Section 418

Credit Enhancement Mortgage Loans and Multifamily Affordable Housing Properties

418.01	Bond Transactions and Credit Enhancement Mortgage Loans

For any Credit Enhancement Mortgage Loan Credit Enhancement Mortgage LoanMortgage Loan financed by a Bond issuance where Fannie Mae provides credit enhancement by a Credit Enhancement Instrument, or an MBS for Bonds. where Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! is providing credit enhancement for tax-exempt multifamily housing Bonds BondsTax-exempt or taxable multifamily revenue bonds, or other tax-exempt or taxable bonds, issued to finance 1 or more Credit Enhancement Mortgage Loan Properties. , the Borrower BorrowerPerson who is the obligor per the Note. must provide the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. with a copy of the compliance monitoring statement required under the Bond Documents. If the Borrower’s Borrower’sPerson who is the obligor per the Note. statement reflects noncompliance with the low- and moderate-income tenant occupancy requirements set forth in 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. , or if the Borrower BorrowerPerson who is the obligor per the Note. fails to provide the statement to the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. , the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must notify Multifamily Asset Management Multifamily Asset ManagementTeam that can be contacted at [email protected]. , and retain the compliance monitoring statement in its Servicing File Servicing FileYour file for each Mortgage Loan serviced. .

418.02	Compliance Issues Relative to Bond Credit Enhancement Transactions

The Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must monitor the Interest Reserve Requirement, if any, under the Bond Trust Indenture with respect to each Credit Enhancement Mortgage Loan Credit Enhancement Mortgage LoanMortgage Loan financed by a Bond issuance where Fannie Mae provides credit enhancement by a Credit Enhancement Instrument, or an MBS for Bonds. .

The Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must monitor the rating of the institution in which the accounts under any Cash Management, Security, Pledge, and Assignment Agreement are held, and must require the Borrower BorrowerPerson who is the obligor per the Note. to move the accounts if the rating no longer meets Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! ’s requirements as provided in Part V, Chapter 3: Custodial Accounts .

418.03	Monitoring Compliance; Notification of Noncompliance

418.03A	Affordable Regulatory Agreement

At least once in each calendar year (and more often if directed by Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! ), the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must obtain a Borrower BorrowerPerson who is the obligor per the Note. certification 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 in full compliance with:

the rules qualifying the interest on the Bonds BondsTax-exempt or taxable multifamily revenue bonds, or other tax-exempt or taxable bonds, issued to finance 1 or more Credit Enhancement Mortgage Loan Properties. for exclusion from gross income for federal income tax purposes pursuant to the Internal Revenue Code; and
the requirements of 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 Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must review the Borrower BorrowerPerson who is the obligor per the Note. certificate, and 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). does not comply with all applicable regulatory requirements, 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]. . Neither Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! nor the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. is responsible for determining or ensuring the Borrower’s Borrower’sPerson who is the obligor per the Note. compliance under 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. .

418.03B	Default Notice for Failure to Comply with the Bond Documents

The Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must promptly notify Multifamily Asset Management Multifamily Asset ManagementTeam that can be contacted at [email protected]. , the Borrower BorrowerPerson who is the obligor per the Note. , the Bond Trustee Bond TrusteeTrustee for a Credit Enhancement Instrument. , and the Issuer IssuerEntity that: issues Bonds for a Credit Enhancement Mortgage Loan; packages mortgages for sale as a Security for an MBS; or issues a Letter of Credit. in writing of any default by a Borrower BorrowerPerson who is the obligor per the Note. with any provision of any Loan Document Loan DocumentAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. , Reimbursement Agreement, Security Agreement, 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. , or other Loan Document Loan DocumentAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. , Credit Enhancement Document, or Bond Document.

The Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must promptly forward to Multifamily Asset Management Multifamily Asset ManagementTeam that can be contacted at [email protected]. copies of any notices received from a Borrower BorrowerPerson who is the obligor per the Note. , Bond Trustee Bond TrusteeTrustee for a Credit Enhancement Instrument. , Issuer IssuerEntity that: issues Bonds for a Credit Enhancement Mortgage Loan; packages mortgages for sale as a Security for an MBS; or issues a Letter of Credit. , or any other party regarding any default by a Borrower BorrowerPerson who is the obligor per the Note. , and shall maintain ongoing contact with Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! regarding the status of the Credit Enhancement Mortgage Loan Credit Enhancement Mortgage LoanMortgage Loan financed by a Bond issuance where Fannie Mae provides credit enhancement by a Credit Enhancement Instrument, or an MBS for Bonds. by submitting a Non-Monetary Default Borrower Request in 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. .

