What is a T-12 in real estate?

A T-12 (Trailing Twelve Months) is an operating statement showing the last 12 months of income and expenses for a property. Lenders use it to calculate Net Operating Income (NOI) and determine loan amounts. Bhumi provides forensic T-12 audits that reconcile every line item to bank statements.

How long does a T-12 audit take?

Bhumi delivers a complete, lender-ready T-12 package within 48 hours of receiving your documents. Full forensic reconstruction typically takes 1-2 weeks. Deal closing support runs approximately 30 days.

What size multifamily portfolios does Bhumi work with?

Bhumi specializes in $500K to $5M multifamily portfolios with 5-50 units. This is the sweet spot where institutional lenders require documentation but owners often lack institutional-grade bookkeeping - too complex for most accountants, too small for institutional advisors.

What documents do I need to start a T-12 audit?

To start, Bhumi needs three things: 12 months of bank statements for all accounts touching the property, a current rent roll showing units, tenants, and rent amounts, and your most recent tax return or Schedule E for the property.

How much does a T-12 audit cost?

Bhumi charges a flat fee based on portfolio complexity - number of units, bank accounts, and document condition. No hourly billing surprises. Contact for a specific quote based on your situation.

What lenders does Bhumi work with?

Bhumi is lender-agnostic and has prepared packages for Freddie Mac Small Balance Loans, Fannie Mae Small Loans, regional banks, credit unions, and private lenders. The documentation standards are tailored to each lender's requirements.

What is NOI variance and why does it matter?

NOI variance is the gap between what your T-12 operating statement shows and what your bank deposits prove. Lenders require zero variance for loan approval. Bhumi's forensic reconciliation traces every dollar of revenue to a specific bank deposit, eliminating phantom income and protecting your loan amount.

Can Bhumi help with inherited real estate portfolios?

Yes. Bhumi specializes in inherited portfolios where the previous generation ran operations manually. We've handled portfolios with Venmo payments, cash deposits with no paper trail, commingled personal and business expenses, and decades of accumulated documentation gaps.

What is a trigger event in a Freddie Mac loan?

A trigger event is any action or occurrence that requires lender consent under your loan documents. Common triggers include: transfers of ownership interest, adding subordinate financing, changes in property management, significant lease modifications, and certain capital expenditures. Taking these actions without consent constitutes a loan default—even if you're current on payments.

Do I need Freddie Mac consent to sell my property?

Yes. Selling the property—or even transferring ownership interests in the borrowing entity—requires lender consent. The buyer must qualify under Freddie Mac's borrower requirements, pay an assumption fee (typically 1%), and execute new loan documents. Selling without consent triggers the due-on-sale clause, making the full loan balance immediately due.

What happens if I don't seek consent for a trigger event?

Proceeding without consent is a loan default. Consequences include: acceleration of the loan (full balance due immediately), default interest rate (typically 5% above note rate), loss of non-recourse protection (bad boy carveouts may be triggered), and potential foreclosure. The servicer will discover unauthorized actions during annual reviews, refinancing attempts, or sale.

How long does it take to get consent for a trigger event?

Timeline varies by event type: Simple management changes take 2-4 weeks. Ownership transfers (assumptions) take 60-90 days due to borrower underwriting. Subordinate financing requests take 30-45 days. Complex events requiring credit committee approval can take 90+ days. Start the consent process immediately when you anticipate any trigger event.

What fees are involved in trigger event consents?

Fees vary by event: Loan assumptions carry a 1% fee ($40,000 on a $4M loan). Subordinate financing consents may have review fees of $5,000-$15,000. Management changes typically have minimal fees ($1,000-$2,500). Complex consents requiring legal review can add $10,000-$25,000 in attorney fees. Budget for these when planning transactions.

Trigger Events: When Your Loan Changes Mid-Stream

Definition

Trigger Event: Any action, occurrence, or change that requires lender consent under the loan documents. Proceeding without consent constitutes a default, regardless of payment status.

You're current on every payment. The property is performing. You decide to bring in a new property manager, refinance a partner's ownership stake, or sign a long-term lease with a major tenant. Congratulations—you may have just defaulted on your loan. Freddie Mac loans come with extensive consent requirements, and violating them has serious consequences.

Why Do Trigger Events Exist?

Freddie Mac underwrote your loan based on specific assumptions:

Who owns the property: Your experience and financial strength
How it's managed: Professional management meeting their standards
Capital structure: No additional leverage increasing default risk
Property operations: Maintaining income and occupancy levels

Changes to any of these assumptions affect the loan's risk profile. Trigger events ensure the lender can evaluate and approve changes before they occur.

Common Trigger Events

1. Ownership Transfers

The most significant trigger event. Requires consent for:

Transfer Type	Consent Required?	Process
Sale of property	Yes—full assumption	Buyer must qualify, 60-90 days, 1% fee
Transfer of majority interest (>49%)	Yes—full assumption	Same as property sale
Transfer of minority interest (<49%)	Depends on loan docs	May be permitted with notice only
Transfer to Key Principal's trust	Usually permitted	Notice required, estate planning exception
Change of Key Principal	Yes	New KP must qualify under Guide standards

Warning

The due-on-sale clause is not negotiable. Transferring ownership without consent makes the entire loan balance due immediately. This isn't a technicality—lenders enforce it.

2. Subordinate Financing

Adding any debt secured by the property or ownership interests requires consent:

Second mortgages (generally prohibited)
Mezzanine loans (prohibited)
Preferred equity with debt-like features (prohibited)
Lines of credit secured by ownership interests

Even if the subordinate financing would be permitted under Guide Section 4.6, you must still obtain consent. Proceeding without consent is a default.

