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U160.10 Property Insurance
To be eligible for the
Banc-Series small balance apartment
loans, Borrower must carry property insurance
that covers:
§ Direct Physical Damage to
the property, including any personal property owned by or in the
care, custody and control of the Borrower.
§ Loss of Rental Income as a
result of direct physical damage to the property.
The property insurance must meet the
following requirements to be eligible for apartment financing:
A. Covered Causes of Loss
The Property Insurance policy must
cover All Risks of Direct Physical Loss except losses specifically
Excluded or Limited.
B. Windstorm
Windstorm Insurance, including
hurricane and tornado coverage, may be obtained through a
stand-alone policy if necessary as long as that policy meets all
other requirements shown under Property Insurance and Other
Insurance Requirements to be eligible for apartment financing. Windstorm Insurance may be provided on an
actual cash value (ACV) basis if Borrower’s insurance agent provides
a signed statement that replacement cost coverage is not available
prior to the apartment loan closing.
If ACV coverage is provided, the
policy must be endorsed to provide Ordinance or Law coverage in a
minimum amount equal to 25% of the actual cash value of the
property.
C.
Flood
Flood Insurance is required for
apartment financing if the
property lies within a FEMA flood insurance Zone A or Zone V. If
Flood Insurance is required, the Borrower must execute the Flood
Insurance Notice, prior to closing the apartment loan. Flood Insurance may be provided on an actual cash
value (ACV) basis if Borrower’s insurance agent provides a signed
statement that replacement cost coverage is not available. If ACV
coverage is provided, the policy must be endorsed to provide
Ordinance or Law coverage in a minimum amount equal to 25% of the
amount of Flood Insurance provided.
D. Earthquake
Earthquake Insurance is required if
the property is located in FEMA Earthquake Zones 3 or 4 unless
Apartment Lender’s guidelines provide for an exception.
E. Earth Movement
Earth Movement Insurance is required
if the property is located where landslide, mine subsidence, earth
sinking, and other earth movement (including earthquake) may occur.
F. Boiler Insurance
Boiler Explosion Insurance is required
if heating is provided by a pressure steam boiler built prior to
1987 or having a pressure rating greater than 18 pounds per square
inch.
G. Electrical Acknowledgement
If a property has aluminum wiring
running from the panel to the outlets in any of the units,
Apartment
Lender
must be provided with written acknowledgement from the property
insurance company acknowledging the presence of aluminum wiring and
its related hazards.
H. Valuation (Replacement
Cost Coverage)
All Property Insurance policies
(including Windstorm, Flood, Earthquake, Earth Movement and Boiler
Insurances) are to be on a replacement cost basis (the cost to
replace or repair the damaged property without deduction for
physical depreciation). In apartment loan purchase transactions only, if the
replacement cost exceeds the sales price, then the amount of
coverage will be based on the purchase price.
I. Coinsurance
If any Property Insurance policy
contains a coinsurance clause, the coinsurance percentage must be
80% or greater.
J. Minimum Limits
The following are minimum limit
requirements for Property Insurance policies:
1. All Risk Direct Damage
Replacement value of all covered real
and personal property.
2. Rental Income Under the All
Risk Direct Damage Policy
The amount equal to the expected gross
annual rental income of the property. Alternatively, coverage can
be provided on a “12 months actual loss sustained” basis.
3. Flood
The maximum available under the
National Flood Insurance Program ($250,000) or the outstanding loan
amount, whichever is smaller.
4. Earthquake or Earth Movement
The outstanding apartment loan amount or such
amount as required in accordance with Apartment Lender’s apartment
financing guidelines.
5. Boiler Insurance - Direct
Damage
40% of the Direct Damage limit
requirement shown in
U160.10 (J.1)
above.
6. Rental Income under the Boiler
Insurance Policy
40% of the amount required under
U160.10 (J.2)
above.
K. Maximum Deductible
The following are the maximum
deductibles permitted for Property Insurance policies:
1. Earthquake or Earth Movement
10% of the covered damage.
2. Windstorm
5% of the covered damage.
3. All Other Property Insurance
Policies
$25,000 or 1% of the replacement value
of the property, rounded up to the next $5,000, whichever is greater
(for example, the maximum deductible on property with replacement
value of $2,500,001 is $30,000).
