Fannie Mae Unfunded Forward Commitment 4% LIHTC Properties

Securing financing for a multifamily property can be the first step of a very good investment opportunity, but the process is often complex. The dedicated professionals at LSG Lending Advisors have many years of experience in all areas of this specialized type of lending. Every client has their own unique business needs and challenges, so we take the time to create custom made solutions that will meet the requirements of every project. We can help ensure that your loan application process goes smoothly and closes in a timely fashion.

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The Fannie Mae Unfunded Forward Commitment 4% Low-Income Housing Tax Credit (LIHTC) allocation properties program is for properties with a 4% LIHTC allocation that need substantial rehabilitation or new construction, with fixed rate, permanent financing for tax-exempt transactions. The minimum loan amount is $3 million, and allows a loan term of up to 30 years with a 35-year amortization. The maximum LTV limit is up to 90% for transactions with 90% affordable units, and 85% for deals with less than 90% affordable units.

Term Sheet for Fannie Mae Unfunded Forward Commitment 4% Low-Income Housing Tax Credit (LIHTC)

Eligibility/ Benefits	Substantial rehabilitation or new construction transaction with 4% LIHTC allocation. Fixed-rate, permanent financing for tax-exempt transactions. Allows for rate lock and establishes other mortgage provisions for up to 30 months in advance of construction completion and conversion to a permanent mortgage loan.
Forward Rate Lock Period	24 or 30-month commitments. One six-month extension available.
Loan Amount	Minimum $3.0 million.
Loan to Value	90% for deals with 90% or more affordable units. 85% for deals with less than 90% affordable units.
Loan Term	Up to 30 years.
Amortization	Up to 35 years.
Debt Service Coverage Ratio	1.15x for deals with 90% or more affordable units. 1.20x for deals with less than 90% affordable units.
Interest Rate	Fixed rate set at the time of rate lock of the Forward Commitment.
Prepayment	Flexible prepayment options available, including yield maintenance and declining prepayment premium.
Guaranty	Non-recourse with standard carve-outs.
Subordinate Financing	Available subject to Fannie Mae requirements.
Conversion Requirements	Project completion with certificates of occupancy for all units. 90% Occupancy for 90 days. Permanent loan must meet Fannie Mae’s underwriting requirements.
Reserves	Deposit required for Replacement Reserves, Taxes, Insurance.
Processing Fee	Typically $20,000 - Includes cost of Third-Party Reports (Appraisal, Market Analysis, Environmental, and Engineering Report) and Lender Due Diligence. Borrower is responsible for Legal Fees and Standard Closing Costs.
Commitment Fees	Competitive and negotiable.
Good Faith Deposit	1% of loan amount, funded following conversion.
Forward Standby Fee	One-time up-front fee of 0.15%.
Additional Considerations	During the construction phase, the M.TEB execution requires the bonds to be cash collateralized with proceeds of the construction loan.