Navigating through the loan acquisition process for HUD/FHA 223(f), HUD 221(d)(4), Fannie Mae, and/or Freddie Mac programs can be complicated. LSG Lending Advisors is committed to working with you every step of the way to ensure you understand each aspect of the process and end up with a product that works best for your project. Keep reading to find a detailed process for each loan type, including infographics to help make understanding the steps easier.
HUD/FHA 223(f) Loan Process
The HUD/FHA 223(f) process is much shorter than that of a 221(d)(4). After speaking with an expert from LSG Lending Advisors, we can work with you to gather the information needed for one of the MAP Approved Lenders that we have relationships with to provide a Term Sheet and Loan Analysis for you that details the costs, estimated interest rate, and maximum loan size based on Loan to Value that your project qualifies for. We will discuss the third-party reports that are required, as well as the estimated costs of them. We will work with yourself and the Lender to make sure that any questions or concerns are answered in a timely fashion. Most Lenders will be able to submit the Application to HUD for a Firm Commitment once they receive back the Third-Party reports. The reports are usually received within 30 days of ordering them, and the Lender will review them and prepare the Narrative for HUD within 30 days. HUD has up to 90 days to issue a Firm Commitment or reject the Application. The timing can vary based upon the amount of applications that the HUD office currently has in their queue. Upon receipt of a Firm Commitment, the Lender will work with you to lock your interest rate, and work with your attorney on finalizing title documentation. The Lender will work with HUD and the attorneys of the borrower to schedule a closing date for the transaction.
HUD/FHA 223(f) Loan Process Infographic
HUD 221(d)(4) Loan Process
Once LSG Lending starts working with a potential client the process for a HUD 221(d)(4) loan can take as little as 6 to 8 months for a substantial rehabilitation of an affordable property and 10 to 12 months for a 221(d)(4) new construction loan. Depending on the experience of the borrower and other factors, the pre-application process may be bypassed and the application can be submitted for a Firm Commitment. If the developer or management company has prior experience and fits the HUD/FHA 221(d)(4) guidelines LSG Lending can work with you to gather the information needed for one of the MAP Approved Lenders that they have relationships with to provide a Term Sheet and Loan Analysis for you that details the costs, estimated interest rate, and maximum loan size based on Loan to Cost for your project. LSG Lending Advisors will set up a conference call with a top representative from the Lender as well as a Chief Underwriter that specializes in the transaction type to make sure that all of the information is correct to provide the most accurate analysis. LSG Lending Advisors will be available to answer any questions or concerns during the entire process from the Engagement, to the closing, as well as any servicing questions after the transaction has closed. LSG Lending Advisors will provide checklists, detail of FHA costs and fees associated with your transaction, and a typical loan timetable based on the variables.
If the loan qualifies and the pre-application process is required, the Lender will order a limited appraisal, environmental reports, and a market study. The pre-application will be submitted to HUD usually within 90 days.
Once the pre-application is approved, HUD issues a Letter to Proceed, at which time the architectural and engineering report will be ordered, and have a full appraisal completed for the Lender. Once the Lender receives the information back, they will prepare the Firm Application and submit to HUD for approval. Upon receipt of a Firm Commitment, the Lender will work with you to lock your interest rate, and work with your attorney on finalizing title documentation. The Lender will work with HUD and the attorneys of the borrower to schedule a closing date for the transaction.
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HUD 221(d)(4) Loan Process Infographic
Fannie Mae/Freddie Mac Loan Process
LSG Lending Advisors can help you decide what is the best Fannie Mae loan product for your project. The loan process takes between 60 to 90 days to complete, and varies based on the complexity of the transaction. The Fannie Mae transaction requires more stringent documentation requirements and third-party reports than is needed to complete a Conventional Loan. The deposit required is approximately $12,000 which is used to cover third party reports such as the appraisal, environmental reports, as well as lender and agency inspections. LSG Lending Advisors will work with you to gather all the necessary documentation that the lender requires to provide a term sheet for your review. LSG Lending Advisors will work with the lender to achieve your objectives and achieve a very favorable interest rate.
Fannie Mae and Freddie Mac Preliminary Loan Needs Infographic