Section 407
A Subordinate Loan Subordinate LoanMultifamily residential real estate loan secured by a Lien against the Property having a lesser priority than the Lien securing another multifamily residential real estate loan on the same Property. is generally not permitted unless it complies with Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! ’s requirements. Approval of any Subordinate Loan Subordinate LoanMultifamily residential real estate loan secured by a Lien against the Property having a lesser priority than the Lien securing another multifamily residential real estate loan on the same Property. is not delegated to the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. and must be approved in advance by Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! . Additionally:
- with respect to any Subordinate Loan Subordinate LoanMultifamily residential real estate loan secured by a Lien against the Property having a lesser priority than the Lien securing another multifamily residential real estate loan on the same Property. , the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must abide by the terms and conditions of the Loan Documents Loan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. , the Guide GuideMultifamily Selling and Servicing Guide controlling all Lender and Servicer requirements unless a Lender Contract specifies otherwise. , and any Disclosure Documents Disclosure DocumentsDocuments for an Investor for a particular Securitized Mortgage Loan, which may include the MBS Trust Agreement, Prospectus, and any related documents. , provided that the Loan Documents Loan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. will control in the case of any conflict;
- unless the Loan Documents Loan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. explicitly allow a Subordinate Loan Subordinate LoanMultifamily residential real estate loan secured by a Lien against the Property having a lesser priority than the Lien securing another multifamily residential real estate loan on the same Property. , the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must not permit the Borrower BorrowerPerson who is the obligor per the Note. , without prior Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! approval, to incur the Subordinate Loan Subordinate LoanMultifamily residential real estate loan secured by a Lien against the Property having a lesser priority than the Lien securing another multifamily residential real estate loan on the same Property. or allow a Lien LienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. securing the Subordinate Loan Subordinate LoanMultifamily residential real estate loan secured by a Lien against the Property having a lesser priority than the Lien securing another multifamily residential real estate loan on the same Property. to be placed 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). ;
- if the Loan Documents Loan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. explicitly allow a Subordinate Loan Subordinate LoanMultifamily residential real estate loan secured by a Lien against the Property having a lesser priority than the Lien securing another multifamily residential real estate loan on the same Property. without the approval of the Lender LenderPerson Fannie Mae approved to sell or service Mortgage Loans. , the consent of the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. or Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! is not required; however, notice of the Subordinate Loan Subordinate LoanMultifamily residential real estate loan secured by a Lien against the Property having a lesser priority than the Lien securing another multifamily residential real estate loan on the same Property. and a copy of any documents must be submitted through the MAMP MAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, requested modifications, asset management reports, and data corrections for loan or property attributes. ;
- the Borrower BorrowerPerson who is the obligor per the Note. and the subordinate lender must enter into and record the appropriate Subordination Agreement ( Form 6414 or Form 6456 for the 6000 series Loan Documents Loan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. ; Form 4503 or Form 4507 for the 4000 Series Loan Documents Loan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. ); and
- the proceeds of the Subordinate Loan Subordinate LoanMultifamily residential real estate loan secured by a Lien against the Property having a lesser priority than the Lien securing another multifamily residential real estate loan on the same Property. must benefit 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). (i.e., cash-out financing is not permitted).
The Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must immediately notify Multifamily Asset Management Multifamily Asset ManagementTeam that can be contacted at [email protected]. in writing upon learning of any unauthorized additional unsecured debt or indebtedness secured by a Lien LienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. 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). or of any pledge of ownership interests that is not permitted by the Loan Documents Loan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. , and send the Borrower BorrowerPerson who is the obligor per the Note. a Reservation of Rights Letter ( Form 4804 ) with a copy submitted through the MAMP MAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, requested modifications, asset management reports, and data corrections for loan or property attributes. . Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! will determine whether to approve the Subordinate Loan Subordinate LoanMultifamily residential real estate loan secured by a Lien against the Property having a lesser priority than the Lien securing another multifamily residential real estate loan on the same Property. , or exercise its remedies.
Part III, Chapter 13: Supplemental Mortgage Loans , contains the requirements for Supplemental Mortgage Loans Supplemental Mortgage LoansMortgage Loan purchased by Fannie Mae that is subordinated to, and has a Mortgage Loan Origination Date after, the Senior Mortgage Loan that is also owned by Fannie Mae. , and Part III, Chapter 7: Multifamily Affordable Housing Properties contains additional requirements for subordinate financing with respect to a Multifamily Affordable Housing Property Multifamily Affordable Housing 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. . The Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must ensure adherence to all applicable requirements.
The Borrower BorrowerPerson who is the obligor per the Note. must pay the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. a $2,500 review fee. The Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. may increase or decrease its fee at its discretion. No Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! review fees are due. The Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. may also seek reimbursement from the Borrower BorrowerPerson who is the obligor per the Note. for all reasonable out-of-pocket costs, including reasonable legal fees incurred by Servicer’s Servicer’sPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. counsel.
If Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! outside counsel is engaged, the Borrower BorrowerPerson who is the obligor per the Note. must pay its fee, estimated at $2,500 for Subordinate Financing requests. The actual legal fee may be higher or lower, depending on the ultimate scope of the request and the time necessary to resolve. The Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. will receive a summary invoice directly from Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! outside counsel and must arrange for payment. The Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. will be apprised of any likely increases in the estimated review fee. The estimated legal fee must be collected from the Borrower BorrowerPerson who is the obligor per the Note. before engaging Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! outside counsel.
