DUS UNDERWRITER’S NARRATIVE FOR SMALL LOAN PRODUCT
Lender: Date:
Lender Number:
Loan Officer:
Underwriter:
Property Inspection Date:
Lender Instructions: The DUS Underwriter’s Narrative is intended to summarize pertinent facts related to a transaction. The Lender is expected to provide detailed descriptions where necessary. The Lender should respond to all queries. If a query is not applicable, then answer “n/a.” If the answer to a query is marked with an asterisk (*) , a narrative description regarding the query must be provided. Lender should provide additional information and/or attach additional schedules as needed.
Salient Facts & Loan Features
Mortgage Identification
Commitment Number: Commitment Date:
Property Name:
Property Street Address:
City, County, State, Zip Code:
Borrower:
Key Principals: 1)
2)
3)
Other Principals: 1)
2)
Loan Information
Number of Units
Loan Amount: $ Per Unit: $
Underwriting Value: $ Per Unit: $
Appraised Value: $ Per Unit: $
Purchase Price: $ Purchase Date:
Loan-to Underwriting Value: % Loan-to-Appraised Value: %
Debt Service Coverage:
Underwriting NOI: $
Income Available for Debt Service $
Monthly Replacement Reserve Collection $
Initial Deposit to Replacement Reserve $ _________________
Completion/Repair account deposit $
Other Escrows $
Break-even $
List conditions of approval and any conditions which must be met prior to loan closing:
Structure: [ ] Cash [ ] MBS [ ] Credit Enhance.
Execution: [ ] DUS [ ] Prior Appv [ ] Other*
LIHTC [ ] Yes [ ] No If yes, % units.
Pass-Through Rate: %
Guarantee Fee: %
Servicing Fee: %
Other: %
Note Rate: %
[ ] Interest Only [ ] Fixed Rate [ ] ARM (adjustment period )
Loan term: years
Amortization: years
Yield Maint.: years
Pricing Tier:
[ ] Tier 1 [ ] Tier 2 [ ] Tier 3 [ ] Tier 4 [ ] Special*
Underwriting Tier:
[ ] Tier 1 [ ] Tier 2 [ ] Tier 3 [ ] Tier 4 [ ] Special*
Is Special Risk Category Underwriting required? [ ] Yes* [ ] No
Minimum DSC for Tier: Maximum LTV for Tier:
Loan Type: [ ] Base Loan [ ] Maximum Loan*
Loan Purpose: [ ] Refinance [ ] Acquisition [ ] New Construction
[ ] Other*
Were any waivers granted by Lender?: [ ] Yes* [ ] No
Were any waivers requested from Fannie Mae?: [ ] Yes* [ ] No
Discuss any answer checked with an asterisk (*):
Executive Summary/Risk Assessment
Property History
Briefly provide a “snapshot” description of the Property, a synopsis of when it was built, any former uses, former ownership, previous financing, etc. In addition, summarize the history of the current Borrower’s involvement with the Property including total equity investment and capital improvements made during the past three years.
• Summarize the strengths & weaknesses of the ownership entity:
• Summarize the strengths & weaknesses of the property management:
• Summarize the strengths & weaknesses of the market and submarket:
• Summarize the strengths & weaknesses of the neighborhood:
• Summarize the strengths & weaknesses of the Property’s site, physical plant and marketability describing any other favorable and/or unfavorable conditions of the Property’s site and improvements including any easement(s) that could have an adverse effect on the long term marketability of the Property:
• Describe Secondary Financing (if applicable):
• Discuss Exit Strategy:
• Discuss any special considerations not discussed elsewhere in this Narrative:
• Given all of the facts above, is this loan eligible for the proposed Tier?:
[ ] Yes [ ] No*
*Discuss
Sources and Uses of Funds
Sources:
DUS Loan: $
Secondary Financing: $
Total Financing: $
Uses:
Existing Mortgage(s) Purchase Price: $
Origination Fees: $
Closing Costs: $
Replacement Reserves: $
Completion/Repairs: $
Other: $
Cash from (to) Borrower: $
Total: (should equal Total Financing) $
I. Borrower, Key Principals, and Principals
Transaction Ownership
Ownership structure of Borrower:
| | | | |
|Name; Address; Fax; Phone; Tax ID/SSN# |Ownership Role |Structure of Ownership |Percent of |
| | | |Ownership |
| | | | |
| | | | |
| | | | |
| | | | |
Briefly describe any organizational and financial relationship between the Borrower, Key Principal and Principal(s) not evident from the above box.
