Head scratcher. Unforseen problem just before closing on the purchase of a multi family dwelling.
**Update. 
Funds transferred and signing date set for Friday. 
We got it without the rent reserve or affidavit. Thanks everyone in the thread for your input. Hope to be of help to you all some day soon.**

Anyone have experience in handling an all of sudden drop in the economic value just before closing?

Now the lender requires an increase in the down payment because the economic value is reduced thanks to the vacancy. It's only 1 unit of 8 that is vacant and the Vacancy rate where we are is only 2%. 

Our Client can not make up the incremental difference to account for the increased down payment needed because of the vacancy. 

We suggested a hold back of funds, in trust to guarantee revenue until the new buyer finds a suitable tenant but the lender is not keen on the idea. 

Need a solution if anyone can throw there hat in the ring. 

TY
[{"id": "faep1bk", "text": "Client can\u2019t afford it then", "replies": [{"id": "faepjyh", "text": "Simple as that", "replies": [{"id": "faepovh", "text": "Seems like if they can\u2019t bridge that gap then maybe they shouldn\u2019t be that close to tapped out anyways. Maybe go in as an equity partner yourself?\ud83e\udd37\u200d\u2642\ufe0f", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "faeq23f", "text": "What about a lockbox where monies go to the lender first for debt service and then lender disburses funds? Or a rent reserve? Unless the margins are too tight? Might be a good idea to shop around for another lender. Don\u2019t understand how this didn\u2019t come up in diligence.", "replies": [{"id": "faespzg", "text": "The seller kicked out the tenant and decided to fix up the place. We're going the way of rent reserve just waiting on the CSO to give an ok.", "replies": [{"id": "faeu5st", "text": "That\u2019s weird for him to do that while negotiating with someone...anyways I imagine the reserve should work, there are tons of ways to make lenders feel more comfortable. It\u2019s just about shifting the risk and making sure they get their D/S", "replies": [{"id": "faex9dg", "text": "Deals accepted, the mortgage was approved, legal sent the new rent roll to the underwriter and that's how were in this position.\n\nThe one unit was in bad shape, it was up to the vendor to bring up to code. \nApparently the tenant was a hoarder. Ugh", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "faeq610", "text": "The change in value impacts the seller also, so you should have some leverage with negotiations. An option we use in commercial might be a master lease from the seller. Another option would be to extend closing until a tenant can be secured.", "replies": [], "depth": 1}, {"id": "faeq937", "text": "You could move into the vacancy... kidding, but obviously filling the vacancy would suffice. Client needs to pay the increase if they need a quick fix.", "replies": [], "depth": 1}, {"id": "faev962", "text": "Hope your client has a loan contingency. The seller will have to provide a credit in order to right size the loan. Or buyer will need to come up with $.", "replies": [{"id": "faf6jp6", "text": "The latest is were trying to have the lender accept an affidavit that he will rent quick. Suggested by legal. \n\nI'm in awe because with a vacancy of 2% it should take weeks to rent not months...", "replies": [{"id": "fag4vc1", "text": "So this loan has recourse.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fagku5i", "text": "I'm baffled that an economic rent analysis wouldn't suffice.", "replies": [], "depth": 1}, {"id": "fahi7ut", "text": "I've had this happen recently on an 18-unit property - is it a Fannie or Freddie SBL?  I ask because they are hyper-focused on cash collections, not as much economic viability. \n\nA very outside-the-box solution we used was to have our seller make several cash deposits of a few thousand dollars to spread across the property manager's T3 operating statements.  The lender doesn't track it to specific leases or units so it looked like the collections and economic value were amicable.   \n\nThe PM (who was entirely responsible for the problems in the first place) reimbursed the seller at close via a separate agreement and the deal got done on time. \n\nNot an ideal solution but thought some may find it interesting.", "replies": [{"id": "fajfxwk", "text": "Not a Freddi Mac deal. Update is the signing date is set. We got it without the rent reserve.", "replies": [], "depth": 2}], "depth": 1}]