Any Borrower BorrowerPerson who is the obligor per the Note. request for approval of a Subordinate Loan Subordinate LoanMultifamily residential real estate loan secured by a Lien against the Property having a lesser priority than the Lien securing another multifamily residential real estate loan on the same Property. must be reviewed by the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. . If acceptable, the request must be submitted for approval through the MAMP MAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, requested modifications, asset management reports, and data corrections for loan or property attributes. in accordance with the following:
- the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must submit the request to Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! at least 30 days before the projected closing date of the Subordinate Loan Subordinate LoanMultifamily residential real estate loan secured by a Lien against the Property having a lesser priority than the Lien securing another multifamily residential real estate loan on the same Property. ; and
- the submission must contain:
- 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. (obtained at the Borrower’s Borrower’sPerson who is the obligor per the Note. cost), dated no earlier than 90 days prior to the date of the Borrower BorrowerPerson who is the obligor per the Note. request for approval of the Subordinate Loan Subordinate LoanMultifamily residential real estate loan secured by a Lien against the Property having a lesser priority than the Lien securing another multifamily residential real estate loan on the same Property. , that complies with Part II, Chapter 2: Valuation and Income, Section 202: Appraisal and Valuation ;
- Servicer’s Servicer’sPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. underwriting spreadsheet showing the Subordinate Loan Subordinate LoanMultifamily residential real estate loan secured by a Lien against the Property having a lesser priority than the Lien securing another multifamily residential real estate loan on the same Property. ’s effect on 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, expenses, 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. , 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. , and 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. ;
- a copy of the final, unsigned loan documents evidencing the Subordinate Loan Subordinate LoanMultifamily residential real estate loan secured by a Lien against the Property having a lesser priority than the Lien securing another multifamily residential real estate loan on the same Property. , with the loan amount, interest rate, payment schedules, and all other transaction related information completed;
- the MBA
MBAMortgage Bankers Association
Standard Inspection Form documenting a physical 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).
, performed at Borrower’s
Borrower’sPerson who is the obligor per the Note.
expense, occurring no earlier than 90 days before the date of the Borrower
BorrowerPerson who is the obligor per the Note.
request for the Subordinate Loan
Subordinate LoanMultifamily residential real estate loan secured by a Lien against the Property having a lesser priority than the Lien securing another multifamily residential real estate loan on the same Property.
; provided that, if the Servicer’s
Servicer’sPrimary Person servicing the Mortgage Loan, including
the originator,
seller, or
a third party.
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).
reveals that 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 being properly maintained, the Borrower
BorrowerPerson who is the obligor per the Note.
request will not be approved by Fannie Mae
Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!!
unless:
- a Replacement Reserve Replacement ReserveCustodial Account the Borrower funds during the Mortgage Loan term for Replacements. is sufficiently funded; and
- the Borrower BorrowerPerson who is the obligor per the Note. makes any Immediate Repairs identified by the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. prior to the closing date of the Subordinate Loan Subordinate LoanMultifamily residential real estate loan secured by a Lien against the Property having a lesser priority than the Lien securing another multifamily residential real estate loan on the same Property. ; and
- a title policy endorsement for 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). showing no unauthorized Liens LiensLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. or encumbrances of any nature 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). .
For a Cooperative Property Cooperative PropertyMultifamily residential property owned by a Cooperative Organization. , the Subordinate Loan Subordinate LoanMultifamily residential real estate loan secured by a Lien against the Property having a lesser priority than the Lien securing another multifamily residential real estate loan on the same Property. is unacceptable if the potential increase in the 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. necessary to cover P&I P&IPrincipal and interest on the Subordinate Loan Subordinate LoanMultifamily residential real estate loan secured by a Lien against the Property having a lesser priority than the Lien securing another multifamily residential real estate loan on the same Property. exceeds 10% of the current 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. .
Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! will provide the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. with a written decision regarding the Borrower BorrowerPerson who is the obligor per the Note. request, after which the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must notify the Borrower BorrowerPerson who is the obligor per the Note. in writing and retain the notice in the Servicing File Servicing FileYour file for each Mortgage Loan serviced. .
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The Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must:
- not permit any changes to the form Subordination Agreement ( Form 6414 or Form 6456 for the 6000 series Loan Documents Loan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. ; Form 4503 or Form 4507 for the 4000 series Loan Documents Loan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. ) without the prior written consent of Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! ;
- obtain a satisfactory title policy endorsement effective as of the date of recordation of the subordinate security instrument that:
- insures the Lien LienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. of the Security Instrument Security InstrumentInstrument creating a lien or encumbrance on 1 or more Properties and securing the Loan Document obligations. as senior to the Lien LienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. of the subordinate security instrument; and
- reflects the recordation of the Subordination Agreement;
- submit a copy of the recorded Subordination Agreement through the MAMP MAMPMultifamily Asset Management Portal used to submit Property inspections, operating statements, requested modifications, asset management reports, and data corrections for loan or property attributes. ; and
- send the original executed copy of the recorded Subordination Agreement and the title policy endorsement to Multifamily Certification and Custody Multifamily Certification and CustodyTeam responsible for taking custody of and certifying Mortgage Loans that can be contacted at [email protected], (800) 940-4646, or for submissions: Fannie Mae (Multifamily) Certification and Custody 21240 Ridgetop Circle Suite 125-130 Sterling, VA 20166. within 15 Business Days Business DaysAny day other than a Saturday, Sunday, day when Fannie Mae is closed, day when the Federal Reserve Bank of New York is closed, or for any MBS and required remittance withdrawal, day when the Federal Reserve Bank is closed in the district where any of the MBS funds are held. , and retain copies of each in the Servicing File Servicing FileYour file for each Mortgage Loan serviced. .