| | Borrower | Key Principal | Principal |
| | | | |
|Name | | | |
| | | | |
|Organization | | | |
|Type | | | |
| | | | |
|Date formed | | | |
|Tax ID# | | | |
| | | | | | |
|Single Asset |Yes |No* |Yes |No |N/A |
|Entity | | | | | |
| | | | | | |
|Domestic |Yes |No* |Yes |No* |N/A |
|Entity | | | | | |
| | | | | | | |
|Other Fannie Mae |Yes* |No |Yes* |No |Yes* |No |
|Loans | | | | | | |
|Date of MORNET | | | |
|check | | | |
| | | | | | | |
|MORNET |Yes |No* |Yes |No* |Yes |No* |
|Acceptable | | | | | | |
| | | | |
|Date of Credit Report | | | |
| | | | | | | |
|Credit Report |Yes |No* |Yes |No* |Yes |No* |
|Acceptable | | | | | | |
|Date of Public | | | |
|Records Search | | | |
| | | | | | | |
|Any Concerns |Yes* |No |Yes* |No |Yes* |No |
* Please Explain:
Borrower Specific Information
Acceptable mortgage payment history? [ ] Yes [ ] No* [ ] N/A (Purchase)
Financial Statement of Borrowing Entity? Date of Statement:
Is the financial status acceptable ? [ ] Yes [ ] No*
Did Lender’s contact with the Bank and Trade references of the Borrowing Entity attest to and support the aforementioned statement of financial position?
[ ] Yes [ ] No
(If not please explain what steps were taken by Lender to ensure the financial stability of the Borrowing Entity)
Does the aforementioned information describe an acceptable Borrowing Entity:
[ ] Yes [ ] No*
(If not please explain what changes Lender will require of the Borrowing Entity prior to loan closing.)
Key Principal (s) Specific Information
Complete the following section for each Key Principal. ( If there’s more than one Key Principal, Lender must replicate the box.):
Name:
Indicate Net Worth and Liabilities. Date of Statement:
| | |
|ASSETS: |LIABILITIES: |
| | | | |
|Cash | |Real Estate | |
| | |Mortgagees Payable | |
| | | | |
|Marketable Securities | |Car Loans | |
| | | | |
|Non-marketable | | | |
|Securities | | | |
|Partial Interest in | | | |
|Real Estate | | | |
|Real estate owned | | | |
|Loans receivable | | | |
| | | | |
|Personal Property | | | |
| | | | |
|Cash Value-Life | | | |
|Insurance | | | |
| | | | |
| | |Total Liabilities: |$ |
| | | | |
|TOTAL ASSETS: |$ |NET WORTH: |$ |
List the Dollar value of Cash or Cash Equivalents confirmed by Lender through independent sources:
$
Did Lender’s contact with the Bank and Trade references of the Key Principal attest to and support the aforementioned statement of financial position?
[ ] Yes [ ] No*
*(If not, please explain what steps were taken by Lender to ensure the financial stability of the Key Principal)
Briefly summarize the performance and cash flow of Key Principal’s real estate holdings which are detailed on the attached Schedule “A”-Schedule of Other Real Estate Holdings”.
Are there any lawsuits? [ ] Yes* [ ] No
Are there any contingent liabilities? [ ] Yes* [ ] No
Are there any upcoming refinances? [ ] Yes* [ ] No
Does the aforementioned information describe an acceptable Key Principal for this transaction?
[ ] Yes [ ] No*
*(If not, please explain what additional information was provided to Lender to justify the acceptability of this individual as Key Principal):
Principal (s)
Complete the following for each Principal
Name:
Discuss experience and qualifications of Principal (s) including solvency, character, and past credit history with special emphasis on any experience with Lender or Fannie Mae.
II. Property Management
Management Entity Name: Mgmt. Fee Charged: % of EGI.
Are staffing and/or other services included in the fee
that would normally be paid at the property level? [ ] Yes [ ] No
Location of Main Office:
Phone# Fax#
Time Managing Subject: Total Units under Management:
If applicable, please describe the “Borrower’s, Key Principal’s, or Principal’s identity of interest with the management company.
