TAH Workshop - Best Practices - Freddie Mac · Best Practices from TAH Prescreen, Underwriting & Commitment 2018 Targeted Affordable Housing Seller Workshop June 7, 2018

Best Practices from TAH

Prescreen, Underwriting & Commitment

2018 Targeted Affordable Housing Seller Workshop

June 7, 2018

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Obtaining a Quote and Receiving Prescreen Approval

Production Process

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Prescreen Process

TAH Seller Workshop - Best Practices 3

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▪ Production circulates to Seller

indicative pricing via the

preliminary quote form (loan

sizing purposes only), subject to

prescreen approval and final

underwriting

▪ Seller submits LST with rent roll

populated to confirm VLI units (via

email) and whether loan is

Capped or Uncapped

Step 1: Prepare Preliminary Quote Form


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▪ Seller submits Prescreen Narrative,

photos/maps, Refinance Test (if applicable),

and any additional due diligence items

available for the prescreen hard quote

package

▪ Sellers required to upload LST to OUS

along with the prescreen package to

generate loan numbers for Production

Pipeline Management system

Step 2: Submit Prescreen Package


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▪ Production completes initial review of due

diligence items from the Seller and

transmits via email: transaction summary,

market information, sponsorship analysis,

risk and mitigants, credit exceptions and

approval recommendations

Step 3: Analyze Submission


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▪ Underwriting reviews prescreen

recommendations submitted via email by

Production and responds with approval, denial,

or conditional approval within 48-72 business

hours (larger or more complex transactions

may require additional approvals)

Step 4: Review Prescreen

Review Pre-screen and Conditional

Approval


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▪ Production finalizes pricing in Production

Pricing Manager, prepares the corresponding

Quote Memo approval form with terms and

conditions for final underwriting

Step 5: Prepare Prescreen Approval Memo

Prepare Pre-screen Approval Memo


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Underwriting and Commitment

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▪ How to ensure you get your deal

done in an efficient and timely

fashion

Key Takeaways


https://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=2ahUKEwiZhfHXxsbaAhUNMd8KHZkCCHcQjRx6BAgAEAU&url=https://mf.freddiemac.com/product/tah.html&psig=AOvVaw2FSZU0YLfA4AbB-bXK9KfP&ust=1524234647784493

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Best Practices

…to ensure a more efficient underwriting process




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▪ The most important thing to ensure a good start

Best Practices, continued


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▪ Just 12 little items…upfront

▪ That is all we need to start

Package Submission


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▪ Guarantor financial statements

▪ Current Rent Roll

▪ PLIMs

▪ Org chart

▪ Credit exceptions

▪ 1115s for Borrower Principals

▪ Narrative

▪ LST

▪ Appraisal

▪ Engineering Report

▪ Environmental Report

▪ Property financial statements

Package Submission, continued


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▪ Narrative

» Use narrative template

» Outline changes from prescreen to final UW

» Include any exceptions and mitigants

▪ Name and address should be the same on all documents

▪ 1116 REO Form – Comment on usual issues (i.e., low DCRs and high

LTVs

Package Submission, continued


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▪ Let us know when docs are uploaded

▪ Please label properly

▪ Titles are helpful (especially if more than one of the

same type)

▪ Items are not considered ‘in’ until uploaded

▪ PLIMs and legal analyses also must be sent

directly to in-house legal counsel

▪ Executed Commitments must be uploaded prior to

rate-lock

DMS Uploads


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▪ 2 weeks - full submission package to draft

Commitment for a cash deal (generally)

▪ 3 weeks for a bond/TEL

▪ Average network timing = 16.1 days

▪ Timing starts with submittal of all 12 initial items

▪ Major changes during UW requires an

additional review… will add to timeline

Timing


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▪ Kick-off call to discuss the transaction

▪ Interim call to discuss issues

▪ Commitment call to ensure legal issues vetted

Three Calls


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▪ Lead time on inspections

▪ Contact information in your signature

▪ Strong cash flow footnotes

▪ Correct Seller/Servicer numbers

▪ Correct tax ID numbers

▪ Pricing expiration – need email with why

extension is needed and the anticipated rate-

lock date

▪ Commitment edits should be consolidated

into one in a “tracked-changes” format

Helpful Hints to Keep Us Happy


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▪ Inputs should reflect final underwriting

» Always run it after NOI, Value, and loan terms finalized

▪ Choose the correct market

» If non-MSA choose appropriate Regional “other”

» If doing anything else, document correct result and explain as an exception

▪ Supplemental loan inputs

» Use current UPB, remaining term, amortization and IO period for 1st mortgage

inputs

▪ Floating vs. fixed

Refinance Test


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▪ Focus on market input (drives all assumptions, do not use constant

growth rate)

Refinance Test, continued


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▪ Supplementals (all information will need to be put in manually)



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▪ Focus on market input (drives all assumptions)



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▪ Floating▪ Fixed



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▪ Please try to avoid

▪ May affect pricing / timing

▪ Examples

» Borrower structure / org charts

» Doc mods

» Insurance submittal / waivers

» Engineering Reports

» LP review of legal docs

Last Minute Material Changes


Documents

TAH Workshop - Best Practices - Freddie Mac · Best Practices from TAH Prescreen, Underwriting & Commitment 2018 Targeted Affordable Housing Seller Workshop June 7, 2018