418.04	Multifamily Affordable Housing (MAH) Properties

The Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must collect annual compliance documentation in the form of:

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. with Sponsor SponsorPrincipal equity owner and/or primary decision maker of the Borrower (often the Key Principal or the Person Controlling the Key Principal). -Initiated Affordability, certifications from the Borrower BorrowerPerson who is the obligor per the Note. and Administering Agent Administering AgentThird-party compliance monitoring company. of compliance with the Sponsor-Initiated Affordability Agreement Sponsor-Initiated Affordability AgreementVoluntary agreement signed by the Borrower and recorded in the land records against the Property, putting rent and income restrictions in place to preserve or create multifamily affordable housing. ; or
for any other 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. , the annual recertification of 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). compliance with 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. from the agency or entity that imposed any applicable rent or occupancy restrictions or, if not available, an explanation of why it is not available.

The Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must immediately submit a Non-Monetary Default Borrower Request in 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. to notify Multifamily Asset Management Multifamily Asset ManagementTeam that can be contacted at [email protected]. if this documentation reveals any event of default or noncompliance with the applicable:

Sponsor-Initiated Affordability Agreement Sponsor-Initiated Affordability AgreementVoluntary agreement signed by the Borrower and recorded in the land records against the Property, putting rent and income restrictions in place to preserve or create multifamily affordable housing. ; or
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 Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must retain the annual compliance documentation in its Servicing File Servicing FileYour file for each Mortgage Loan serviced. .

418.05	Low-Income Housing Tax Credits

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 subject to a Low-Income Housing Tax Credit Low-Income Housing Tax CreditFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. allocation, the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must obtain, at least once in each calendar year (and more often if directed by Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! ):

copies of the tax and other compliance forms specified in Part III, Chapter 7: Multifamily Affordable Housing Properties ; and
Borrower BorrowerPerson who is the obligor per the Note. certifications of 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). compliance with the requirements of the Internal Revenue Code regarding Low-Income Housing Tax Credits Low-Income Housing Tax CreditsFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. ; and
if the Low-Income Housing Tax Credits Low-Income Housing Tax CreditsFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. have not yet been syndicated, monthly reports from the Borrower BorrowerPerson who is the obligor per the Note. detailing the Borrower’s Borrower’sPerson who is the obligor per the Note. progress in syndicating the tax credit allocation until the syndication is completed.

If the Borrower BorrowerPerson who is the obligor per the Note. indicated 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). does not comply with all applicable regulatory requirements, the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must immediately submit a Non-Monetary Default Borrower BorrowerPerson who is the obligor per the Note. Request in 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. . Neither Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! nor the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. is responsible for determining or ensuring the Borrower’s Borrower’sPerson who is the obligor per the Note. compliance with Low-Income Housing Tax Credit Low-Income Housing Tax CreditFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. requirements. The Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. also must comply with the information requirements of Part III, Chapter 7: Multifamily Affordable Housing Properties .

418.06	Expanded Housing Choice

A 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 an Expanded Housing Choice pricing incentive requires additional annual monitoring. The Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must:

receive a Supplemental Annual Loan Agreement Certification (Expanded Housing Choice) ( Form 6620.Supplemental.Expanded Housing Choice ) from the Borrower BorrowerPerson who is the obligor per the Note. ;
retain Form 6620.Supplemental.Expanded Housing Choice in its Servicing File Servicing FileYour file for each Mortgage Loan serviced. ; and
submit a Non-Monetary Default Borrower Request in 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. , with a copy of any Borrower BorrowerPerson who is the obligor per the Note. notice, for failure to submit Form 6620.Supplemental.Expanded Housing Choice .

418.07	HAP Contract Approval and Releasing Restabilization Reserve

The Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. is delegated the authority to:

approve renewal of the 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). during 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; and
waive any Loan Document Loan DocumentAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. provision requiring the 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). to be fully funded by HUD HUDU.S. Department of Housing and Urban Development through 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. .

The Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. must submit 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. a copy of the renewed 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). , and retain a copy in the Servicing File Servicing FileYour file for each Mortgage Loan serviced. , together with any Borrower BorrowerPerson who is the obligor per the Note. request for release of the Restabilitzation Reserve.

Provided the Loan Documents Loan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. explicitly allow the disbursement, Fannie Mae Fannie MaeThis Glossary term Is Created Using Automation in Lower Environments and is used for testing purposes only!! consent is not required for the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. to approve disbursements from the Restabilization Reserve, including a:

disbursement due to a HAP Contract Delay; or
Borrower BorrowerPerson who is the obligor per the Note. -requested final disbursement, provided:
- the Servicer ServicerPrimary Person servicing the Mortgage Loan, including the originator, seller, or a third party. has received written evidence that the HAP HAPAn 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). contract has been extended by HUD HUDU.S. Department of Housing and Urban Development through the Maturity Date Maturity DateDate all Mortgage Loan amounts become fully due and payable per the Loan Documents. with no material changes to its terms; and
- no default has occurred and is continuing under the Loan Documents Loan DocumentsAll Fannie Mae-approved documents evidencing, securing, or guaranteeing the Mortgage Loan. .