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contracts. The required net yield is the interest rate that
petitioner will receive from the mortgage it purchases from an
originator. Petitioner did not charge an upfront commitment fee
in its immediate delivery purchase program.
2. Prior Approval Program
Alternatively, originators may sell multifamily mortgages to
petitioner under the prior approval program, which began in 1976.
Under this program, petitioner entered into contracts with
originators to purchase a multifamily mortgage before the closing
date of the mortgage. In general, each executed prior approval
purchase contract pertained to a single mortgage, as opposed to a
pool of mortgages. Petitioner’s promotional pamphlets state that
this program offered originators the “peace of mind” of knowing
that petitioner would purchase the loan once it closed. The
pamphlets also explain that once an originator entered into a
prior approval purchase contract with petitioner, “delivery of
the loan is still optional, so [the originators] don’t have to
worry if the deal hits a snag or falls through completely.”
Under the prior approval program, originators were not
obligated to deliver the multifamily mortgage to petitioner.
Petitioner’s Sellers’ & Servicers’ Guide is part of the contract
between an originator and petitioner. Petitioner’s Sellers’ &
Servicers’ Guide states: “Delivery under this program is
optional. However, unless the optional delivery contract is
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