Type of Management:
Self-managed, no on-site manager
Third party, off-site manager
On-site property manager
How well are other properties managed by management company, especially properties in the Property’s market area? List and discuss any other properties that were inspected.
Is the management entity qualified? [ ] Yes [ ] No*
Is a change in the management company contemplated?
[ ] Yes* [ ] No
*If yes, is the company qualified to adequately manage the Property?
[ ] Yes [ ] No*
Is there an acceptable management plan or are there acceptable management practices in place given the size & type of Property, and tenant population?
[ ] Yes [ ] No*
Leases
Lease terms less than six months? [ ] Yes* [ ] No
Corporate/Furnished Leases? [ ] Yes* [ ] No
Section 8/HAP Contract? [ ] Yes* [ ] No
Commercial Space? [ ] Yes* [ ] No
Rent/Occupancy Restrictions? [ ] Yes* [ ] No
Discuss any answer checked with an asterisk (*):
Were at least ten percent of the leases reviewed by Lender during the site inspection (twenty-percent for properties with less than 100 units)?
[ ] Yes [ ] No*
(If not please explain)
List salaries and benefits of on-site management and staff:
| | | | |BENEFITS incl. FREE or REDUCED RENTS |
|EMPLOYEE |POSITION |FT/PT |SALARY | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Rate the adequacy of the property management staff:
Weak Adequate Strong
1.0 2.0 3.0 4.0 5.0
| | | | | |
If rated 2 or less, discuss.
Are changes in management staffing planned? [ ] Yes * [ ] No
If yes, discuss the effect on the marketability & operation of the Property:
If the Property shares expenses or staff costs with other properties or has expenses or staff costs that are absorbed by the management company, rate the impact of a change in management company.
Large Impact Moderate Impact No Impact
1.0 2.0 3.0 4.0 5.0
| | | | | |
If rated 2 or less, discuss.
III. Market Description
City Population:
MSA Population:
Assess the current economic strength of the market and submarket. Consider unemployment vs. the national average, evidence of employers expanding or relocating into or out of the region and infrastructure.
Stagnant Moderate Robust
Economic strength of: 1.0 2.0 3.0 4.0 5.0
| | | | | |
Market
| | | | | |
Submarket
Describe if 2 or less.
Indicate your forecast for the economy over the next 3 to 5 years.
Stagnant Moderate Robust
Projected economic strength of: 1.0 2.0 3.0 4.0 5.0
| | | | | |
Market
| | | | | |
Submarket
Describe if 2 or less.
Assess the diversification of the local employment base. Consider the strengths and stability of dominant employers, e.g., military base vs. Fortune 500 headquarters.
Volatile Neutral Very Stable
Diversification of employment base: 1.0 2.0 3.0 4.0 5.0
| | | | | |
Market
| | | | | |
Submarket
Describe if 2 or less.
Assess the potential for an adverse employment shift (e.g., troop deployment, summer breaks, plant idlings, seasonal employment, etc.) and its impact on the subject.
High Medium Low
Subject Property demand volatility: 1.0 2.0 3.0 4.0 5.0
| | | | | |
Market
| | | | | |
Submarket
Describe if 2 or less.
Assess the supply of competitive units in the submarket, plus units that are currently under construction which will come on line in the near future.
Large Amount of Supply Very Little Supply
Current supply of competitive units: 1.0 2.0 3.0 4.0 5.0
| | | | | |
Describe if rating is 2 or less.
Assess the likelihood of future development of competitive product in the submarket. Take into account current supply of competitive units, zoning restrictions, availability of suitable land, and the highest and best uses.
Highly Unlikely Very Likely
Development of competitive units: 1.0 2.0 3.0 4.0 5.0
| | | | | |
Describe if 4 or more.
Given the economic strength and supply including alternative housing opportunities (i.e. single family homeownership programs, manufactured housing, etc) and demand factors in the market and submarket, what is your opinion of the trend for vacancy rates over the next several years?
Significantly higher than... About the same as… Significantly lower than…
Projected submarket vacancy rates 1.0 2.0 3.0 4.0 5.0
will be
| | | | | |
Describe if rating is 2 or less.
