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MEMORANDUM Fannie Mae Powered By Docstoc
					Date:         December 9, 2004

To:           DUS Lenders

From:         Randall Berdine, Vice President, Multifamily

Subject:      Lender Memo 04-08:        Preferred Delegation, Manufactured Housing

       The expansion of the Preferred Delegation Pilot to DUS Lenders to
        include Manufactured Housing Communities.

Fannie Mae is happy to announce the expansion of the Preferred Delegation Pilot to
include Manufactured Housing Community (“MHC”) loans. It is anticipated that the
expansion will result in a more efficient decision-making process for Lenders so that new
Manufactured Housing Community business is quickly captured. This change in
Preferred Delegation will only apply to conventional Manufactured Housing Community
loans less than $20 million.


Only Post Review Lenders as defined in Part III, Chapter 15, Section 1502.01 of the
DUS Guide are eligible for Preferred Delegation for MHC loans.

Except as modified herein, all terms of the Preferred Delegation Pilot will apply to
Manufactured Housing Community loans. All other features and processes (such as Pilot
Structure, Pilot Administration and Pilot Reporting) will remain the same. Please refer to
DUS Lender Memo 04-06.

Preferred Delegation does not change DUS Manufactured Housing Community
underwriting standards. It is the Lender’s responsibility to judge whether the
characteristics of the loan and the utilization of Preferred Delegation result in a
prudently structured and underwritten loan that is consistent with DUS Manufactured
Housing Community standards.

Post Review Lenders may inform their customers of the addition of Manufactured
Housing Community loans to Preferred Delegation. However, Post Review Lenders
may not advertise or issue press releases providing the terms of the Pilot, nor may they
disclose the amount of allocated delegation. The result of this Pilot should be that
customers perceive and experience a more responsive process for bidding, negotiating,
and closing transactions.

Waivers not eligible for Manufactured Housing Community Preferred Delegation

The property requirements for a Manufactured Housing Community as outlined in Part
III, Chapter 15, Section 1502 of the DUS Guide are not eligible for Preferred

In addition, there are certain items identified by DUS Lender Memo 04-06 that are not
eligible for a Preferred Delegation Waiver from the current DUS Guidelines, and
therefore require consultation with Fannie Mae. For reference purposes, Attachment 1
provides information related to Preferred Delegation exclusions.         For further
information, Lenders should consult DUS Lender Memo 04-06.

Waivers for Manufactured Housing Community subject to restrictions

The use of Preferred Delegation for the following MHC Lender Delegated Waivers is
restricted. This means that any use of Preferred Delegation associated with the
following must conform to all conditions, identified in Part III, Chapter 15 of the DUS
Guide, that are required to exercise MHC Lender Delegated Waivers.

The MHC Lender Delegated Waivers are:

      MHC Private Sewage Treatment Plants
      MHC Flood
      MHC Long Term Leases
      MHC NRI

Waivers Subject to Higher Scrutiny

Some waivers, by their nature, will receive greater scrutiny by Fannie Mae in
subsequent reviews due to the potential impact upon the risk of the loan. This does not
mean that the Lender is not permitted to grant the waiver without Fannie Mae approval.
Many waivers have been granted in the past and have proved necessary to win
business without deterioration of credit quality. Certain waivers may be entirely
appropriate in some instances but not in others. Lenders will be required to judge the

impact of the waiver on the overall credit quality of the transaction. However, the
resulting loan, subject to the waivers, must fit into Fannie Mae’s risk tolerance levels
and the use of the waiver(s) should be appropriate. The Lender must use prudent
judgment in evaluating the risk and apply appropriate mitigants when necessary.

Effective Date

This expansion of Preferred Delegation to include conventional Manufactured Housing
Community loans is effective as of the date of this Lender Memo.

Questions about Preferred Delegation and Manufactured Housing Community loans
may be addressed to Jerry Muir at (404) 398-6283 or by email at, or to your National Account Manager.

Attachment 1

Waivers not eligible for Preferred Delegation

There are certain items that are not eligible for a Preferred Delegation Waiver from the
current DUS Guidelines, and therefore require consultation with Fannie Mae. These

      DUS Loss Sharing parameters
      LTV & DSC for the respective tiers, including ARM limitations
      Applicant Experience Check (BCHECK)
      Statutory Loan Limits (Part III Section 402 and Lender Memo 98-24)
      Terrorist List – Executive Order 13224 (Lender Letter 11/9/2001)
      Pre-stabilized properties and loans subject to earn-outs
      Interest Rate Cap criteria
      Yield Maintenance criteria & term
      Pricing below Second Level Lender Delegated Pricing Waivers including Fannie
       Mae transfer fee
      Tier 2 Interest Only standards
      Appraisal, Environmental and PNA requirements on new loans or when
      Commercial income and net commercial rentable space Limits
      Domestic Borrower requirements
      Certain legal issues and MBS Disclosure issues (see Guide Update 03-01)
      Illegal Zoning
      Current requirements for transfers without Lender or Fannie Mae approval
      Loan Structure issues (e.g. split loan structures)

Legal Exclusions:

There are to be no changes to the Note other than to fill in standard blanks. Subject to
the special disclosure requirements in Guide Update 03-01, changes to the Security
Instrument or other security documents that would affect the timing of pursuing our
legal remedies, the nature of our legal remedies, our rights to collateral, or would create
additional notice requirements to third parties (for example, mezzanine lenders or
subordinate lien holders) require Fannie Mae approval. In general, loan document
changes must continue to be made through Exhibits and Schedules as attachments to
the loan documents and as required in the loan delivery instructions (Form 4600) and
not in the body of the text.

                                          - 1-1 -
                                  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

• 98-12 (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

• 99-05 (08/24/99) Live Pricing   for   Cash     Commitments/MCODES     Commitment

• 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

• 01-10 (07/18/01) Consolidation of the 5-50SM Streamlined Mortgage Loan Product
                   with the DUS Small Loan Product

• 01-14 (10/04/01) 3MaxExpressSM Update

• 01-15 (11/27/01) Actual/360 Interest Accrual

• 02-06 (09/13/02) Changes to Underwriting Guidelines

• 02-08 (10/16/02) Forward Commitments

• 03-02 (04/17/03) Changes to Forward Conversion Worksheet (Form 4212)

• 03-03 (05/07/03) Guidelines for Physical Occupancy and Economic Vacancy

• 03-04 (09/11/03) Ninth Multifamily Assured Schedule Payment TrustSM

• 03-05 (11/05/03) Changes to Principal Analysis

• 03-06 (12/31/03) Large Loan Definition
• 04-01 (02/09/04) Terrorism Insurance Guidelines

• 04-02 (2/13/04)   Expansion of Lenders’ Delegated Waiver Authority to Reduce the
                    Underwriting Floors Applicable to Nine and Ten Year Balloon

• 04-03 (02/13/04) Modifications to DUS/DMBS Product

• 04-04 (03/04/04) New DUS Lender Capital Standards and Requirements

• 04-05 (03/19/04) Establishment of Lender Delegated Waiver Authority to Reduce the
                   Underwriting Floors Applicable for Fixed and Variable Rate Bond
                   Credit Enhancement

• 04-06 (05/24/04) Preferred Delegation Memo

• 04-07 (06/03/04) Preservation and Section 8

• 04-08 (12/03/04) Preferred Delegation Memo, Manufactured Housing Expansion


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