Multifamily Properties Purchased Through Eminent Domain
The King County Housing Authority (KCHA), a municipal corporation created by the State of Washington, is authorized to acquire property through the exercise of its power of eminent domain. KCHA has used, and is expected to continue using, this power to acquire multifamily properties in King County in order to preserve affordable housing in the county. If a property is taken by KCHA through eminent domain, or the property is purchased by KCHA in lieu of going through the eminent domain process, Fannie Mae's loan documents do not require the borrower to pay a prepayment premium. Fannie Mae's MBS disclosure documents also state that no prepayment premium will be paid under these circumstances. The investor receives a payoff at par on the MBS upon the closing of the property acquisition.
In 2019, as of the date of this announcement, KCHA acquired the Fannie Mae properties listed below by eminent domain in lieu of condemnation.
|Fannie Mae Loan Number
|Kendall Ridge Apartment Homes
|15414 NE 18th Street; Bellevue, WA 98007
|11010 NE 124th Lane; Kirkland, WA 98034
Frequently Asked Questions (FAQs)
Q1. What actions has KCHA taken to date involving the use of eminent domain associated with Fannie Mae properties?
A1. In 2019, KCHA passed resolutions authorizing the acquisition of certain multifamily properties to preserve affordable housing. See the list above for the two Fannie Mae properties currently affected.
Q2. Will this affect other properties in King County, or properties in other jurisdictions?
A2. KCHA has currently announced its intention to acquire five properties using this method, two of which back Fannie Mae securities and are identified above, although the county may choose to explore this option with additional properties. Currently, KCHA is the only governmental entity of which we are aware that is using eminent domain as part of its strategy to preserve affordable housing.
Q3. Where can I find out if the property backing a loan in a specific security is located in King County? Does Fannie Mae have other properties in King County?
A3. Investors can search DUS Disclose® by CUSIP or Transaction ID to find specific property information, including a property's location, initial affordability terms, and performance information. Investors can download the population of properties that Fannie Mae finances in King County by using the Advanced Search function. Learning Center on DUS Disclose has Quick Reference Guides (QRGs) and FAQs to guide users in their searches.
Q4. Why was no prepayment premium paid on Fannie Mae securities backed by loans with properties acquired through eminent domain?
A4. Our mortgage loan documents do not require a borrower to pay a prepayment premium in the event of a condemnation (which is the process through which the eminent domain power is exercised) resulting in the early receipt of all or a portion of the principal of a loan. Our MBS prospectus discloses that a prepayment premium is not required to be paid by the borrower in the event of an involuntary prepayment resulting from the receipt of amounts received in connection with a condemnation action affecting a property.
For further questions, please contact the Fannie Mae Investor Help Line at 1-800-232-6643 or send us an email.