Any other market issues or concerns? [ ] Yes* [ ] No
Tenant Profile
% Student % Military % Family % Elderly % Other
Does Property market to a specific tenant type? [ ] Yes * [ ] No
If yes, discuss.
Neighborhood Data
Neighborhood is:
%Single family %Condominium %Apartments %Commercial % Industrial
%Vacant Land %Other:
Describe the composition of the neighborhood and its position and stability in the submarket, including any negative influences or economic obsolescence:
Describe surrounding/adjacent uses and zoning (if vacant):
Assess the proximity of the Property to local demand generators. Consider: local schools, retail centers, employers, and public transportation. Consider how these demand generators affect the Subject, such as whether nearby schools are less important if the tenants are “empty nesters,” etc.
Poor Average Excellent
Proximity to demand generators: 1.0 2.0 3.0 4.0 5.0
| | | | | |
Describe if rating is 2 or less:
Rate the overall desirability of the Subject’s location compared to other properties competing for the same tenant base.
Inferior to Comparable to Superior to
Subject desirability is… 1.0 2.0 3.0 4.0 5.0
| | | | | |
Describe if rating is 2 or less:
IV. Site Improvements and Marketability
Site
Site Data Acres Units Per Acre
Contiguous parcels? [ ] Yes [ ] No*
Phased Property? [ ] Yes* [ ] No
Flood Zone? [ ] Yes * [ ] No
Area prone to seismic activity? [ ] Yes* [ ] No
Area prone to sinkhole or mine subsidence? [ ] Yes * [ ] No
If newly completed, was soils report obtained? [ ] Yes [ ] No*
Ground lease? [ ] Yes* [ ] No
Any unusual site features? [ ] Yes * [ ] No
Discuss any answer checked with asterisk(*):
Describe topography, landscaping, access, visibility, ingress and egress:
Any unusual topography? [ ] Yes* [ ] No
Adequate landscaping? [ ] Yes [ ] No*
Evaluate the overall accessibility of the Subject. Consider traffic signals, curb cuts, and ease of access.
Poor Average Excellent
Accessibility: 1.0 2.0 3.0 4.0 5.0
| | | | | |
Describe if rating is 2 or less:
Adequately visible? [ ] Yes [ ] No*
Adequate signage? [ ] Yes [ ] No*
Are there any distinguishable and/or unfavorable site conditions?
[ ] Yes * [ ] No
Do the improvements represent a legal/conforming use?
[ ] Yes [ ] No*
If non-conforming, has a letter of rebuilding ability been obtained?
[ ] Yes [ ] No*
If yes, what % of units can be rebuilt? %
Site Utilities and Services
Gas Telephone Trash Removal Private Well* Sewer Trans.
Station*
Electricity Public Water Public Sewer Septic System*
Oil Cable Television Storm System Private Sewer*
Discuss any item checked with an asterisk (*):
Improvements and Marketability
Property Type: [ ] Garden [ ] Mid-Rise [ ] High-Rise [ ] Twnhse [ ] Other
No. of Bldg: No. of Floors: No. of Units: No. of Elevators:
Year Built: Gross Building Area: SF Net Rentable Area: SF
Commercial Area: SF Type:
Parking Spaces: Open: Carport: Garage:
Total Parking Spaces: Per Unit: Per Bedroom:
Storage Closets/Storage Space: [ ] Yes [ ] No*
Certificates of Occupancy obtained? [ ] Yes [ ] No*
If no, discuss:
Type of construction:
Assess the Subject’s floor plan. Consider the overall design and layout of rooms, room size, and overall functionality.
