A.8.6.3 Implementation

A. A sample form of SNDA is attached. This form should be used for all SNDAs approved by Satellite Offices and Regional Centers.

B. For guidance related to underwriting commercial rents and commercial tenants and the reviewing and setting rents for commercial space in insured and assisted properties, see Chapter 7, Section 7.7.

1. SNDAs are permitted for Rooftop, Cell Phone Tower, Cable Television and Internet Access Leases on all properties with an existing insured mortgage or on all properties applying for an insured mortgage subject to the following:

   • New, existing or renegotiated rooftop leases (including for cell phone towers, cable television or internet access) in all properties with currently insured mortgages, in all properties applying to refinance, or in all new construction or substantial rehabilitation properties, may use an SNDA. In those cases, the commercial lease and income that is or will be in place is a benefit to the property, while imposing little or no additional property operating expense. The presence of a rooftop cell

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Appendix 8 Mortgage Credit Requirements A.8.6 Subordination, Non-Disturbance and Attornment Agreements

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phone tower or cable access to the building should not negatively affect the residents, the marketability of the units or HUD’s recovery value on the note in the event of a default.

• With respect to all such leases, the underwriting and review process should ensure that there are no exclusivity requirements under the leases that would prevent the owner from attracting competing services for the benefit of the residential tenants in the future.

2. SNDAs are permitted for Commercial Leases, other than Rooftop, Cell Phone Tower, Cable Television or Internet Access Leases on all non-assisted or non-subsidized properties with an existing insured mortgage or on all non-assisted or non-subsidized properties applying for an insured mortgage subject to the following:

   • New, existing or renegotiated commercial leases with commercial tenants in properties with currently insured mortgages, in properties applying to refinance, or in new construction or substantial rehabilitation properties may use an SNDA.

• A lease may be approved if the lease calls for a fair market rent in the local area and the activities to be conducted by, or the structures and equipment to be installed by, the proposed tenant will not have an adverse effect on the residents.

• If any IOI relationship (defined as a financial interest or family relationship with the officers, directors, stockholders, or partners of the Borrower) exists between the Borrower as lessor and the commercial tenant as lessee, an SNDA is not permitted.

The commercial tenant must be appropriate for a residential building.