Presentation on theme: "Mortgage Credit Panel Discussion 2014 Midwest Lenders Conference Chicago, Illinois * June 16-18, 2014 Moderator: Rick Sherman, Berkadia Panelists:Kelly."— Presentation transcript:
Mortgage Credit Panel Discussion 2014 Midwest Lenders Conference Chicago, Illinois * June 16-18, 2014 Moderator: Rick Sherman, Berkadia Panelists:Kelly Allen, Detroit HUD Rebecca Barber, Detroit HUD Marie Sherwood, Detroit HUD Charley Gardner, Oak Grove Capital
Organization Structure 1.Who is a Principal? 2.Who is a Key Principal? 3.Section 50 recommendation 4.Other Considerations: Non-profit Borrower Non-Principal individual with control of a Principal entity
Levels of Review 1.Principal versus Key Principal 2.Entity versus Individual 3.New Construction/Sub-Rehabilitation versus Refinance/Purchase 4.Large Loan Risk Mitigation Policies
Best Borrower, LLC Mortgagor 100% Owner Chiapella Enterprises, LLC Managing Member 10% Owner Barb Chiapella 100% Managing Member Anderson Investments, LLC Member 50% Owner Mary Anderson 100% Managing Member HUD Partners, LLC Member 40% Member Ben Metcalf 25% Managing Member Mark Van Kirk 25% Member Ted Toon 25% Member Dan Sullivan 25% Member Mortgagor Organizational Chart
Principal Documents Resumes HUD Forms 2530 Supp Fannie Mae Form 1006 (Request for VOD) Trade/Credit References Financial Statements REO/Debt Schedule (KP only) Credit Reports Listing of Business Concerns OFAC Sponsors’ Continuing Commitment (NC/SR only)
(Chicago Multifamily Hub )
Top 10 Deficiencies 10.Insufficient explanation for “yes” answers on the Supp. 9.No evidence of funds to meet cash requirements (VODs). 8.Development team with inadequate industry/HUD experience.
Top 10 Deficiencies, Cont. 7.Inadequate analysis of Sponsor/Principal troubled assets and/or properties maturing in 5 years. 6.No mortgage credit review for Passive Investors. 5.Not providing CPA-reviewed financial statements.
Top 10 Deficiencies, Cont. 4.Occupancy and NOI underwritten higher than historical operations. 3.Cash-out requests with aggressive cap rate, inadequate repairs, and inadequate funding of the replacement reserve. 2.Not identifying correct Section 50 signatory.
1.Failure to identify correct Principals for Mortgage Credit review.