Sec. 05.04.10.12. Additional Requirements for Multifamily Properties

Loans for multifamily properties insured by the MHF multifamily insurance program shall meet the following requirements:

A. The sum of the original principal amount of the loan and total amount of prior outstanding indebtedness encumbering the property at the time of the closing of the loan may not exceed the then applicable limits for MHF multifamily insurance.

B. The appraisal of the property as rehabilitated shall be sufficient to meet the ratio of the loan plus the amount of prior indebtedness encumbering the property to the value of the property determined by the:

(1) Administration in its applicable Program handbook; and

(2) MHF in accordance with its regulations or guidelines.

C. The Administration shall examine any prior indebtedness encumbering the property to ascertain that the prior indebtedness resulted from reasonable and responsible underwriting and evaluation.

D. The mortgage may be subject to indebtedness encumbering the property having priority to the mortgage. The Administration may prohibit encumbrances junior to the mortgage.