Moderate Rehabilitation (Mod Rehab) Supplemental - Arbor Realty

Articles

Renters See Apartments as ‘Forever Homes’

Today’s renters are in it for the long haul. The Federal Reserve Bank of New York’s recently released 2025 SCE Housing Survey shows that the average renter thinks there is a two-in-three chance they will rent for the foreseeable future. With home prices and interest rates unfavorable to would-be homebuyers, we explore renters’ perceptions and how they could impact future rental housing demand.

Current Reports

Top Markets for Multifamily Investment Report Spring 2025

Arbor’s Top Markets for Multifamily Investment Report Spring 2025, developed in partnership with Chandan Economics, is your roadmap to the best locations to deploy capital. Based on the findings of our exclusive Multifamily Opportunity Matrix, this in-depth analysis assesses economic strength and market capabilities to navigate evolving conditions of the top 50 largest U.S. metros.

Research

Arbor’s data-driven articles and research reports empower multifamily and single-family rental investors and developers to make more profitable financial decisions.

Articles

Renters Account for Majority of Household Growth

The number of rental households climbed nearly 2% last year, as 848,000 more households became renters, an analysis of the U.S. Census Bureau’s Housing Vacancies and Homeownership Survey shows (Chart 1). Rental households also hit a new high of 45.3 million, accounting for more than half of all U.S. household growth in 2024. Weakening affordability, evolving lifestyle preferences, and a limited supply of quality housing all contributed to surging multifamily and single-family rental (SFR) demand.

Articles

Solar Panel Usage Accelerates in Rental Properties

Solar panel installations, which skyrocketed in the U.S. over the last half-century, are projected to double to 10 million in just six years. While installations soared in all types of residences, owner-occupied properties significantly outpaced rentals. However, the evolving economics of solar power may be approaching a tipping point for single-family rental (SFR) operators looking for a differentiator.

Articles

Single-Family Rental Investment Snapshot — April 2025

Even amid ongoing economic volatility, SFR continues to be a well-positioned asset class that is expected to follow stable growth patterns.

Articles

Arbor Builds on Mentoring Tradition in Launch of Project Destined Programs

This spring, Arbor is doubling down on our commitment to aspiring commercial real estate students through our partnership with Project Destined by helping to launch the first-ever Women’s Fellowship and with our participation in the Project Destined Bridge Program.

Analysis

Small Multifamily Investment Snapshot — March 2025

Amid ongoing macroeconomic uncertainty, the small multifamily sector remains favorably positioned for stability as the structural need for affordable housing in the U.S. has supported the strength of the sector’s demand profile.

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Home | Fannie Mae | Moderate Rehabilitation (Mod Rehab) Supplemental

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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	The Moderate Rehabilitation Supplemental Mortgage Loan is excluded from the one Supplemental Loan rule The loan sizing and pricing is comparable to the first lien mortgage loan Lower cost than refinancing Access to additional capital Certainty of execution Speed in processing and underwriting
Eligiblity	Stabilized Conventional, Multifamily Affordable Housing, Seniors Housing, Student Housing Properties, and Manufactured Housing Communities First Mortgage Loan identified as Moderate Rehabilitation Existing Fannie Mae fixed-rate or adjustable-rate mortgage loans Arbor must be the servicer of the existing Fannie Mae Mortgage Loan Fannie Mae must be the only debt holder on the property
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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