Poor Average Excellent
Floor Plan: 1.0 2.0 3.0 4.0 5.0
| | | | | |
Describe if rating is 2 or less:
Rate the appeal, design and ease of maintenance of the common areas:
Poor Average Excellent
1.0 2.0 3.0 4.0 5.0
| | | | | |
Describe if rating is 2 or less:
Commercial space? [ ] Yes * [ ] No
If yes, describe:
Overall appeal and marketability relative to the competition:
Inferior Comparable Superior
1.0 2.0 3.0 4.0 5.0
| | | | | |
Describe if rating is 2 or less:
Appliances
Oven/Range: Gas Elec No. of Units
Refrigerator: Frost Free? [ ] Yes [ ] No
No. of Units
Dishwasher: No. of Units
Disposal: No. of Units
Microwave: No. of Units
Washer/Dryer: Stack Full sized No. of Units
Unit Amenities
[ ] W & D Hook-ups [ ] Drapes [ ] Mini Blinds [ ] Overhead Fans
[ ] Trash Compactor [ ] Lofts [ ] Vaulted Ceiling [ ] Fireplaces
[ ] Balcony/Patio [ ] Storage [ ] [ ]
Rate the adequacy of the Property’s unit amenities in relation to competing properties:
Inferior Comparable Superior
1.0 2.0 3.0 4.0 5.0
| | | | | |
Describe if rating is 2 or less:
Unit Utilities and Services
Heat Type: Fuel: [ ] Owner Pays [ ] Tenant Pays
A/C Type: Fuel: [ ] Owner Pays [ ] Tenant Pays
Hot Water Type: Fuel: [ ] Owner Pays [ ] Tenant Pays
Cooking: Fuel: [ ] Owner Pays [ ] Tenant Pays
Domestic Electrical: [ ] Owner Pays [ ] Tenant Pays
Water/Sewer: [ ] Owner Pays [ ] Tenant Pays
Cable Television: [ ] Owner Pays [ ] Tenant Pays
If unit Heat and/or A/C are from central source, describe type and condition:
Tenant paid utilities are: [ ] Individually Metered [ ] Mastered Metered
If tenant pays utilities, is this practice common in the market?
[ ] Yes [ ] No*
Electrical Service Unit: Amps:
Is electrical capacity to the units adequate? [ ] Yes [ ] No*
Is the unit fuse panel in the form of circuit breakers? [ ] Yes [ ] No*
Is wiring from unit fuse panel to receptacles aluminum:?
[ ] Yes * [ ] No
Discuss any answer checked with an asterisk (*):
Common Area Utilities and Services
Heat: Type: [ ] Individual [ ] Central
Fuel: [ ] Electric [ ] Gas [ ] Oil
A/C: Type: [ ] Individual [ ] Central
Fuel: [ ] Electric [ ] Gas
Security Features
[ ] Guarded Gate [ ] Perimeter Fence [ ] Security Patrol
[ ] Unit Activated Entrance [ ] Panic Button [ ] Other
Are the security features adequate for the area and Property’s Tenant profile? [ ] Yes [ ] No*
Unit Mix
|No. of Units |No. of Bedrooms |% |No. of Baths |Size (SQ.FT) |Underwritten |
| | | | | |Rent/Mo |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Are there any unfavorable aspects of the unit mix as it relates to the competition and Property’s marketability?
[ ] Yes* [ ] No
Common Amenities
[ ] Indoor Pool [ ] Outdoor Pool [ ] Sauna/Jacuzzi
[ ] Tennis Courts [ ] Club House [ ] Fitness Center
[ ] Playground [ ] Car Wash Area [ ] Laundry Facilities
[ ] Other
Rate Property amenities relative to competing properties:
Inferior Comparable Superior
1.0 2.0 3.0 4.0 5.0
| | | | | |
Describe if rating is 2 or less:
V. Physical Needs Assessment (PNA)
Company: Date of Report:
Term covered by Report:
Does evaluator meet the requirements of the DUS Guide:
[ ] Yes [ ] No*
Are all Property components accounted for in the PNA:
[ ] Yes [ ] No*
Is the Effective Remaining Life for each component based on the minimum Effective Useful Life Table in the DUS Guide: [ ] Yes [ ] No*
List the inflation factor used. %
Is this the correct inflation factor: [ ] Yes [ ] No*
Were any adjustments made to the PNA by the Lender:
[ ] Yes* [ ] No
Discuss any answer checked with an asterisk (*):
Lender will collect a deposit of $ for the immediate repairs noted by the evaluator which are listed in detail in the attached Schedule “B”. This represents an amount equal to % estimated cost/ % of contract cost.
State time frame for repairs.
Is the Replacement Reserve funding outlined in the attached Schedule “B” adequate to cover the cost of future capital improvements as estimated by the evaluator? [ ] Yes [ ] No*
Initial Deposit Amount $ Per Unit $
Annual Funding Amount $ Per Unit $
Did Lender find the PNA completed by the evaluator to be acceptable and in conformance with Lender’s and Fannie Mae’s Guidelines? [ ] Yes [ ] No*
Does Lender have any concerns about the physical condition of the Property which are not addressed in the PNA?
