Limited Equity Cooperative Properties

Requirements

In addition to the rest of this Chapter, you must ensure that Limited Equity Cooperative Properties Limited Equity Cooperative PropertiesCooperative Organization that has income, rent, or equity build-up restriction (not including any transfer taxes), which may be dictated by a governmental entity, a third-party capital provider, or its own organizational documents. meet the following:

• Cooperative Maintenance Fees Cooperative Maintenance FeesPeriodic fee assessed each shareholder or owner of a Cooperative Organization to fund costs and expenses associated with ongoing operations of the Cooperative Property. :  You must ensure that:
  • monthly Cooperative Maintenance Fees Cooperative Maintenance FeesPeriodic fee assessed each shareholder or owner of a Cooperative Organization to fund costs and expenses associated with ongoing operations of the Cooperative Property. are not more than 90% of comparable unit market rents; and
  • if there are restrictions from the HUD HUDU.S. Department of Housing and Urban Development or others, then both HUD HUDU.S. Department of Housing and Urban Development and the Limited Equity Cooperative Property Limited Equity Cooperative PropertyCooperative Organization that has income, rent, or equity build-up restriction (not including any transfer taxes), which may be dictated by a governmental entity, a third-party capital provider, or its own organizational documents. ’s Board of Directors or managers must approve all Cooperative Maintenance Fee Cooperative Maintenance FeePeriodic fee assessed each shareholder or owner of a Cooperative Organization to fund costs and expenses associated with ongoing operations of the Cooperative Property. increases before the Commitment Date Commitment DateDate a Commitment is confirmed by Fannie Mae per Part IV, Chapter 2: Rate Lock and Committing, Section 204: Commitments. .
• Cooperative Operating Reserve Cooperative Operating ReserveLiquid funds, including loan proceeds, controlled by the Cooperative Organization to cover operating and capital expenses, and comprised of unrestricted cash, less the sum of accounts payable. :  You must require a reserve equal to at least 6 months of P&I P&IPrincipal and interest  payments on 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 .
• HUD HUDU.S. Department of Housing and Urban Development IRP IRPInterest Reduction Payment Loan:  You must require an IRP IRPInterest Reduction Payment reserve equal to 2 months of IRP IRPInterest Reduction Payment payments for the life of the IRP IRPInterest Reduction Payment Loan.  The funds in the IRP IRPInterest Reduction Payment reserve may only be used to compensate for late IRP IRPInterest Reduction Payment payments.
• Actual Cooperative Property NCF:  You must calculate Actual Cooperative Property NCF per Part III, Chapter 8: Cooperative Properties, Section 804.03: Actual Cooperative Property NCF , but the following exceptions apply:
  • Economic vacancy:  Use the greater of
    • 5%, or
    • the highest level experienced by 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 last 3 years.
  • Actual operating expenses:  Equal to 103% of the previous year's operating expenses.
  • Replacement Reserve Replacement ReserveCustodial Account the Borrower funds during the Mortgage Loan term for Replacements. :  Use the greater of
    • the scheduled Replacement Reserve Replacement ReserveCustodial Account the Borrower funds during the Mortgage Loan term for Replacements. per unit as determined by a PCA PCAAssessment of the Property's physical condition and historical operation. , or
    • $250 per unit per year.
• Unit Turnover:  Total unit turnover must not be greater than 20%.
• Escrows:  You must require monthly deposits for real estate taxes, insurance, and the Replacement Reserve Replacement ReserveCustodial Account the Borrower funds during the Mortgage Loan term for Replacements. .
• Cooperative Property Sponsor Cooperative Property SponsorPerson who invested in, converted, or is converting a residential rental apartment building to a Cooperative Property and continues to own unsold shares in the Cooperative Organization. :  There must be no Sponsor SponsorPrincipal equity owner and/or primary decision maker of the Borrower (often the Key Principal or the Person Controlling the Key Principal). -owned units.
• 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 experience:  The property management company must have Limited Equity Cooperative Property Limited Equity Cooperative PropertyCooperative Organization that has income, rent, or equity build-up restriction (not including any transfer taxes), which may be dictated by a governmental entity, a third-party capital provider, or its own organizational documents. management experience.  If HUD HUDU.S. Department of Housing and Urban Development restrictions are in-place, the firm must also have a history of successfully complying with HUD HUDU.S. Department of Housing and Urban Development restrictions and reporting requirements.