MODIFIED RISK SUPPLEMENT TO DELEGATED UNDERWRITING
AND SERVICING MASTER LOSS SHARING AGREEMENT
FHA RISK SHARING (PARI PASSU LENDER / BCE)
This MODIFIED RISK SUPPLEMENT (the "Supplement") to Delegated Underwriting and Servicing Master Loss Sharing Agreement ("Loss Sharing Agreement") between Fannie Mae, a corporation organized and existing under the laws of the United States of America, and ______, a ______, (the "Lender"), which Loss Sharing Agreement was executed by Lender ______[month], _____[day], ______[year], is made by and between Fannie Mae and Lender, effective as of the date of execution by Fannie Mae.
RECITALS:
A. Fannie Mae offers a multifamily mortgage purchase product line called Delegated Underwriting and Servicing ("DUS"), under which Fannie Mae purchases multifamily mortgage loans from approved multifamily mortgage lenders that underwrite, originate, sell and service such mortgage loans.
B. Fannie Mae and Lender have previously executed and delivered the Loss Sharing Agreement, under which Fannie Mae and Lender share in any losses on Mortgage Loans purchased from Lender by Fannie Mae under DUS or as to which Lender assumed loss sharing obligations under DUS.
C. Fannie Mae and Lender have previously executed and delivered the DUS Credit Enhancement Addendum, under which Fannie Mae and Lender agreed to modify the Loss Sharing Agreement with respect to loss sharing on any mortgage loan financed by one or more issues of multifamily housing bonds (the “Bonds”) for which Fannie Mae provides credit enhancement, and with respect to which Lender is providing underwriting, mortgage servicing and other services.
D. Fannie Mae has issued a Credit Enhancement Instrument dated ______(the “Credit Enhancement Instrument”) providing for credit enhancement for the Bonds issued in connection with and funding a mortgage loan in the original principal amount of $______(the “Modified Risk Mortgage Loan”) to ______, a ______(“Borrower”), and secured by a lien on the multifamily rental housing project located in ______, known as ______.
E. The Modified Risk Mortgage Loan qualifies for FHA Risk Sharing (as provided in the Multifamily Selling and Servicing Guide).
F. Fannie Mae and Lender desire to supplement the Loss Sharing Agreement to (i) reflect that a portion of the loss on the Modified Risk Mortgage Loan (if any), in the amount of the FHA Risk Sharing Percentage (as defined below) will be borne by the U.S. Department of Housing and Urban Development, as a result of FHA Risk Sharing, and (ii) reduce the loss under the Loss Sharing Agreement to be borne by Lender with respect to the Modified Risk Mortgage Loan.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings set forth in this Supplement, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, Fannie Mae and Lender incorporate the above recitals and agree as follows:
Section 1.01. Definitions.
(a) Notwithstanding anything to the contrary in the Loss Sharing Agreement, the following definition shall apply with respect to the Modified Risk Mortgage Loan:
Facility Fee: The consideration owed to Fannie Mae for the liability Fannie Mae assumes in connection with providing the Credit Enhancement Instrument, including the credit enhancement fee and any principal reserve fund fee, but excluding the loan servicing fee.
FHA Risk Sharing Percentage: Fifty percent (50%).
(b) Capitalized terms used but not defined in this Supplement shall have the meanings assigned to them in the Loss Sharing Agreement.
Section 1.02. Loss Sharing Formula. The Loss Sharing Formula applicable to the Modified Risk Mortgage Loan shall be the Loss Sharing provisions set forth in Exhibit C to the Loss Sharing Agreement, as modified by this Supplement, in effect on the Commitment Date for the Modified Risk Mortgage Loan, notwithstanding any subsequent changes to the Loss Sharing provisions set forth in Exhibit C to the Loss Sharing Agreement (or the DUS Guide), unless agreed to in writing by Lender and Fannie Mae.
Section 1.03. Total Lender Loss. Notwithstanding Part VII, Section 102 (Limitation on Total Lender Loss) of Exhibit C to the Loss Sharing Agreement, the sum of the amounts listed in clauses (i) and (ii) of the definition of “Total Lender Loss” in Part VII, Section 101 (Total Lender Loss) of Exhibit C to the Loss Sharing Agreement with respect to the Modified Risk Mortgage Loan may never exceed the amount calculated by multiplying (a) the original principal balance of the Modified Risk Mortgage Loan by (b) the FHA Risk Sharing Percentage by (c)the Maximum Lender Loss Percentage (as set forth in Part VII, Chapter 1, Section 102 of Exhibit C to the Loss Sharing Agreement) for the Loss Level applicable to the Modified Risk Mortgage Loan.
Section 1.04. Reimbursement Base.
(a) The Reimbursement Base for the Modified Risk Mortgage Loan shall be the Reimbursement Base calculated in accordance with the provisions of Exhibit C to the Loss Sharing Agreement (but as modified by Section 1.04(b) below and utilizing the full Lender Deductible Amount, if applicable), multiplied by the FHA Risk Sharing Percentage.
