part II, Chapter 2: Valuation and Income, Section 202: Appraisal and Valuation .
| 703.02B | |
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Requirements
If a Tier TierTier 1, Tier 2, Tier 3, or Tier 4 per the Multifamily Underwriting Standards (Form 4660). 2 or Tier TierTier 1, Tier 2, Tier 3, or Tier 4 per the Multifamily Underwriting Standards (Form 4660). 3 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 is secured by a 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). with a HAP Contract HAP ContractAn agreement providing a HUD Section 8 rental subsidy for the Property in the form of a: project-based voucher contract (PBV), or project-based rental assistance contract (PBRA). expiring before 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 Maturity Date Maturity DateDate all Mortgage Loan amounts become fully due and payable per the Loan Documents. , you must include a market study (which can be part of 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. ) that:
- is prepared by a qualified real estate professional; and
- for comparable market rate rental properties in the submarket, identifies the
- absorption rate,
- lease-up period, and
- rent level.
| 703.02C | |
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Requirements
If you use a 35-year amortization term, 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).
must have:
- LIHTCs LIHTCsFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. with at least 8 years remaining in the initial 15-year compliance period; and/or
- a new HAP Contract
HAP ContractAn agreement providing a HUD Section 8 rental subsidy for the Property in the form of a:
project-based voucher contract (PBV), or
project-based rental assistance contract (PBRA).
covering at least 95% of the units under the:
- Rental Assistance Demonstration (RAD) program; or
- Capital Repairs Program per the Section 8 Renewal Policy Guidebook available on HUD’s HUD’sU.S. Department of Housing and Urban Development website; and
- MAH
MAHProperty that:
complies with Part III, Chapter 7: Multifamily Affordable Housing Properties, Section 702: MAH Property Eligibility; and
is underwritten per Part III, Chapter 7: Multifamily Affordable Housing Properties.
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
must be a first Lien
LienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind.
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 a minimum term equal to the greater of
- the remaining initial LIHTC LIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. compliance period, or
- 10 years.
| 703.02D | |
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Requirements
You must identify and mitigate any risks from the Borrower’s Borrower’sPerson who is the obligor per the Note. electing LIHTC Average Income LIHTC Average IncomeInternal Revenue Code Section 42 election allowing LIHTC property owners to rent units to households earning up to 80% of AMI, provided: a minimum of 40% of the residential units are both rent-restricted and occupied by households with a maximum income up to an average of 60% of AMI; and … per the Internal Revenue Code.
Guidance
When a Borrower BorrowerPerson who is the obligor per the Note. elects LIHTC Average Income LIHTC Average IncomeInternal Revenue Code Section 42 election allowing LIHTC property owners to rent units to households earning up to 80% of AMI, provided: a minimum of 40% of the residential units are both rent-restricted and occupied by households with a maximum income up to an average of 60% of AMI; and … per the Internal Revenue Code for a 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). with new LIHTCs LIHTCsFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. , you should consider:
- Will LIHTC Average Income LIHTC Average IncomeInternal Revenue Code Section 42 election allowing LIHTC property owners to rent units to households earning up to 80% of AMI, provided: a minimum of 40% of the residential units are both rent-restricted and occupied by households with a maximum income up to an average of 60% of AMI; and … impact other non-LIHTC LIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. regulatory agreements?
- Is LIHTC Average Income LIHTC Average IncomeInternal Revenue Code Section 42 election allowing LIHTC property owners to rent units to households earning up to 80% of AMI, provided: a minimum of 40% of the residential units are both rent-restricted and occupied by households with a maximum income up to an average of 60% of AMI; and … compatible with other funding and subsidy source requirements, including any HAP Contract HAP ContractAn agreement providing a HUD Section 8 rental subsidy for the Property in the form of a: project-based voucher contract (PBV), or project-based rental assistance contract (PBRA). ?
- Has LIHTC Average Income
LIHTC Average IncomeInternal Revenue Code Section 42 election allowing LIHTC property owners to rent units to households earning up to 80% of AMI, provided:
a minimum of 40% of the residential units are both rent-restricted and occupied by households with a maximum income up to an average of 60% of AMI; and
…
been approved by the
- state agency, and
- LIHTC LIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. investor or syndicator?
- Will the on-site 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). management staff have sufficient experience?
- Will the unit mix be impacted, including
- unit parity,
- multi-building election,
- floating units, and
- market rate units?
- What is the rent advantage, especially for units above 60% of AMI?
- For a Forward Commitment
Forward CommitmentCommitment to purchase a permanent Mortgage Loan for a to-be constructed or rehabilitated Property.
,
- is 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). not a re-syndication of a 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). previously developed or preserved using LIHTCs LIHTCsFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. and subject to an existing extended use agreement, or
- 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 a re-syndication, have you confirmed 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). has completed its extended use period?
- Does the market study include capture rates for each unit designation supporting LIHTC Average Income LIHTC Average IncomeInternal Revenue Code Section 42 election allowing LIHTC property owners to rent units to households earning up to 80% of AMI, provided: a minimum of 40% of the residential units are both rent-restricted and occupied by households with a maximum income up to an average of 60% of AMI; and … ?
| 703.02E | |
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Requirements
For any 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). with new LIHTCs LIHTCsFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. , you must ensure at least 20% of the aggregate LIHTC LIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. equity that the LIHTC LIHTCFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. investor or syndicator must contribute into the limited partnership is received on or before the Mortgage Loan Origination Date Mortgage Loan Origination DateDate you fund a Mortgage Loan to the Borrower. .
| 703.02F | |
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Guidance
You should analyze the development budget, including the
- developer fee due the Sponsor SponsorPrincipal equity owner and/or primary decision maker of the Borrower (often the Key Principal or the Person Controlling the Key Principal). or any 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… , and
- any deferred developer fee (i.e., the portion of the developer fee shown as a source in the sources and uses statement).
If the deferred developer fee is greater than 50% of the total developer fee, you should confirm there are sufficient
- hard and soft contingency budgets, and
- projected surplus cash flows to repay the deferred developer fee within the initial compliance period.
| 703.02G | |
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Guidance
Refer to Part II, Chapter 2: Valuation and Income, Section 207: Rent-Stabilized Properties regarding rent-stabilized MAH Property MAH PropertyProperty that: complies with Part III, Chapter 7: Multifamily Affordable Housing Properties, Section 702: MAH Property Eligibility; and is underwritten per Part III, Chapter 7: Multifamily Affordable Housing Properties. units.