[ ] Yes* [ ] No
Discuss any answer marked with an asterisk (*):
Will collection of the Replacement Reserves be waived?
[ ] Yes* [ ] No
If YES, discuss and justify decision with special emphasis for “cash out” transactions:
VII. Environmental Site Assessment
Company: Date of Report:
Did the Environmental Site Assessment address all areas required by the ASTM E-1528 plus Phase 1 for Lead-based paint & Asbestos?
[ ] Yes [ ] No*
If no, discuss.
Were the results of the Environmental Assessment acceptable?
[ ] Yes [ ] No*
Identify hazards and O & M or other means of enforcing corrections:
Are there any other concerns, special considerations and/or conditions regarding the Environmental Report?
[ ] Yes* [ ] No
VIII. Appraisal
Name of Appraiser: Date of Valuation:
Location:
Is the Appraiser certified to do business within the State?
[ ] Yes [ ] No*
Certified Rent Roll certified by Borrower included? [ ] Yes [ ] No*
Original Op. Statements certified by Borrower included?
[ ] Yes [ ] No*
Property Legal Description included? [ ] Yes [ ] No*
Commercial Lease Analysis included? [ ] Yes [ ] No* [ ] N/A
Ground Lease Analysis included? [ ] Yes [ ] No* [ ] N/A
Reciprocal Use Agreements included? [ ] Yes [ ] No* [ ] N/A
Property Photographs included? [ ] Yes [ ] No*
Comparable Photographs included? [ ] Yes [ ] No*
Property Maps included? [ ] Yes [ ] No*
Sales Contract included? [ ] Yes [ ] No* [ ] N/A
Documentation relating to Rent Restrictions included?
[ ] Yes [ ] No* [ ] N/A
Documentation relating to Special Restrictions included?
[ ] Yes [ ] No* [ ] N/A
Statement of Qualifications included? [ ] Yes [ ] No*
Other Special Instructions included? [ ] Yes [ ] No*
Discuss and explain any item checked with an asterisk (*):
Was the appraiser furnished with Part III, Chapter 5 of the DUS Guide with instructions to pay particular attention to Section 507.15?
[ ] Yes [ ] No*
If no, discuss:
Market Valuation
Is the Appraiser’s approach/methodology to market valuation in conformance with accepted appraisal standards?
[ ] Yes [ ] No*
Are the sales comparables appropriate? [ ] Yes [ ] No*
If applicable, are the adjustments made by the Appraiser appropriate?
[ ] Yes [ ] No*
Value Reconciliation – Market Approach:
|Value Computation Method | Adjusted Range | Subject’s Variable | Indicated Value |
|Gross Income Multiplier | | | |
|Value Per Unit | | | |
|Value Per Square Foot | | | |
The Appraiser’s conclusion of value by the Market Approach is $
Income Approach
Rent Comparables and Income Derivation:
At least three (3) rental comparables provided: [ ] Yes [ ] No*
Rental comparables adjusted for dissimilarities: [ ] Yes [ ] No*
Please discuss any answer checked with an asterisk (*)
Are the Appraiser’s derived economic Rents acceptable based upon market conditions?
[ ] Yes [ ] No*
What is the percentage difference between the current scheduled rents at the Property and the Appraiser’s economic rents? % (If greater than 5% difference please explain why and support the use of the Appraiser’s economic rents.)
Do the Appraiser’s economic rents reflect recent trends at the Property and in the submarket?
[ ] Yes [ ] No*
If no, discuss:
Concessions accounted for by Appraiser? [ ] Yes [ ] No* [ ] N/A
Premium Income accounted for Appraiser? [ ] Yes [ ] No* [ ] N/A
Other income projected correctly? [ ] Yes [ ] No* [ ] N/A
Commercial income projected correctly? [ ] Yes [ ] No* [ ] N/A
Discuss answer checked with an asterisk (*)
Expense Data
Expenses analyzed on line-item basis? [ ] Yes [ ] No*
Expenses trended appropriately? [ ] Yes [ ] No*
Expenses supported by comparable property data? [ ] Yes [ ] No*
Are the Replacement Reserves appropriate? [ ] Yes [ ] No*
Please discuss any answer checked with an asterisk (*)
Are the Appraiser’s expenses (excluding Replacement Reserves and capital improvements) higher than prior years?