L. Mortgagee Clause
Every Property Insurance policy must
contain a Mortgagee Clause in favor of:
CommercialBanc Commercial Mortgage is an approved
affiliate of the LaSalle Bank Corporation. CommercialBanc
originates and underwrites our
Banc-Series Apartment Loan Program
according to their guidelines. All apartment loans are assigned to
LaSalle Bank at the time of closing. As such we ask that the
mortgagee clause show the following:
LASALLE BANK CORPORATION, MULTIFAMILY
FINANCE GROUP, its Successors, and/or
Assigns as their interests may appear
P.O. Box 57068
Irvine, CA 92619-7068
The Mortgagee Clause must:
1. State that any
losses are payable first to the Mortgagee to the extent of the
Mortgagee’s interest, with any remaining amount payable to the
Borrower;
2. Provide that the
insurance will not be voided as respects the Mortgagee as the result
of any act, failure to act, error, or omission of the Borrower.
U160.20
General Liability Insurance
Borrower must carry General Liability
Insurance that covers the Borrower’s liability for bodily injury or
property damage to others arising out of the Apartment Loan Borrower’s premises or
operations. General Liability Insurance is also called Public
Liability or Personal Liability Insurance.
A. Limit
$1,000,000 per occurrence or 20% of
the replacement value of the property, rounded up to the next
$500,000, whichever is greater (for example, a property with
replacement value of $5,000,001 must carry minimum limits of
$1,500,000.
The limit may be met with any
combination of primary General Liability Insurance and Excess (or
Umbrella) Liability Insurance.
B. Additional Insured
The General Liability policy and any
Excess or Umbrella Liability policy must be endorsed to name the
Apartment Lender as an additional insured.
U160.30
Other Insurance Requirements
A. Insurance Company Rating
All insurance companies must be rated
A- or better by A.M. Best’s.
Should an insurance company’s rating
fall below A- during the period of the apartment loan, Borrower must replace
that insurance company with a qualifying insurance company within 60
days.
B. Notice of Cancellation
Each insurance company must provide
written notification to Lender 30 days prior to the effective date
of any cancellation, non-renewal or material change.
C. Evidence of Compliance with
Insurance Requirements at Closing
At least 3 days prior to closing the
apartment loan, Borrower must provide evidence that these Insurance
Requirements have been met. Evidence is to consist of:
1. Property Insurance
Provide an EVIDENCE OF PROPERTY
INSURANCE form (ACORD 27) signed by an authorized representative of
the insurance company or its authorized representative. The
EVIDENCE OF PROPERTY INSURANCE form must show the amount of
insurance and demonstrate compliance with all Property Insurance
Requirements. The policy must be effective no later than 12:01
a.m., the day of the closing.
Under ADDITIONAL INTERESTS:
(a) Enter the name and address
of LASALLE BANK CORPORATION, MULTIFAMILY FINANCE GROUP as shown
under U160.10 K. above.
(b) Put an X in the square next
to MORTGAGEE
Under REMARKS, enter the following:
“Losses are payable first to the
Mortgagee to the extent of the Mortgagee’s interest, with any
remaining amount payable to the Apartment Loan Borrower (INSURED).
This insurance will not be voided as
respects the Mortgagee as the result of any act, failure to act or
omission of the Apartment Loan Borrower (INSURED).”
Under REMARKS also show:
(a) The annual
premium
(b) The coinsurance
percentage (if applicable), and
(c) The current
Best’s letter rating (A- or better required) of the Insurance
Company
Under CANCELLATION, enter “30” in the
blank before “DAYS”.
NOTICE: CERTIFICATES OF
INSURANCE (ACORD forms 24 or 25) WILL NOT BE ACCEPTED FOR PROVIDING
EVIDENCE OF PROPERTY INSURANCE.
2. Liability Insurance
Provide a CERTIFICATE OF LIABILITY
INSURANCE (ACORD form 25) signed by an authorized representative of
the insurance company or its authorized representative. The
CERTIFICATE OF LIABILITY INSURANCE form must show the amount of
insurance and demonstrate compliance with all Liability Insurance
Requirements. The policy must be effective no later than 12:01
a.m., the day of the closing.
Under (CERTIFICATE HOLDER) enter the
name and address of LASALLE BANK CORPORATION, MULTIFAMILY FINANCE
GROUP as shown under U160.10 K. Above.
Under DESCRIPTION OF
OPERATIONS/SPECIAL PROVISIONS enter:
“LASALLE BANK CORPORATION, MULTIFAMILY
FINANCE GROUP is an Additional Insured”. Alternatively, if the
CERTIFICATE OF LIABILITY INSURANCE form has an Additional Insured
box, put an X in that box.
