Bond Credit Enhancement
| Description | Fannie Mae provides credit enhancement for tax-exempt multifamily housing revenue bonds that have low and moderate income occupancy restrictions; Fixed rate bonds can be enhanced; Enhancement is rated AAA, and can be used in either a “Refunding” or a “Credit Substitution” |
|---|---|
| Loan Amount | Minimum $3,000,000 |
| Loan Terms | 10 to 30 Years |
| Amortization | Up to 30 Years |
| Loan to Value Maximum | Maximum 85% of conventional appraised value or 80% of “tax exempt” appraisal (with cap rate reflecting tax exempt financing), except in the case of 4% LIHTC in which the maximum LTV increases to 90% |
| Coverage Minimum | 1.25x for fixed rate, except in the case of 4% LIHTC in which the minimum DSCR decreases to 1.15x |
| Borrower | Domestic single asset borrowing entity is required |
| Interest Rate | Risk-based pricing, varies with LTV and DSC ratios |
| Third Party Reports | MAI appraisal, Physical Needs Assessment, and Environmental Phase I Assessment are required for all deals; Seismic Report is required for properties in Seismic Zone 4; A market study may also be required. |
| Reserves | Tax and insurance escrows are required; Repair and Replacement escrow funding is required based on engineer’s Physical Needs Assessment; For loans at less than 65% of value with no deferred maintenance, funding of repair and replacement reserve can be waived, at lender’s discretion |
| Application and Due Diligence Fees | $2,500 non-refundable Application Fee to cover internal underwriting; $12,500 Due Diligence Fee to cover third party reporting |
| Origination Fee | Fannie Mae requires minimum origination fee equal to one percent of loan amount; can be reduced for loans over $9 million |
| Legal Fees | Fannie Mae’s legal fees are estimated at $35,000; Lender’s legal fees are estimated at $25,000 |
| Timing | Timing is dependent on type of credit enhancement, status of bonds, 3rd party report timing and borrower’s submission of due diligence |
Finance Reports
First Madderra & Cazalot report scheduled for release in early 2011. Please check back.
Multi-Family Reports
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