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Best Practices for Submitting a Complete Loan Package to Freddie Mac

October 12, 2012

2012 has been an exceptionally busy year for business, and the strong market and demand only underscore the need and focus on efficiency. Efficiency during the underwriting process is based on the quality of your packages.

Freddie Mac Multifamily volume has increased nearly 110% in two years, from $9.1 billion in the first half of 2010 to $19.3 billion in through July of 2012. 

Taking into consideration this increased volume, we ask for your focus on the following needs during the quote and underwriting process:

  • Communicate early and often
  • Increase transparency
  • Understand borrower’s unique considerations of property, market & location
  • Provide and request full explanation of cash flow reports/analysis
  • Provide borrower with clear and concise direction on what is needed for quote
  • Use and recommend the online package narrative and underwriting resources
  • Reach out to producers and underwriters as first line of defense

Top Ten Priorities for Forms 1113 and 1116

Freddie Mac underwriters have identified Form 1113 and 1116 as two of the main documents that are often incomplete or problematic. The top ten things to remember when filling these out include:

  1. Do not handwrite any of the material
  2. Dollars and dates are very important – provide a chronological story
  3. Detail why something is no longer a concern for any outstanding debts
  4. Submit an accurate PDF (make sure it matches all numbers on the forms)
  5. Detail impending maturities 12-18 months out
  6. Reveal upfront whether borrower intends to sell the property
  7. Provide dates of all gathered data
  8. Do not submit credit reports that are more than 60-days old
  9. Provide complete story of any existing underperforming properties
  10. Be sure to include the original Excel Workbook for comparison of all numbers

Top Nine Specific Items That Slow Down Deals

Nine specific items that present challenges to the efficient processing of your loan and things you need to know or can do to avoid delays:

  1. Multiple Pricing Scenarios
    • Focus on high priority structure
    • Know borrower’s needs
    • Request them up-front
    • Take under consideration that these will slow down the quote process
  2. Flex Menu Adders
    • Identify items as early as possible
    • If repeat Borrower, give name and city or loan number from last deal, so we can reference adders
  3. Buyups
    • Make the request at quote (as early in the process as possible) This affects the competitiveness of the deal and how we price net spread
    • If changes, request and highlight when submitting underwriting package Late changes require repricing,may affect net spread and rate lock timing, and appears as a retrade to the Borrower
    • Combined origination fee and buyup cannot exceed 1.5% We may make an exception only if fully supported
  4. Caveats in Quote
    • Include these in your application to the borrower
    • Address these when submitting underwriting package Provide any schedules or additional information. Any variance from initial assumptions may result in change to underwriting terms and/or parameters.
  5. Mortgage Transaction NarrativeAnalysis (MTNA)
    • Use the sample language in the MTNA Best Practices document as reference
    • Avoid simply filling in blanks
    • Elaborate on all analysis performed during your loan review
    • Mitigate all identified risks
    • A good narrative anticipates our concerns proactively
  6. Document Modifications
    • Review documentation modification requests with your counsel Submit to the applicable regional attorney only modifications that you recommend, are critical to Borrower and are likely to be approved.
    • Submit in Microsoft Word, and if modifying an existing provision, the entire provision must be restated with requested changes highlighted
    • Submit in a timely fashion May impact level of review and agreed-upon language will be included in the Commitment
  7. LST Updates
    • Update all sections/tabs in LST from Quote prior to submission to Underwriting
    • Confirm loan terms are consistent with those in the executed application
    • Borrower, Property, Rent Roll, Collections and I&E tabs all require up dates based on new information
    • Reconcile historical operating statements in the Document ManagementSystem (DMS) to the I&E tab of the LST
  8. Insurance Form 1133
    • Confirm policy compliance at Early Rate-Lock
    • Critical piece of information that affects: pro forma building, timing of approval and potential document modifications
    • Exception – Flex Menu items could require review outside of Region
    • Refer to Chapter 31 of the Guide
  9. Post Commitment - Securitization Tasks
    • Deal Designations
    • 100-Day Securitization Calendar
    • Due Diligence Requests
    • Site Inspection Process

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