Under DESCRIPTION OF
OPERATIONS/SPECIAL PROVISIONS enter the annual premium for the
liability insurance if the liability insurance premium has not been
included in the premium information provided in the EVIDENCE OF
PROPERTY INSURANCE form. Also, show the current Best’s letter
rating (A- or better required) of the Insurance Company.
Under CANCELLATION enter “30” in the
blank before “DAYS”.
D.
Evidence of Renewal or Replacement Policies
Apartment Loan Borrower must advise LASALLE BANK
CORPORATION, MULTIFAMILY FINANCE GROUP, its Successors, and/or
Assigns as their interests may appear of any renewals or
replacements of the required insurances by providing the same
documentation required for closing in U160.30 (C.), Evidence of
Compliance with Insurance Requirements at Closing, above. Such
evidence must be provided prior to the expiration date of the policy
that is being renewed or replaced.
SECTION II -
APARTMENT LOAN PROGRAM BORROWER(S)
U200.00 ELIGIBLE BORROWER(S)
FOR APARTMENT FINANCING
It is the policy of Apartment Lender to consider
each apartment loan application regardless of the race, color, religion,
national origin, sex, marital status or age of the applicant
(provided the applicant has the capacity to enter into a binding
contract).
Each application for apartment
financing will be processed in compliance with all
applicable federal, state and local laws and regulations (e.g. the
Fair Housing Act and the Equal Credit Opportunity Act).
All eligible guarantors are required
to submit to Apartment Lender a complete credit package.
Section 326 of the USA PATRIOT Act
creates a statutory obligation to verify the identity of each
borrower and any other borrowing entity. As a result,
Apartment Lender will
require a primary and secondary form of identification for each
borrower and additional information on an entity.
Commercial Mortgage Brokers are
required to read or provide a copy of the following statement to applicant(s), prior to gathering and verifying the information:
“To help the government fight the
funding of terrorism and money laundering activities, Federal law
requires all financial institutions to obtain, verify, and record
information that identifies each person and entity that opens an
account.
When you apply for an apartment loan, we will
ask for your name, address, date of birth, and other information
that will allow us to identify you. We may also ask to see your
driver’s license or other identifying documents, such as a tax
identification number.”
Only one piece of identification will
be required for each borrower. The following chart shows the types
of identification that are acceptable for apartment financing:
| U.S. Citizen |
Non – U.S. Citizen |
| State Drivers License
(unexpired) |
Resident Alien Card
(unexpired) |
| Passport (Unexpired) |
Passport (Unexpired) |
For elderly persons, who are U.S.
citizens and are legitimately unable to present an unexpired
government issued ID with a photograph, we will require a minimum of
two pieces of “additional identification”. We will then require
that you obtain (through the loan process) a third piece of
“non-documentary” verification. Examples of this are as follows:
third party references such as credit reports, employment records,
title work, and financial institution references.
Additional Identification Used For Apartment Loan Qualification
| U.S. Person |
Non - U.S. Person |
| Passport |
Passport |
| Birth Certificate |
Birth Certificate |
| Social Security Card |
|
| Voter Registration Card |
|
| Property Tax Bill |
|
| Firearm License |
|
| Utility Bill |
|
| Medical Card |
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For elderly persons, who are non-U.S.
citizens and are legitimately unable to present an unexpired
government-issued ID with a photograph, we will require a valid
resident alien registration card and one piece of “additional
documentary” verification. Examples of this are as follows: third
party references such as credit reports, employment records, title
work, and financial institution references.
If any portion of title will be held
in an entity, in addition to verifying the individuals, the
entity(ies) must be verified by the following: tax identification
number, business location address (cannot be a P.O. Box) and
business mailing address (can be a P.O. Box).
U200.10 Borrower’s Age
In accordance with the laws of the
state in which the subject property is located, the Borrower(s)
must be at least of such age that the loan documents can be legally
enforced. Apartment Lender has no maximum age limitations.
U200.20 Citizen, Resident &
Immigration Status
Apartment Lender will consider
apartment mortgages for
citizens of the United States of America and for aliens who are
lawful permanent residents of the United States of America under the
same requirements applied to U.S. citizens. Evidence of permanent
residency is issued by the Immigration and Naturalization Service
(INS).
Types of permanent residency evidence are
as follows:
A. Alien Registration Receipt
Card I-151 (Green Card);
B. Resident Alien Card I-151 not
having an expiration date on the back side;
C. Alien registration Receipt
Card/Conditional Resident Alien Card with expiration date, including
a copy of a filed INS Form I-751. A passport that is not expired and
contains an unexpired stamp that shows processed for I-551 is
acceptable.
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