tah workshop - best practices - freddie mac · best practices from tah prescreen, underwriting...
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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
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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
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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)
Refinance Test, continued
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▪ Focus on market input (drives all assumptions)
Refinance Test, continued
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▪ Floating▪ Fixed
Refinance Test, continued
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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
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