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U200.30 Guarantors,
Co-Signers and Non-Purchasing Spouses
Apartment Lender will consider guarantor(s) as
long as they can provide a credit application, execute the
appropriate apartment loan documents, and will have a title interest in the
property or an equity interest in the borrower. Co-signers are not
permitted. A non-purchasing spouse may be required to execute the
apartment mortgage instrument, for the purpose of waiving homestead rights,
dependent on the applicable laws of the state in which the property
is located.
U200.40 Titling Entity and
Guaranty Requirements
Apartment Lender will allow the title vesting to
be placed in entities other than Individual, Joint Tenancy, Tenants
in Common, and Divided Percentages. These other entities, all of
which must be legally recognized in a state of the United States of
America and the state in which the secured property is located,
include the following: Corporations, Limited Liability Companies (LLCs),
General Partnerships, Limited Partnerships, Limited Liability
Partnerships (LLPs).
Apartment Lender will also allow the title
vesting in Living Trusts (Revocable and Irrevocable) and Realty
Trusts (state of Massachusetts only) and Land Trusts.
When title is vested in a Land Trust,
Apartment Lender requires that the trustee is a legal corporation whose
business operation initiates and administers to Land Trusts.
In all instances, Apartment Lender reserves the
right to require a legal review of the entity by Apartment
Lender’s legal
counsel, at the borrower(s) expense.
U200.41 Layered Entities
Apartment Lender will permit title to a secured
property to be vested in a “layered entity”. A layered entity is
defined by Apartment Lender as an entity wherein the ownership interest(s) in
that entity is held by another entity (other than an individual
person(s)). Example: The borrowing entity is a General Partnership
with the General Partner being a Limited Liability Company (LLC).
Apartment Lender will require a satisfactory
legal review of all layered entities by Apartment Lender’s legal counsel, at
the borrower(s) expense.
U200.42 Corporations
A corporation is comprised of
shareholders and is administered by corporate officers, i.e.,
president, vice-president, treasurer, secretary, etc.. Guarantor(s)
must own a minimum of 51% of the corporation. Apartment Lender
requires that the apartment mortgage instrument be signed by a duly appointed officer(s) of said corporation, and may require certain shareholders
to be guarantors.
All guarantor(s) must be individuals
and own an equity interest in the corporation in order to be
eligible for
Banc-Series Small Balance Apartment Loan Program.
U200.43 Limited Liability
Companies (LLCs)
An LLC is comprised of members, each
with the same or varying percentage of ownership in the LLC.
Apartment Lender requires that it obtains guarantees from a member(s)
whose ownership interest(s) equates to a minimum of 51% of the LLC.
Apartment Lender may require additional members to guaranty
depending on the overall strength of the apartment loan application. Apartment
Lender’s decision to add guarantors would require a complete credit
package from said individual(s).
U200.44 General Partnerships
Apartment Lender recommends that all
general partner(s) be individual person(s). Please See Section
U200.41 for exceptions. Apartment Lender requires that all general
partner(s) execute the apartment mortgage instrument and be guarantors.
U200.45 Limited Partnerships
A Limited Partnership is a legal
entity comprised of general partner(s) and limited partner(s).
Apartment Lender will require all general partners to be guarantors.
Apartment Lender may require certain limited partners to be
guarantors. If there are general partners who are not individuals
(this is considered a layered entity), Apartment Lender will still
require a personal guaranty.
U200.46 Limited Liability
Partnerships (LLPs)
An LLP is comprised of partners, each
with the same or varying percentage of ownership. Apartment Lender
requires that it obtains guarantees from a partner(s) whose
ownership interest(s) equates to a minimum of 51% of the LLP.
Apartment Lender may require additional partners to guaranty
depending on the overall strength of the apartment loan application. Apartment
Lender’s decision to add guarantors will require a complete credit
package from said individual(s)
U200.47 Living Trusts
A Living Trust is a trust (revocable
or irrevocable) which is in effect during the life of the
guarantor(s). Apartment Lender shall require a satisfactory legal
review of the trust agreement by Apartment Lender’s legal counsel,
at borrower’s expense.
