Articles

Eight Common Commercial Real Estate Investor Questions

Whether you are just beginning your investing journey or are looking to take your portfolio to the next level, Arbor stands ready with our talented team and decades of expertise. Given our vast experience and national footprint of successful deals, we are familiar with many common commercial real estate investor questions, such as the ones answered in this article.

Articles

Multifamily is Well-Positioned for Short- and Long-Term Growth

With the macroeconomy maintaining its underlying strength and a handful of rate cuts expected by the Fed within the next 18 months, green shoots of optimism within the multifamily sector are multiplying. Even as high interest rates impede normal operations, stabilization is underway while the sector’s long-term prospects remain unwavering. In this deep dive, our research teams will explore the tailwinds underpinning the multifamily sector’s short- and long-term outlook.

Refinance of Existing HUD-Insured Loan

FHA® Interest Rate Reduction (IRR) Refinance of Existing HUD-Insured Loan   Arbor provides this program to reduce the interest rate on qualified existing HUD-insured multifamily loans. The HUD-insured loan remains in place, with reduced payments based on the new rate, the current balance, and the remaining term. The existing prepayment penalty must be paid in full. V041624

Mortgage Insurance for Rental Housing for Urban Renewal and Targeted Redevelopment

FHA®220 Mortgage Insurance for Rental Housing for Urban Renewal and Targeted Redevelopment*   Arbor provides FHA-insured, long-term, fixed rate financing for new construction and substantial rehabilitation of multifamily projects nationwide. This program provides for both construction and permanent financing for projects in urban renewal areas and other areas where local governments have undertaken designated revitalization activities. Applications are typically processed in two stages (preliminary application followed by firm application). Affordable/rental assisted projects and HUDexperienced development teams may request a “straight to firm” application, saving significant time by eliminating the preliminary application stage. V020224

Articles

Regional Construction Trends: Annual Multifamily Completions Surged in the South and West

After the volume of newly issued multifamily permits hit a 37-year high in 2022, multifamily completions surged another 22.3% last year. As the sector continues to gain strength, its growth has remained concentrated in the southern and western regions of the country, according to an analysis of new data from the U.S. Census Bureau’s Survey of Construction.

Articles

The Evolving Characteristics of Multifamily Construction

During the post-global financial crisis (GFC) cycle, a disproportionate share of new multifamily construction was of high-rise units in properties with amenities. However, the tides have turned. The rising cost of homeownership has brought the need for more affordable housing development in the U.S. to the top of many legislative agendas. In this deep dive, our research teams utilize data from the U.S. Census Bureau’s Annual Survey of Construction to show how and why the characteristics of new multifamily properties continue to evolve alongside shifting market needs.

Articles

Video: Growing LGBTQIA+ Visibility in the CRE Industry

LGBTQIA+ Pride Month is recognized in June, but its lessons are timeless. During a recent conversation between Tres Seippel, Director, Construction Management at Arbor, and Dr. Sam Chandan, Founder of Chandan Economics, Founding Director, NYU Chen Institute for Global Real Estate Finance, and Co-Chair of the Real Estate Pride Council, Seippel shared why it is more important than ever for the industry to embrace visibility and show support for employees who identify as LGBTQIA+ or other diverse backgrounds.

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Home | Fannie Mae | Adjustable Rate Mortgage (ARM) 5-5
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FANNIE MAE DUS® Adjustable Rate Mortgage (ARM) 5-5

Arbor’s DUS® ARM 5-5 product offers a 5-year variable rate financing option with an embedded cap and an option to extend for an additional 5-year term or convert to a fixed rate.

BENEFITS Attractive low-cost financing; no minimum or maximum loan size; maximum interest rate is set at rate lock; optional extension to second 5-year term with minimal reunderwriting; convertible to a fixed-rate loan with minimal re-underwriting
ELIGIBILITY Existing, stabilized multifamily properties, including: Conventional, Multifamily Affordable Housing, Seniors Housing, Student Housing, and Manufactured Housing Communities; loans for acquisition or refinance
TERM Initial 5-year loan term; optional extension to a second 5-year term at maturity; rollover will retain the same guaranty and servicing fees as the original loan; rollover will not incur a prepayment premium
AMORTIZATION Up to 30 years
INTEREST RATE ADJUSTMENTS Adjusts based on changes to the underlying index and is equal to the index plus the margin
MAXIMUM LTV 65%
MINIMUM DSCR 1.00x at the maximum lifetime interest rate; mortgage loan amount shall not exceed that of a fixed rate loan with similar terms
RATE LOCK 30-day commitments
INDEX 30-day average SOFR
SUPPLEMENTAL FINANCING Supplemental loans are available
LOCKOUT PERIOD; PREPAYMENT AVAILABILITY No prepayment is allowed during the first year of either the initial or second 5-year variable rate terms; thereafter, prepayment is permitted with the payment of a 1% prepayment premium; no prepayment premium is due during the “open period” (typically the last 3 months) of either the initial or second 5-year variable rate terms
INTEREST RATE CAP Maximum monthly interest rate adjustment of 1% up or down; maximum lifetime interest rate to Borrower capped at 5%, plus the guaranty fee, plus the servicing fee
INTEREST RATE FLOOR The interest rate will never be less than the sum of the investor spread, the guaranty fee and the servicing fee
CONVERSION TO FIXED RATE Subject to the terms of the loan document, the variable rate mortgage loan may be converted to a fixed rate mortgage loan (with a 7- or 10-year term) on any rate change date beginning on the first day after the Lockout Period and ending on the first day of the third month prior to the Maturity Date

  • No prepayment penalty is charged at the time that the variable rate Mortgage loan converts to a fixed rate mortgage loan
  • Minimal re-underwriting; lender determines that the current net cash flow can support the new fixed rate terms
  • No increase in the loan amount; loan may be eligible for a Supplemental Loan
NEW MBS ISSUANCE AT CONVERSION TO FIXED OR VARIABLE RATE ROLLOVER If the Borrower opts to either (i) convert the ARM 5/5 Loan to a fixed-rate Mortgage Loan, or (ii) extend the initial 5-year variable-rate term of the ARM 5/5 Loan for a second 5-year variable-rate term:

  • At Conversion to fixed or renewal to a new 5-year variable-rate term, the existing MBS is repaid.
  • For a Conversion to a fixed rate, a new fixed-rate MBS is issued.
  • For a renewal to a new 5-year variable-rate term, a new variable rate MBS is issued.
ACCRUAL Actual/360
RECOURSE Non-recourse execution with standard carve-outs for “bad acts” such as fraud and bankruptcy
ESCROWS Replacement reserve, tax and insurance escrows are typically required
THIRD-PARTY REPORTS Standard third-party reports required, including Appraisal, Phase I Environmental Site Assessment and Property Condition Assessment
ASSUMPTION Loans are typically assumable, subject to review and approval of the new borrower’s financial capacity and experience

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