We are excited to share recent enhancements to the Conventional Loan Agreements as part of our ongoing efforts to make the consent process smoother and more efficient. These updates address common servicer and borrower pain points that we’ve heard from you related to certain types of transfers of ownership. 

Here are the updates:

  • Board Member Transfers: To resolve the issue of fees being triggered by minor board changes, we updated the Legal Issues Analysis regarding boards. We also created a Board of Managers Transfer Rider, which permits transfers of board members without lender consent/transfer fees if ultimate control does not change and other standard conditions are satisfied.
  • Death of Guarantor/Estate Planning Transfers: We received feedback that strict post-death notice requirements often result in fees perceived as excessive. To address this, we extended the notice period for Guarantor deaths and the period for satisfying certain conditions related to estate transfers. This should substantially reduce borrower burden associated with estate transfers and reduce related borrower requests for a default waiver and waivers of related loan document requirements.   
  • Affiliate Transfers: In scenarios involving the removal, substitution or addition of an entity in the organizational structure of borrower or Guarantor, ambiguity about the scope of “Affiliate” often resulted in unnecessary transfer or review fees. We added clarifying language to remove the uncertainty as to whether these types of organizational changes qualify as “affiliate transfers”.
  • Transfers with Multiple Steps: We also received feedback that excessive or unreasonable transfer/review fees were being charged in connection with concurrent or “same day” multi-step transactions because borrowers were being charged separate fees for each intermediate transfer.  To address this, we’ve specified that if simultaneous or concurrent transfers occur in connection with a conditionally permitted transfer, lender will only collect a single fee.
  • Previously Underwritten Person (PUP) Transfers: We expanded the availability of PUP conditionally permitted transfers by removing the requirement that such transfers must be due to the retirement, death or legal incapacity of a prior borrower principal. This will enable borrower to avoid a 1% transfer fee being triggered in connection with certain PUP transfers not otherwise related to death or incapacity.
  • Release of Guarantor: We expanded the availability of certain conditionally permitted transfers involving a Guarantor release by permitting an acceptable replacement Guarantor in lieu of the requirement that the remaining Guarantors must independently satisfy net worth and liquidity requirements. This will enable borrower to substitute a Guarantor with an acceptable replacement Guarantor without triggering a 1% transfer fee. 

With these changes, we’re delivering on our commitment to improve the transfers of ownership experience. Thank you for your trust and partnership. If you have any questions or feedback on these changes, please email the Multifamily Borrower Transactions mailbox.