(b) Sections 201(a)(ii) and (iii) of Chapter 2 of Exhibit C to the Loss Sharing Agreement are modified to read as follows:
“(ii) Delinquency Advances, actually made by the Lender and evidenced to Fannie Mae’s satisfaction, but not including amounts exceeding the 5% Amount that are returned by Fannie Mae to the Lender under any Interim Loss Sharing Adjustment made with respect to that Mortgage Loan. Such amounts include:
(A) if the transaction documents of the Modified Risk Mortgage Loan require the Borrower to make deposits to a principal reserve fund in lieu of amortizing the principal of the Modified Risk Mortgage Loan in whole or in part, the related principal reserve fund fee;
(B) the annual or other periodic continuing trust administration fee of the related bond trustee;
(C) the annual or other periodic continuing fee of the rebate analyst, if any, for its rebate calculation services for the related bonds; and
(D) all other amounts required to be included as a Delinquency Advance for the Modified Risk Mortgage Loan.
(iii) Amounts equal to the scheduled principal and interest payments on that Modified Risk Mortgage Loan calculated on and after the Date of Default excluding amounts advanced as Delinquency Advances by the Lender or paid, in whole or in part, by or on behalf of the Borrower. Such amounts include each of the following:
(A) interest payable on the related bonds and included in the interest rate in the mortgage note for the Modified Risk Mortgage Loan owed and unpaid by or on behalf of the Borrower prior to the Asset Valuation Date (not at the default interest rate);
(B) the annual or other periodic fee of the Issuer as a continuing fee for the issuance of the related bonds and the provision of the financing for the Mortgage Property, whether or not included in the interest rate of the Modified Risk Mortgage Loan; and
(C) the Facility Fee which the borrower is required to pay to Fannie Mae, whether or not included in the interest rate of the Modified Risk Mortgage Loan.”
Section 1.05. Interim Loss Sharing Adjustments. For purposes of Interim Loss Sharing Adjustments on the Modified Risk Mortgage Loan, the 5% Amount shall be multiplied by the FHA Risk Sharing Percentage. Lender may request an Interim Loss Sharing Adjustment after 5% Amount (as reduced by the FHA Risk Sharing Percentage) has been expended for Delinquency Advances, Servicing Advances and Delinquency Reduction Costs.
Section 1.06. Lender Deductible Amount. The actual Lender Deductible Amount (if applicable) for the Modified Risk Mortgage Loan is the Lender Deductible Amount set forth in Exhibit C to the Loss Sharing Agreement, multiplied by the FHA Risk Sharing Percentage. The Lender Deductible Amount is only applicable if the Modified Risk Mortgage Loan is then at Loss Level II or Loss Level III.
Section 1.07. Mortgage Loan Certificate. Lender must execute the Mortgage Loan Certificate attached to this Supplement as Exhibit A in lieu of the Mortgage Loan Certificate otherwise required by the Agreement.
IN WITNESS WHEREOF, the parties to this Supplement have caused it to be duly executed by their duly authorized officers or representatives. This Supplement shall be effective as of the date of its execution by Fannie Mae.
FANNIE MAE:
By: ______
Name:
Title:
Date:______
Address: 3900 Wisconsin Avenue, NW
Washington, DC 20016-2892
Attn:
Facsimile:
Telephone:
LENDER:
By:______
Name:
Title:
Date:______
Address: ______
______
Facsimile:
Telephone:
Fannie Mae Modified Risk Supplement Form 4575.PP.FHA.CE 07/11 (Page 1)
FHA Risk Sharing (Pari Passu Loss Sharing / BCE)
ã2011 Fannie Mae
EXHIBIT A TO MODIFIED RISK SUPPLEMENT
(FHA RISK SHARING – PARI PASSU LOSS SHARING / BCE)
MORTGAGE LOAN CERTIFICATE
(MODIFIED RISK MORTGAGE LOAN
(FHA RISK SHARING – PARI PASSU LOSS SHARING / BCE)
This Mortgage Loan Certificate (Modified Risk Mortgage Loan – FHA Risk Sharing / BCE)("Certificate") forms an integral part of the Master Loss Sharing Agreement (the "Agreement") between Fannie Mae and the Lender named below as in effect on the date of the Certificate.
This Certificate is designed to identify the Mortgage Loan described below as a Mortgage Loan to which the Agreement relates. By delivery to Fannie Mae of the Mortgage Loan identified below, the Lender agrees that the representations and warranties set forth in the Agreement with respect to Mortgage Loans shall be applicable to the Mortgage Loan described in this Certificate. Lender certifies to Fannie Mae that the following description of the Mortgage Loan is true and correct in all respects.
DESCRIPTION OF MORTGAGE LOAN
Fannie Mae Commitment/Pool Number: ______
Commitment Date: ______
Borrower: ______
Project Name: ______
Original Principal Balance: ______
Gross Note Rate: ______
Maturity Date: ______
Lender is delivering this Mortgage Loan with an initial Loss Sharing Level of I.
The Mortgage Loan described above is a Modified Risk Mortgage Loan for purposes of the Agreement.
LENDER:______
a ______
*By: ______
Printed Name: ______
Title: ______
Date:______
*Must be signed by the President or a Vice President or by a General Partner with authority to bind Lender.
Exhibit A to Fannie Mae Modified Risk Supplement
Exhibit A to Fannie Mae Modified Risk Supplement Form 4575.PP.FHA.CE 07/11 (Page A-2)
FHA Risk Sharing (Pari Passu Loss Sharing / BCE)
ã2011 Fannie Mae