Investing in a multifamily property can be a great business decision, but the process can be complex. It’s important to have an experienced and knowledgeable advocate by your side to help guide you through each step along the way. You can count on the professionals at LSG Lending Advisors to be your trusted partner for all of your multifamily property financing needs. We pride ourselves in creating custom solutions for each clients’ unique business needs.
The LSG Lending Advisors team are experts in evaluating multifamily financing projects as it relates to adherence with FHA/HUD MAP lending guidelines. In addition, we have partnered with some of the finest FHA/HUD MAP approved lenders in the marketplace to get your loan closed in a timely manner. Contact us today to learn more about how your multifamily property project can benefit from our many years of hands on experience.
The Fannie Mae Funded Forward Commitment 9% Low-Income Housing Tax Credit (LIHTC) Properties program allows protection from interest rate volatility by locking the interest rate and other key provisions prior to completing construction. Eligible projects are preservation and rural transactions, those that need substantial rehabilitation, or new construction. This loan offers conversion from a construction loan to a permanent loan once occupancy of 90% plus is achieved for 90 days. This program offers a loan term of up to 30 years with a 35-year amortization. The maximum LTV limit is up to 90%.
Term Sheet for Fannie Mae Funded Forward Commitment 9% LIHTC Properties
| Benefits |
- Protection from interest rate volatility by locking the interest rate and other key provisions prior to completing construction.
- Certainty and speed of execution.
|
| Eligibility |
- New construction and properties undergoing substantial rehabilitation, including preservation and rural transactions.
- Lenders approved to deliver forward commitments under Fannie Mae’s Multifamily Affordable Housing product line.
|
Rate Lock Overview
| Term |
24 or 30 months, plus one delegated six-month extension. |
| Good Faith Deposit |
1-2% of the maximum loan amount (execution dependent), due at rate lock, refundable upon conversion. |
| Subordinate Mortgage |
At the time of rate lock, the borrower will execute a mortgage that places a junior lien on the property as security for a possible non-delivery event. The lien is released upon delivery of the permanent loan to Fannie Mae or upon payment of the non-delivery fee. |
Financing Structure During
Construction |
Fannie Mae issues a forward commitment to purchase the permanent mortgage at a specified interest rate following construction completion, lease-up, and stabilization.
Concurrently, Fannie Mae advances funds on an interest-only basis to the lender to finance the construction or rehab. Funded Forward Rate Lock Commitments are fully collateralized by a letter of credit or other acceptable collateral.
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Permanent Loan Key Terms
| Conversion to Permanent Loan |
Upon completion of construction with certificates of occupancy for all units, and 90% occupancy for 90 consecutive days. Loan must meet Fannie Mae’s underwriting requirements for the permanent
mortgage loan. |
| Term |
Up to 30 years. |
| Amortization |
Up to 35 years. |
| Maximum LTV |
90%. |
| Minimum DSCR |
1.15x. |