3. Property Management Changes

Changing your property manager requires consent:

New third-party manager: Must be approved by lender
Self-management transition: Generally requires consent and may not be permitted
Management fee changes: Material increases may require approval

Freddie Mac has approved property manager lists. Switching to an unapproved manager—even a competent one—requires formal approval.

4. Significant Lease Transactions

Certain lease actions trigger consent requirements:

Lease Action	Consent Typically Required?
Commercial lease >10% of rentable area	Yes
Lease term >5 years	Often yes
Below-market rent concessions	Depends on materiality
Master lease or bulk lease	Yes
Lease termination buyout	If material to income

5. Property Alterations

Material changes to the property may require consent:

Major renovations: Especially if affecting unit count or building systems
Change of use: Converting commercial space to residential or vice versa
Demolition: Removing structures or reducing rentable area
New construction: Adding units or buildings

Routine maintenance and minor improvements typically don't require consent, but material alterations do.

6. Insurance and Condemnation

Insurance proceeds: Above certain thresholds, lender controls disbursement
Condemnation awards: Lender has rights to proceeds
Changes to insurance coverage: Reducing coverage below required levels

The Consent Process

Step 1: Review Loan Documents

Before any transaction, check your:

Loan Agreement: Sections on transfers, encumbrances, operations
Deed of Trust/Mortgage: Due-on-sale and transfer provisions
Guaranty: Bad boy carveout triggers

These documents control—don't rely on assumptions about what's permitted.

Step 2: Notify the Servicer

Contact your loan servicer (not Freddie Mac directly) to:

Confirm consent is required
Request the consent application package
Understand timeline and fees
Identify required documentation

Step 3: Submit Complete Application

Consent requests typically require:

Formal request letter explaining the proposed action
Supporting documentation (new management agreement, transfer documents, etc.)
Updated borrower financials (for ownership changes)
Consent fee payment

Step 4: Review and Approval

The servicer reviews and, for significant events, escalates to Freddie Mac. Timeline:

Event Type	Typical Timeline
Management change	2-4 weeks
Minor lease approval	2-3 weeks
Subordinate financing	30-45 days
Ownership transfer/assumption	60-90 days
Complex structural changes	90+ days

Key Point

Start the consent process as soon as you contemplate any trigger event. Timelines are minimums, not guarantees. Deals have fallen apart because borrowers underestimated consent timing.

Consequences of Not Seeking Consent

Immediate Consequences

Loan default: Even if current on payments
Acceleration: Lender can call the full balance due
Default interest: Typically 5% above note rate
Late fees and penalties: Compound the problem

Bad Boy Carveout Triggers

Unauthorized transfers can trigger non-recourse carveouts:

Loan becomes full recourse to guarantor
Personal liability for entire loan balance
No longer limited to property value

Warning

Bad boy carveouts for unauthorized transfers are typically absolute—not curable. Once triggered, the guarantor is personally liable for the full loan amount, even if the transfer is reversed.

Discovery Is Inevitable

Even if you "get away with it" initially, unauthorized actions surface during:

Annual financial reporting: Required operating statements and rent rolls
Property inspections: Annual servicer inspections
Refinancing attempts: Title searches reveal unauthorized liens
Sale process: Buyer's due diligence uncovers issues
Insurance claims: Named insured discrepancies

Common Trigger Events Borrowers Miss

1. Estate Planning Transfers

Transferring ownership to your family trust or estate planning entity often requires consent. The estate planning exception in most loan documents is narrow—verify before transferring.

2. Partnership Restructuring

Buying out a partner, admitting a new partner, or restructuring the ownership entity can trigger consent requirements—even if you're not changing control.

3. Refinancing Other Properties

If your other properties are cross-collateralized or you've pledged your ownership interests elsewhere, that may violate your Freddie Mac loan's negative pledge provisions.

4. Management Contract Renewals

Renewing a management contract with materially different terms (longer term, higher fees) may require consent even though you're keeping the same manager.

5. Corporate Changes

Merging or converting your borrowing entity (LLC to LP, or vice versa) can trigger consent requirements.

Building a Consent-Aware Culture

Best Practices

Calendar key dates: Management contract renewals, partnership agreements, lease expirations
Train your team: Property managers and accountants should understand consent requirements
Review before acting: Make loan document review part of any transaction checklist
Maintain servicer relationship: Know your servicer contact for questions
Document everything: Keep copies of all consent requests and approvals

Insider Terminology

Due-on-Sale Clause

Provision making the full loan balance due upon transfer of ownership without lender consent. Standard in all Freddie Mac loans.

Bad Boy Carveouts

Exceptions to non-recourse protection triggered by borrower misconduct, including unauthorized transfers. Makes guarantor personally liable for full loan balance.

Negative Pledge

Covenant prohibiting the borrower from encumbering the property or ownership interests with additional liens without consent.

Consent Fee

Fee charged by servicer/lender to process consent requests. Typically $1,000-$15,000 depending on complexity; 1% for full assumptions.

Transfer

Any direct or indirect change in ownership of the property or the borrowing entity. Includes sales, pledges, encumbrances, and equity restructurings.

Key Takeaways

Bottom Line

Read your loan documents: Know what requires consent before you act
Start consent process early: Timelines are longer than borrowers expect
Unauthorized actions = default: Regardless of payment status
Bad boy carveouts are real: Unauthorized transfers can trigger personal liability
Discovery is inevitable: The servicer will find out eventually