Freddie Mac Supplements the Requirements for Small Balance Loans Over $6 MillionJanuary 17, 2018 – Alerts Real Estate and Housing Finance Alert
Per guidance in the Freddie Mac Multifamily Seller/Servicer Guide, surveys are typically waived for small balance loans (SBLs) so long as there are no general survey exceptions in the title.
However, sellers, servicers and legal counsel should be aware of additional guidance for deals over $6 million that goes beyond what is stated in the SBL Section of the guide.
In addition to the requirement that a borrower entity must be a single-asset entity (no restricted multiple-asset entity is permitted), SBL loans over $6 million must conform to the conventional survey requirements found in Ch. 29 (not Ch.29SBL) of the guide. In other words, a survey waiver for SBL over $6 million will be permitted only if it falls under one of the categories listed on Freddie’s Survey Waiver Requirements (revised 10-18-2017) for standard CME deals.
Effective January 16, 2018, the following updated language will be included in Freddie Mac SBL Commitments for SBL loans $6 million and over, which will override any contrary requirements in the guide:
Loan Amount Over $6,000,000
Notwithstanding anything to the contrary in the Guide, Seller must satisfy each of the following requirements with respect to this Mortgage based on its size:
- Third-party reports. Seller must deliver the following full third party reports according to the Multifamily Conventional Cash Mortgage Purchase Program requirements, rather than the Small Balance Loan Purchase Program requirements:
(B) Zoning report
- Survey. Seller must either (i) deliver a current survey that complies with Chapter 29 of the Guide or (ii) satisfy one of the waiver alternatives in the Survey Waiver Requirements document supplementing Chapter 29 that is available on FreddieMac.com.
- Annual physical inspection. Seller must perform a physical inspection and complete the corresponding property inspection report for the Property described in Chapter 40 of the Guide on an annual basis for the term of the Loan, unless otherwise instructed by Lender.
This publication is intended for general information purposes only. It does not constitute legal advice. The reader should consult with knowledgeable legal counsel to determine how applicable laws apply to specific facts and situations. This publication is based on the most current information at the time it was written. Since it is possible that the laws or other circumstances may have changed since publication, please call us to discuss any action you may be considering as a result of reading this publication.