FHA Multifamily Case Study: Closing Loans Amid Uncertainty
Arbor Underwriting Team Goes Over and Above for Borrowers
In times of volatility, it pays to have support from a team willing to go the extra mile. Whether it’s meeting tight deadlines or ensuring all requirements are met, Arbor’s Federal Housing Administration (FHA) underwriters remain committed to helping borrowers secure loans that expand rental housing opportunities for Americans.
“Arbor’s FHA team is comprised of individuals who are veterans in the U.S. Department of Housing and Urban Development (HUD) multifamily landscape,” said Brett Neely, SVP, FHA Chief Underwriter. “They understand what needs to be done to close these HUD loans while exhibiting the soft skills of patience and thoroughness which are invaluable in the FHA space.”
Arbor in Action
Despite economic uncertainty, Arbor continues to be very active in FHA multifamily lending, administering long-term, non-recourse financing for market-rate apartments, with many success stories, including two recent closed loans in Michigan and Florida.
Luxury Michigan Apartment Community: FHA 223(f) Loan
The owner of The Emerson in Ann Arbor, Michigan, an upscale 324-unit community just minutes from the University of Michigan, had current debt that was due to mature in the first week of December, a difficult month to close a loan with HUD.
Arbor’s underwriters ensured HUD representatives were aware of the approaching deadline and worked closely with them throughout the process to meet the borrower’s timeline. Simultaneously, Arbor’s FHA multifamily team supported the borrower’s outreach to city officials to expedite inspections and resolve open permits to help move the loan across the finish line on time.
During underwriting, the luxury community was undergoing renovations of its units. Arbor worked with HUD to include the renovations under non-critical repairs to increase the property’s underwritten rents and maximize loan proceeds. Arbor later adjusted the non-critical repairs before closing to account for additional work completed since the original Project Capital Needs Assessment (PCNA), lowering the amount the borrower needed to have at closing.
The Emerson was financed through HUD’s 223(f) loan program, allowing the borrower to secure long-term fixed-rate financing and qualify for a reduction in the mortgage insurance premium (MIP) through HUD’s Green and Energy Efficient Housing. As a result, the borrower’s MIP was reduced from 0.60 bps to 0.25 bps, increasing loan proceeds by about $2.5 million.
“The entire team needs to be very vigilant with the treasury rates so we can be ready to update all active deals daily,” Neely said. “We can’t miss these small pockets of opportunity in this volatile economic environment.”
Upscale Florida Apartment Community: Bridge-to-HUD Transaction
Goldelm at Bennett Park’s owners had a tight timeframe for completing an Arbor Bridge-to-HUD transaction to avoid additional extension fees. Situated on 67 acres, the Bradenton, Florida, apartment community with 400 market-rate units in garden-style buildings, with pools and clubhouses, faced challenges on its path to a timely closing.
Given that this property is in a hurricane-prone area, insurance firms were providing deductible limits well above what HUD allows. Arbor’s underwriting team worked with all parties to facilitate a deductible buy-down that would meet HUD requirements, clearing the way for closing.
Throughout the process, Arbor’s team went the extra mile, even assisting with a right of first refusal issue with the county that could have derailed the project. Through Arbor’s persistence, the loan closed promptly, and the property qualified for Green Certification through the GreenPoint Rated Building program. “Providing exceptional customer service is priority #1 for our FHA Team,” said Neely.
Arbor’s FHA Advantage
Arbor is licensed by HUD to administer its FHA mortgage insurance programs for long-term, non-recourse financing for market-rate and affordable apartments and cooperatives, assisted living facilities, skilled nursing facilities, and seniors housing. An approved FHA Multifamily Accelerated Processing (MAP) Lender, Arbor provides access to flexible FHA multifamily loan programs on an expedited basis and financing for acquisitions, refinancing, moderate rehabilitation, substantial rehabilitation or new construction.
Arbor’s FHA Underwriting team has a long track record of exceptional service. Our dedicated FHA lending platform offers unique competitive benefits and customized loan solutions to ensure financial success. We are ready to put our strong relationships to work for you as we deliver the best terms in multifamily.
Get in touch with us today to learn more.
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