[ ] Yes [ ] No*
If no discuss:
If applicable, has the appraiser included the cost of any special assessments, flood insurance, O&M program(s) or other non-standard expenses in the calculations:
[ ] Yes [ ] No*
If no, discuss:
Vacancy / Bad Debt / Concessions
Used appropriate Vacancy/ Bad Dept/ Concessions factors for Property size & market condition of 5% or greater?
[ ] Yes [ ] No*
Vacancy forecast lower than the market? [ ] Yes* [ ] No
Vacancy forecast lower than Property’s history? [ ] Yes* [ ] No
Discuss answer checked with an asterisk (*)
Did the Appraiser note any trends that could affect vacancy / bad debt/concessions of the Property in the near future?
[ ] Yes* [ ] No
The Appraiser’s conclusion of value by the Income Approach is $
Valuation
Capitalization rate reconciled with market sales? [ ] Yes [ ] No*
What is the range of the cap rates for the comparables? % - %
What cap rate was used by the Appraiser in the Income Approach to value? %
Is the cap rate appropriate? [ ] Yes [ ] No*
Reconciled with Band of Investment Method? [ ] Yes [ ] No*
Discuss answer checked with an asterisk (*)
Did the appraiser make any adjustments to the capitalization rate relative to special financing, tax credit benefits, or restrictive covenants?
[ ] Yes* [ ] No
If yes, discuss:
|Valuation Method |Value |
|Market Approach |$ |
|Income Approach |$ |
|Final Value |$ |
Conclusions
Final Reconciliation reasonable? [ ] Yes [ ] No*
Any non-standard Limiting Conditions? [ ] Yes* [ ] No
Property inspected by Appraiser? [ ] Yes [ ] No*
Appraiser experienced in the Property’s market? [ ] Yes [ ] No*
Overall quality of Appraisal acceptable? [ ] Yes [ ] No*
Appraisal fully reviewed by Lender? [ ] Yes [ ] No*
Adjustments requested by Lender? [ ] Yes* [ ] No
Please discuss any answer checked with an asterisk (*)
Has the Property been the subject of a sale in the past three years?
[ ] Yes* [ ] No
If yes, did the Appraiser adequately justify any increase or decrease in value since the sale?
[ ] Yes [ ] No*
If no, discuss:
Lender’s Conclusions on Appraisal
Appraised Value: Cap Rate: %
Appraised Value (Restricted LIHTC or TAH):
Lender’s Underwriting Value: Lender’s Cap Rate: %
Lender’s Underwriting Value (Restricted LIHTC or TAH):
Did the Underwriter’s value differ from the Appraiser’s?
[ ] Yes* [ ] No
If yes, justify:
Are there any other concerns and/or special considerations with the Appraisal?
[ ] Yes* [ ] No
IX. Financial Analysis and Loan Calculations
(Attach Schedule “C”-Small Loan Underwriting Analysis Spreadsheet)
Were two full year’s and current year-to-date Property financial statements made available to Appraiser?
[ ] Yes [ ] No*
Were the Property financial statements made available to Lender certified true and correct as well as fully complying with the requirements of Part III, Chapter 6, Section 605.01 of the DUS Guide?
[ ] Yes [ ] No*
Did the aforementioned Property financial statements contain enough detail to allow Lender to rely upon them for making assumptions about future Property performance?
[ ] Yes [ ] No*
Discuss any answer marked with an asterisk(*):
Were any items deducted from operating statement(s) in Lender’s Analysis?
[ ] Yes* [ ] No
Rents at the Property are: [ ] Increasing [ ] Stable [ ] Decreasing
Rents in the Market are: [ ] Increasing [ ] Stable [ ] Decreasing
Describe how the Appraiser determined rent trends:
State the method for determining the GPI:
Annualization of Rent Roll Rent Rolling Method Rent Trending
(Attach Schedule “E” – Rent Roll Turnover Analysis)
Were any adjustments made relative to any rental premiums?
[ ] Yes* [ ] No
Compare Underwriter’s GPI to that of previous three years if available.
