Transitioning to the Multifamily Loan and Security Agreement on September 1
August 25, 2011
Earlier this month, we posted the final versions of our Multifamily Loan and Security Agreement (loan agreement) for the Capital Markets ExecutionSM (CME), Portfolio, and Seniors Housing products for your review. We also posted the updated notes, security instruments, and guaranties that work with the new loan agreement. In addition, we introduced a large number of riders, which provide a standard and efficient way to modify the loan documents and allow you to preview these requirements with your borrower.
As a reminder, we will require the use of the new documents on loans for which the corresponding commitment is issued or an Early Rate Lock application is submitted on or after September 1, 2011.
The loan agreement is an unrecorded document, and it consolidates the bulk of the financial/business terms from several other documents. Other benefits of using of the loan agreement include:
- Maintaining borrower privacy of financial terms and conditions.
- Eliminating several ancillary documents by consolidating them into the loan agreement.
- Allowing for corrections without the need to re-record the Loan Agreement and obtain costly title insurance updates.
- Reducing the size of the recorded security instrument.
To further assist you in the transition to the loan agreement, we’ve prepared Benefits of the Loan Agreement to explain how the loan agreement is beneficial to your borrowers. There are also training materials available for download.
Over the past months, we appreciated the feedback from you and your legal counsel to finalize all these documents. We recommend that you familiarize yourself with the new documents in preparation for the September 1 effective date. During the transition period, please contact your legal counsel with any questions.