The primary beneficiary(ies),which are
the individuals who currently own the assets of the trust, shall be
required to be the guarantor(s).
U200.48 Realty Trusts
(Massachusetts only)
A state of Massachusetts Realty Trust
is a legal viable title entity created for the express purpose of
real estate ownership in the state of Massachusetts. It is comprised
of a trustee(s). The primary beneficiary(ies) shall be required to
be the guarantor(s).
U200.49 Land Trusts
Apartment Lender requires the receipt
of the certified copy of the trust agreement, listing all the
beneficiaries of said trust. Apartment Lender requires that it
obtains guarantees from a beneficiary(ies) who is/are of legal age
and whose ownership interest(s) equates to a minimum of 51% of said
trust. Apartment Lender may require additional beneficiaries to
guaranty depending on the overall strength of the apartment loan application.
Apartment Lender’s decision to add guarantors will require a
complete credit package from said individual(s). Apartment Lender
will allow the beneficiary to be a corporation, LLC, general
partnership, limited partnership, or living trust, provided that: 1)
the beneficiary or equity owner(s) of the entity may be required to
guaranty the loan; and 2) Apartment Lender receives a satisfactory
legal review by Apartment Lender legal counsel, at the borrower’s
expense.
U200.50 Property Management
Experience/Management Letters
Apartment Lender recognizes that an
apartment building that contains 5-11 units is typical of the
“starter” market for the beginning real estate investor. Thus, 5-11
unit properties will not need management letters to be supplied,
since it is assumed that these properties will be owner-managed by
“starters” as well as experienced owners.
For properties, 12 units and larger,
management experience is normally required. Apartment Lender may
deny the apartment loan request based on insufficient management experience
(generally, where the Borrower has not demonstrated the necessary
ability to manage investment real estate within the past 3 years).
If the apartment mortgage loan is granted upon other extenuating reasons, a management
letter will be required, plus satisfactory review of a management
agreement and qualifications of the manager.
Apartment Lender requires the review of a
management agreement and qualifications of the Manager for all
properties located outside of the Borrower’s domicile state.
U200.60
Multiple Apartment Loans to the Same Borrower
The account relationship between a
Borrower and all LaSalle entities cannot exceed $20,000,000
($5,000,000 for properties in the State of California) with
regional, state and county limitations, as determined by Apartment
Lender management, excluding consumer debt (e.g., loans secured by a
first lien on Borrower’s primary or secondary residence; loans
secured by a second or junior mortgage on Borrower’s primary or
secondary residence; loans secured by an automobile; and loans
secured by signature only).
Account relationships in excess of
$20,000,000 will be referred to the appropriate LaSalle division for
further consideration.
U210.00 DOWN PAYMENT/RESERVE REQUIREMENTS
Apartment Lender requires a minimum
DOWN PAYMENT of 20% for the purchase of an apartment property. The
required DOWN PAYMENT for apartment loan requests over $2,000,000 is 25%.
Apartment Lender may grant a minimum DOWN PAYMENT of 20% for the
purchase of an apartment property over $2,000,000 if certain
criteria are met, see Section U320.10.
Apartment Lender requires a minimum
DOWN PAYMENT of 25% for the purchase of a Mixed-Use property. The
required DOWN PAYMENT for apartment loan requests over $2,000,000 is 30%.
Apartment Lender may grant a minimum DOWN PAYMENT of 25% for the
purchase of a Mixed-Use property over $2,000,000 if certain criteria
are met, see Section U320.10.
Apartment Loan Purchases: The
general partner(s) must be Borrower(s) and collectively contribute a
minimum cash DOWN PAYMENT as follows:
|
Property Type |
Loan Amount |
% of Purchase Price |
|
Apartment |
≤ $2,000,000 |
10.00% |
|
Apartment* |
> $2,000,000 |
12.50% |
|
Mixed-Use |
≤ $2,000,000 |
12.50% |
|
Mixed-Use* |
> $2,000,000 |
15.00% |
*Apartment Lender may consider 10.00% of
the purchase price as DOWN PAYMENT for apartment properties and
12.50% of the purchase price as DOWN PAYMENT for Mixed-Use
properties depending if certain criteria is met, see Section U320.10
A portion of that contribution may be as
a limited partner(s);
Apartment Loan Refinances: The
general partner(s) must be Borrower(s) and collectively have at
least a 10% ownership in the partnership. A portion of that
ownership may be as a limited partner(s).
