8.2 Borrower Types – Single Asset Borrower Entity

A. A single asset Borrower entity is required for all multifamily FHA mortgage insurance projects. The single asset Borrower entity must be registered in the United States and in the State where its corporate office is located. Natural Persons, Delaware Statutory Trusts, Maryland Business Trusts, foreign entities, and Tenants in Common are not eligible single asset Borrower entities, although such entities may have ownership interests in the single asset entity Borrower. Acceptable forms of single asset entities that may participate in FHA insured transactions include the following:

1. General Partnership (GP); An ownership structure may have two or more general partners. A written partnership agreement may be accepted in lieu of a state registration.

2. Limited Partnership (LP); A limited partnership must have at least one GP and at least one LP and must also conform to the laws of the jurisdiction in which it was established.

3. Corporation, C Corporation, or S Corporation with shareholder owners and corporate officers and directors who may or may not be shareholders.

4. Limited Liability Company (LLC) composed of members, with one or more managing members and one or more investor members.

5. Trust with beneficiaries and one or more trustees (when the Borrower is a trust, the duration of the trust must be equal to or longer than the term on the FHA Note).

6. Nonprofit Corporation with officers and directors.

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Chapter 8 Mortgage Credit 8.3 Reviewing Principals and Other Parties in Control

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7. Any other public or private single asset Borrower entity.

8. Any combination of acceptable ownership forms can be used to establish a joint venture for the purpose of jointly sharing the risks and the rewards and contributing the appropriate knowledge, skills or assets necessary to a successfully developed project. However, the Borrower must always be a single asset entity.