711.02

Eligibility

711.02A

Borrowers, Key Principals, Guarantors, and Principals

Requirements

You must ensure that the Borrower BorrowerPerson who is the obligor per the Note. , and each 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. , Guarantor GuarantorKey Principal or other Person executing a Payment Guaranty, Non-Recourse Guaranty, or any other Mortgage Loan guaranty. , and Principal PrincipalPerson who owns or controls, in the aggregate, directly or indirectly (together with that Person's Immediate Family Members, if an individual), specified interests in the Borrower per Part I, Chapter 3: Borrower, Guarantor, Key Principals, and Principals, Section 303: Key Principals, Principals,… are not on the most current “List of Parties Excluded from Federal Procurement or Nonprocurement Programs”.

711.02B

Generally

Requirements

You must ensure:

  • 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 :
    • is fixed rate with no interest-only period;
    • has a loan term with a
      • minimum of 15 years, and
      • maximum of 40 years;
    • is either:
      • fully amortizing; or
      • requires a balloon payment of the outstanding principal no sooner than the end of the 15th year, calculated on an amortization term of no more than 30 years;
    • is secured by a:
      • single first Lien LienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. on real property; and
      • project consisting of at least 5 or more dwelling units located on
        • a single parcel of land, or
        • 2 or more non-contiguous parcels comprising a readily marketable 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.  within an area small enough for convenient and efficient management; and
    • is free of all Liens LiensLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. other than the Lien LienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. in favor of Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! and any subordinate Liens LiensLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. approved by Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! ;
  • at least 50% of the units are leased at rents:
    • at or above the underwritten rents; or
    • that can sustain 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 ;
  • if the Borrower BorrowerPerson who is the obligor per the Note. owns a leasehold interest in 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). , on the Mortgage Loan Origination Date Mortgage Loan Origination DateDate you fund a Mortgage Loan to the Borrower. , the lease term:
    • is at least 40 years; and
    • exceeds the amortization period by at least 10 years;
  • 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 affordability restrictions recorded against 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). monitored for compliance by a third party other than HUD HUDU.S. Department of Housing and Urban Development or Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! (except for a Section 8 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). or Section 236 transaction for which HUD HUDU.S. Department of Housing and Urban Development may monitor compliance);
  • the affordability restrictions require that at least:
    • 20% of the units are rent-restricted and occupied by families with incomes no more than 50% of AMI, as adjusted for family size; or
    • 40% (25% in New York City) of the units are rent-restricted and occupied by families with incomes no more than 60% of AMI, as adjusted for family size;
  • the residential unit's gross rent is restricted to no more than 30% of the unit's Imputed Income Limitation per Section 42 of the Internal Revenue Code;
  • the affordability restrictions are in effect for at least 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 term;
  • for an 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. , if the remaining affordability restrictions are less than 18 years, enforcement of those restrictions is considered senior to 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 Lien LienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. ; 
  • 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 does not have an uncured payment default or performance default upon Delivery DeliverySubmission 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
  • 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). qualifies on the Effective Date as an 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. solely per:

You must ensure the 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.  :

  • is not located in:
    • a 500-year floodplain and likely occupied by tenants who may not be sufficiently mobile to avoid injury or death during floods or storms as determined by HUD HUDU.S. Department of Housing and Urban Development (contact the Fannie Mae Deal Team Fannie Mae Deal TeamTeam responsible for reviewing Pre-Review Mortgage Loans, waivers, etc. to establish HUDS’s determination of this factor);
    • a Federal Emergency Management Agency-mapped Special Flood Hazard Area Special Flood Hazard AreaSpecial Flood Hazard Area designated by FEMA. 100-year floodplain (except where no buildings or Improvements ImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now or hereafter constructed or placed on the Property, including all fixtures (as defined in the UCC). other than minor grubbing will be in the floodplain and the floodplain area will be permanently dedicated to non-development, as determined by HUD HUDU.S. Department of Housing and Urban Development (contact the Fannie Mae Deal Team Fannie Mae Deal TeamTeam responsible for reviewing Pre-Review Mortgage Loans, waivers, etc. to establish HUDS’s determination of this factor);
    • the Coastal Barrier Resources System per the Coastal Barrier Resources Act, 16.U.S.C.3501; or
    • a Runway Clear Zone (at a civil airport) or Clear Zone (at a military airfield) 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 newly constructed or substantially rehabilitated; and
  • is not:
    • financed by a loan insured by the Federal Housing Administration or other federal full mortgage insurance, co-insurance, or risk shared insurance or reinsurance under Section 542(c) of the Act;
    • used for Transient Housing or Hotel Purposes (as defined in the Fannie Mae/HUD Risk Sharing Agreement); or
    • a Nursing Home, Intermediate Care Facility of Board, or Care/Assisted Living Facility (as defined in the Fannie Mae/HUD Risk Sharing Agreement).
711.02C

Cash Out

Guidance

There is no limit on the amount of cash out in an FHA Risk Sharing FHA Risk SharingMAH Mortgage Loan with mortgage insurance from FHA. transaction.