In instances where title to the
property will be held in a Limited Liability Corporation (LLC), the
following cash downpayment and ownership requirements apply to
purchases: a member(s) with ownership interest(s) equating to a
minimum of 51% of the LLC must be Borrower(s) and collectively
contribute a minimum cash downpayment as follows:
|
Property Type |
Loan Amount |
% of Purchase Price |
|
Apartment |
≤ $2,000,000 |
10.00% |
|
Apartment* |
> $2,000,000 |
12.50% |
|
Mixed-Use |
≤ $2,000,000 |
12.50% |
|
Mixed-Use* |
> $2,000,000 |
15.00% |
*Apartment Lender may consider 10.00% of
the purchase price as downpayment for apartment properties and
12.50% of the purchase price as downpayment for Mixed-Use properties
depending if certain criteria is met, see Section U320.10.
In instances where title to the property
will be held in a Limited Liability Partnership (LLP), the following
cash downpayment and ownership requirements apply to purchases: a
member(s) with ownership interest(s) equating to a minimum of 51% of
the LLP must be Borrower(s) and collectively contribute a minimum
cash downpayment as follows:
|
Property Type |
Loan Amount |
% of Purchase Price |
|
Apartment |
≤ $2,000,000 |
10.00% |
|
Apartment* |
> $2,000,000 |
12.50% |
|
Mixed-Use |
≤ $2,000,000 |
12.50% |
|
Mixed-Use* |
> $2,000,000 |
15.00% |
Apartment Lender may consider 10.00% of
the purchase price as downpayment for apartment properties and
12.50% of the purchase price as downpayment for Mixed-Use properties
depending if certain criteria is met, see Section U320.10.
The funds for downpayment shall come from
a qualifying asset(s) (See
Section U210.10). Apartment Lender does
not recognize the following as acceptable sources for downpayment:
monetary gifts; secondary financing at the time of purchase;
unverifiable cash on hand; sweat equity; rent credit; real estate
tax credit; security deposit credit; or a 1031 “Reverse” Like-Kind
Exchange whereby a Qualified Exchange Accommodation Arrangement (QEAA)
is used.U210.10
Qualifying Assets For Apartment Loan Purchase
Apartment Lender recognizes the
following assets, with limitations, as acceptable forms of
downpayment that may be used to qualify for
Banc-Series Apartment Loan
Program:
A. Borrower(s) personal
savings. Satisfactory documentation includes Verification of Deposit
(FNMA 1006) or two continuous months of bank statements. Apartment
Loan Underwriting reserves the right to require any unusually large
deposits to be satisfactorily explained and documented by the
Borrower(s);
Borrower(s) corporate savings. Satisfactory documentation includes
Verification of Deposit (FNMA 1006) or two continuous months of bank
statements. Underwriting reserves the right to require any
unusually large deposits to be satisfactorily explained and
documented by the Borrower(s);
C. Borrower(s) equity positions
in stock or bond account(s);
D. Distribution(s) from
Borrower(s) IRA(s) (Individual Retirement Account(s)) or
Keogh(s) (Self-employed Retirement Account(s));
E. Distribution(s) from
Borrower(s) Annuity(ies) and/or Trust Fund(s);
F. Borrower(s) may borrow
from a financial institution against the equity on rental
property(ies) owned under a verifiable line of credit or other
financing instrument, which is considered “arms-length” and may use
all the proceeds as downpayment. Borrower(s) may also borrow
against equity from their primary residence(s), which will be
limited to 10% of the purchase price. The remainder of the funds
must come from acceptable sources as stated in this section, with
the exception of gift funds;
G. Borrower(s) equity from a
Starker 1031 Deferred Exchange or Like-Kind Exchange;
H. Limited partner(s) or LLC/LLP
member(s) investment, where the borrower(s), acting as
general/limited partner(s) or LLC/LLP member(s) respectively, make a
cash contribution of at least 10% of the purchase price;
I.
