FANNIE MAE DUS®
Moderate Rehabilitation (Mod Rehab) Supplemental
Arbor offers subordinate financing options for multifamily properties that have completed moderate rehabilitation.
| Loan Amount | 5-30 years; must be coterminous with the senior mortgage loan |
| Amortization | Up to 30 years |
| Interest Rate | Fixed and variable rate options available |
| Maximum LTV | Combined LTV as high as 75%, depending upon asset class and use of proceeds; may be higher for Multifamily Affordable Housing properties and assumptions |
| Minimum DSCR | Combined DSCR as low as 1.25x, depending upon asset class and use of proceeds; may be lower for Multifamily Affordable Housing properties |
| Mod Rehab Supplemental Mortgage Loan Timing | Within 36 months of origination of the Mod Rehab first mortgage loan; no one-year waiting period |
| Benefits |
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| Eligiblity |
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| Rate Lock | Standard Rate Lock |
| Accrual | 30/360 and Actual/360 |
| Recourse | Nonrecourse execution with standard carve-outs required for “bad acts” such as fraud and bankruptcy |
| Escrows | Replacement reserve, tax and insurance escrows are typically required, based on the resulting tier of the combined preexisting mortgage loan and Moderate Rehabilitation Supplemental Mortgage Loan |
| Third-Party Reports | Standard third-party reports, including Phase I Environmental Site Assessment, and a Property Condition Assessment, may not be required if certain conditions are met |
| Assumption | Loans are typically assumable, subject to review and approval of the new borrower’s financial capacity and experience |
| Tier Dropping | Permitted for fixed rate Moderate Rehab Supplemental Mortgage Loans |
| Rehabilitation Requirements | An average of at least $10,000 per unit of property improvements |
| Verification of Property Improvements | Lender must document all completed rehabilitation work and verify its completion through a site inspection if the work is not performed pursuant to a Completion/Repair Agreement or a Rehabilitation Reserve Agreement |
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