Vacancy / Bad Debt / Concessions (attach Schedule “F”-Historical Vacancy Report)
Physical Vacancy-Market: Appraiser % Lender survey % Date:
Physical Vacancy-Subject: Appraiser % Cert. Rent Roll % Date:
Economic Vacancy: Appraiser % Year-to-date: %
Prior Year % Underwriting %
Provide justification for the Economic Vacancy Factor (vacancy plus Bad Debt and Concessions) used in the underwriting:
Provide justification for the Net Rental Income (Gross Potential less Economic Vacancy) by comparing the underwriting to prior three years collections:
Other Income
Commercial Income
If applicable, discuss Lender’s projection of commercial income, including lease analysis, vacancy factor used, and comparison to previous three years historical income.
Laundry
If applicable, discuss Lender’s projection of laundry income, including a comparison to previous three years historical income. If leased, describe fee-sharing arrangement.
Parking
If applicable, discuss Lender’s projection of parking income, including lease analysis, vacancy factor used, and comparison to previous three years historical income.
Ancillary Income
Provide justification for the Lender’s Other Income projections:
Expense Section
Discuss and provide justification for each expense category underwriting estimate. Compare to prior years, year-to-date annualized (if applicable), appraiser’s and owner’s budget figures:
1. Management: $ $ /Unit Management Fee %
| 1995 | 1996 | 1997 | YTD 1998 | Budget | Appraiser |
| | | | | | |
Support underwriting estimate for Management category:
2. Administration: $ $ /Unit
| 1995 | 1996 | 1997 | YTD 1998 | Budget | Appraiser |
| | | | | | |
Support underwriting estimate for Administration category:
This category includes:
3. Payroll: $ $ /Unit
| 1995 | 1996 | 1997 | YTD 1998 | Budget | Appraiser |
| | | | | | |
Support underwriting estimate for Payroll category:
This category includes:
4. Utilities: $ $ /Unit
| 1995 | 1996 | 1997 | YTD 1998 | Budget | Appraiser |
| | | | | | |
Were various utility providers contacted? [ ] Yes [ ] No
Underwritten at % over prior year.
Support underwriting estimate for Utilities category:
This category includes:
5. Water & Sewer: $ $ /Unit
| 1995 | 1996 | 1997 | YTD 1998 | Budget | Appraiser |
| | | | | | |
Was the water and sewer authority contacted? [ ] Yes [ ] No
Underwritten at % over prior year.
Support underwriting estimate for Water and Sewer category:
This category includes:
6. Repair & Maintenance $ $ /Unit
| 1995 | 1996 | 1997 | YTD 1998 | Budget | Appraiser |
| | | | | | |
Support underwriting estimate for Repair and Maintenance category:
This category includes:
7. Insurance: $ $ /Unit
| 1995 | 1996 | 1997 | YTD 1998 | Budget | Appraiser |
| | | | | | |
Support underwriting estimate for Insurance category:
This category includes:
8. Real Estate Taxes: $ $ /Unit
| 1995 | 1996 | 1997 | YTD 1998 | Budget | Appraiser |
| | | | | | |
Was the local taxing authority contacted?
[ ] Yes [ ] No*
If no, explain:
Does tax estimate reflect any increase in Property Value?
[ ] Yes [ ] No
Support underwriting estimate for Real Estate Tax Category.
9. Total Expenses: $ $ /Unit
| 1995 | 1996 | 1997 | YTD 1998 | Budget | Appraiser |
| | | | | | |
Have all service contracts been obtained and reviewed? [ ] Yes [ ] No*
If no, discuss:
Is Property managed on a stand-alone basis [ ] Yes [ ] No
If no, describe impact on expenses:
Does the Lender have other loans on comparable sized properties in this market area?
[ ] Yes [ ] No
If YES, are the underwritten rents, vacancy and expense projections for this Property comparable to the Lender’s experience with portfolio loans?
[ ] Yes [ ] No
If no, how did the Lender make the determination for any of the foregoing categories where the underwriting conclusion differed from the portfolio information?
X. Approval
Transaction Approval by Loan Committee:
[ ] Yes [ ] No
Loan Committee Final Approval Date:
Acknowledgements:
Chief Underwriter Date
Chief Loan Officer Date
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