(Apartment Loan Purchases Only) Borrower(s) (who are licensed real
estate agents/brokers) anticipated real estate commission(s) derived
from the purchase transaction. The total commission shall not exceed
3%; based on the lesser of the purchase price or appraised value (as
determined by Apartment Lender ); and/or
J.
Apartment Lender will allow gift funds as long as Borrower(s) can
contribute a minimum downpayment of 10% of their own proceeds:
Gift funds will only be accepted towards
an apartment loan purchase if they are coming from an individual
with a family relationship to the borrower. The gift funds must be
properly verified in the borrower’s account (see A and B above for
requirements). Apartment Lender will require an explanation of whom
the gift funds are from, and documentation showing the source of the
gift funds.
*Apartment Lender may consider
10.00% of the purchase price as downpayment for Apartment properties
and 12.50% of the purchase price as down payment for Mixed-Use
properties depending if certain criteria is met, see Section
U320.10.
U210.20
Reserve
Requirement For Apartment Mortgage Loan
In addition
to any holdback requirements, Apartment Lender shall require that
Borrower(s) have a minimum of three months principal and interest in
cash-available reserves following the closing.
U210.30
Impounds For Apartment Loan Program
Apartment Lender requires that an initial
impound be established at the time of closing, with impounding
continuing on a monthly basis beginning with the first scheduled
payment, for the payment of real estate taxes, hazard insurance,
flood insurance (if applicable), earthquake insurance (if
applicable), etc.. Apartment Lender requires that impounds be
collected when the LTV, as determined by Apartment Lender ’s
Underwriting Department, is greater than 50.00%. When the LTV is
equal to or below 50.00%, the borrower(s) will be given the option
of either having Apartment Lender collect impounds or taking
the responsibility of paying the real estate taxes and insurance
premium(s) on their own. Upon any event of default, the borrower
will be required to impound real estate taxes and insurance
premiums. Apartment Lender may considering waiving the
impound requirement up to a 60% LTV if borrower(s) demonstrate an
acceptable credit history and in refinance transactions have no past
due real estate taxes reflected on title
A borrower may have certain insurance
impounds waived when an Umbrella/Master Policy is in place, provided
real estate other than the property used to collateralize the loan,
is attached to said policy.
Tax impounds may not be required when,
according to state law, taxes must be impounded and paid directly
from a municipality-controlled account.
U220.00 APARTMENT LOAN PROGRAM PAYMENT OF SETTLEMENT COSTS
There are settlement costs Borrower(s)
must prepay. These are:
A. Interest charges covering a
period after the settlement date through the end of the month in
which the apartment loan closes (“per diem” interest or “interim”
interest);
B. Real estate tax escrow
accounts, as allowed by law, depending upon the county and state of
the subject property. The amount will be determined by Apartment
Lender;
C. Hazard insurance premium for
up to one year.
There may be other costs paid by the
seller or purchaser. If costs, which are normally paid by
purchasers, are paid by the seller or by any other interested
parties such as the real estate agent or their affiliates, Apartment
Lender will consider them contributions if they exceed 3% of the
appraised value or purchase price, whichever is lower. As such, a
downward adjustment to the property’s purchase price will be made by
Apartment Lender’s Underwriting Department, which may in turn affect
the apartment loan amount.
U220.10 Contributions by
Non-Participants
Apartment Lender does not consider
contributions made by a non-participant to the apartment loan purchase transaction,
including salary advances from an employer since these represent
unsecured apartment loans.
U220.20 Excessive Contributions
A downward adjustment must be made to
the property’s purchase price to reflect the amount of any
contributions that exceed the maximum allowed. The maximum apartment
loan amount must be calculated on the lesser of the reduced purchase
price or appraisal value. Costs of any contributions in the form of
furniture, moving costs, decorating allowances or any other
“giveaways” must be deducted from the property’s purchase price.
(Also, See Section U140.30 - Seller
Contributions For Repairs). |
