"Lender Memo 03-02"
MEMORANDUM Date: April 17, 2003 To: DUS Lenders From: Grace Huebscher Vice President, Multifamily Subject: Lender Memo 03-02: Changes to Forward Conversion Worksheet (Form 4212) Conversion Worksheet, Form 4212, now contains three worksheets for Lender input. Lenders can now enter on the worksheet information for subordinate mortgage with interest only payments for calculating overall debt service and LTV. The worksheet now automatically calculates NOI, debt service, debt service coverage, variances, and permanent loan size. Operating Expenses have been grouped into nine categories. The purpose of this Lender Memo is to announce changes to the existing Forward Conversion Worksheet (Form 4212, dated 2002) and standardize reporting for forward conversion to permanent loans. It is a replacement to the worksheet distributed as part of DUS Guide Update 02-05. The specific changes that have been made include: 1. The Conversion Worksheet now contains three worksheets for Lender input: (a) Questionnaire – Lender answers pertinent questions regarding the completion of the project. (b) Data Input – Lender provides the data that supports the permanent loan amount being requested. This includes data for debt service (both hard and soft debt); data for forward underwritten NOI, data for Current underwritten NOI; and data for stabilized NOI. (c) Variance Questionnaire – Lender explains variances greater or less than 10% between forward underwritten and actual expenses, and forward underwritten and current projections. 2. Lenders can now enter information for subordinate mortgages with interest only payments for calculating overall debt service and LTV. 3. The worksheet automatically calculates NOI, debt service, debt service coverage, variances, and permanent loan size. 4. Operating Expenses have been grouped into nine categories: (1) Management Fee; (2) Administration; (3) Payroll; (4) Utilities; (5) Water & Sewer; (6) Repair and Maintenance; (7) Insurance; (8) Real Estate Taxes; and (9) Replacement Reserves. The Forward Conversion Worksheet does not replace or eliminate other conversion requirements as provided in the DUS Guide. The above requirements are effective immediately. In order to implement these changes to the existing worksheet, please discard the 2002 version of the form and begin using the attached revised worksheet immediately. The revised form will replace the existing form on the efanniemae.com Internet site within the next week. If you have any questions regarding the revisions to the existing worksheet, please contact your NAM, Daniel Cunningham at (202) 752-3733 or email Daniel_cunningham@fanniemae.com, or James Paige at (202) 752-7505 or email email@example.com. Attachment: Forward Conversion Worksheet, Form 4212 (04/03) -2- Lender Memos All Lenders Memos except those listed below have been superseded by previous Guide Updates. The Lender Memos listed below will be incorporated into the DUS SM Guide as the applicable sections are updated. • 97-12 (12/08/97) Refinance Enhancements • 98-09 (05/14/98) Bond Premium Sales for Fixed-Rate Bond Credit Enhanced Properties / Eligible Borrower Organizations • 98-12 (06/02/98) New Choice Loan Refinance Guidelines; Structured DUS and Rapid Refi Changes (ESP) • 98-17 (07/23/98) Single Asset Seniors Housing Product Line • 98-24 (11/17/98) Loan Limits • 99-02 (03/18/99) DUS Bond Credit Enhancements - Reduction of Fannie Mae Counsel Fees in DUS Variable Rate Transactions, Fannie Mae Counsel Option for Real Estate Documentation, and Revised Counsel Designation Form • 99-05 (08/24/99) Live Pricing for Cash Commitments/MCODES Commitment Procedures • 00-01 (02/24/00) Mezzanine Equity • 01-02 (01/16/01) Manufactured Housing Community Loans • 01-05 (05/02/01) Modifications to Underwriting Guidelines for Seniors Housing Product • 01-06 (06/12/01) New Streamlined Loan Summary Tool • 01-10 (07/18/01) Consolidation of the 5-50SM Streamlined Mortgage Loan Product with the DUS Small Loan Product • 01-12 (08/22/01) Revisions to Documents Published on Fannie Mae Multifamily Web Site (#2) • 01-14 (10/04/01) 3MaxExpressSM Update • 01-15 (11/27/01) Actual/360 Interest Accrual • 02-02 (01/08/02) 63-20/Public Entity Borrowers – Underwriting Guidelines for Tax- exempt Bond Financings • 02-04 (05/17/02) Seventh Multifamily Assured Schedule Payment TrustSM • 02-05 (07/08/02) Change to Folder I Content and Folder II Delivery and Content • 02-06 (09/13/02) Changes to Underwriting Guidelines • 02-08 (10/16/02) Forward Commitments • 02-09 (12/19/02) Terrorism Insurance Guidelines • 02-10 (12/20/02) Eighth Multifamily Assured Schedule Payment TrustSM • 03-01 (03/24/03) Expansion of the Lenders’ Delegated Waiver Authority to Reduce the Underwriting Floors Applicable to Five and Seven Year Balloon Mortgages • 03-02 (04/17/03) Changes to Forward Conversion Worksheet (Form 4212) -2-