3.7.2 Eligible Properties

A. Applications for refinancing of property with certificates of occupancy issued 3 or more years prior to application are eligible and will be underwritten consistent with the loan sizing ratios described in Section 3.7.11 below. Applications for these properties must document a pattern of stable occupancy at not less than 85% and stable operating results. Deficit reserves are generally not required but may be imposed where extensive repairs, re-pricing of units, or market instability require mitigation of such risks.

B. Newly built or substantially rehabilitated properties (with certificates of occupancy less than 3 years prior to application) will be accepted as soon as properties achieve the applicable programmatic DSCR for not less than one full month. However, and notwithstanding this allowance, MAP Lenders should be careful to submit only those applications for mortgage insurance that will meet the underwriting requirements set forth below, such that endorsement can reasonably take place no more than sixty days after issuance of the firm commitment. All projects submitted to HUD for mortgage insurance within three years of issuance of the final Certificate of Occupancy must meet the following underwriting conditions, in addition to those currently set forth in the MAP Guide, as part of an application for mortgage insurance.

1. The project must evidence a minimum DSCR consistent with the requirements for Criterion 5, as stated in Section 3.7.11 below, for a period of three consecutive months prior to loan endorsement.

2. An income and expense statement commencing with initial occupancy to application submission, as well as a projection of income and expense for the succeeding twelve months, must be submitted.

3. A current rent roll evidencing existing, achieved rents as well rents that were used to underwrite the existing first mortgage must be submitted.

4. A leasing history of the project commencing from initial occupancy to application submission, as well as the lease-up projection used to underwrite the existing first mortgage, must be submitted.

5. Rent concessions, other discounts and short-term leases (less than 12 months) that are offered by the owner to induce a prospective tenant to enter into a lease must be disclosed and discussed in the Lender's Narrative.

6. HUD will underwrite to actual revenue collected less normalized operating expenses in order to determine when and if the required programmatic DSCR has been achieved.

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Chapter 3 Programs 3.7 Section 207/223(f) Refinance or Acquisition

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7. A request for cash out is permitted, subject to the maximum loan to value (LTV) ratio for Criterion 10 described in Section 3.7.11 below. However, 50% of the available cash must be held by the Lender as a debt service reserve until such time as the property achieves the applicable minimum debt service coverage for six consecutive months.