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.
2.
3.
4.
Who is a Principal?
Who is a Key Principal?
Section 50 recommendation
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
Mortgagor Organizational Chart
Best Borrower, LLC
Mortgagor
100% Owner
Chiapella Enterprises, LLC
Anderson Investments, LLC
HUD Partners, LLC
Managing Member
Member
Member
10% Owner
50% Owner
40% Member
Barb Chiapella
Mary Anderson
100% Managing
Member
100% Managing
Member
Ben Metcalf
Mark Van Kirk
25% Managing Member
25% Member
Ted Toon
Dan Sullivan
25% Member
25% Member
Principal Documents
 Resumes
 HUD Forms
 2530
 92013-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 - 2013)
Top 10 Deficiencies
10. Insufficient explanation for “yes” answers
on the 92013-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.
Questions?
Comments?
Confusion?
General Contractor Documents
1.
2.
3.
4.
Resume (AIA 305)
Credit Report
Financial Statements
Joint Venture Documentation
Management Agent Documents
1. Resume
2. Management Agreement
3. HUD Forms:
a.
b.
c.
d.
e.
9832 – Management Entity Profile
9839 – Management Certification
935.2 – Affirmative Action Plan (NC/SR only)
2530
92013 – supplement