Moderate Rehabilitation (Mod Rehab) Supplemental - Arbor Realty

Current Reports

Single-Family Rental Investment Trends Report Q3 2024

The single-family rental (SFR) sector’s performance surged again last quarter, demonstrating its ability to thrive in all economic cycles. SFR construction continued its record-breaking ascent as CMBS activity blossomed. Arbor’s Single-Family Rental Investment Trends Report Q3 2024, developed in partnership with Chandan Economics, examines the sector’s fundamentals as would-be homeowners weigh the rent-vs-buy calculation.

Articles

Could Build-to-Rent Be a Solution to Housing’s ‘Missing Middle’ Problem?

Did you know that at the same time many renters navigate a housing market with limited affordable options, new apartment development continues to be held back by World War II-era zoning restrictions? In many localities, regulations introduced in the mid-1940s have choked the multifamily pipeline for decades, creating a “missing middle” that leaves low-income renters in a lurch.

Articles

Build-to-Rent Construction Continues Its Record-Breaking Ascent

Increasingly, single-family rental (SFR) operators have been relying on build-to-rent (BTR) development to bridge the housing gap, accelerating the momentum of SFR construction through 2024’s halfway point. Both total SFR/BTR housing starts and BTR’s share of all single-family housing starts reached new record highs in the second quarter, setting the stage for another banner year.

Current Reports

Small Multifamily Investment Trends Report Q3 2024

The small multifamily outlook continues to brighten as more signs indicate a normalization has already begun. In the second quarter, originations activity and borrowing conditions improved as completions sat at a five-decade high, Arbor’s Small Multifamily Investment Trends Report Q3 2024, developed in partnership with Chandan Economics, shows. While the subsector’s fundamentals are trending up, it still has room for growth when interest rate relief arrives.

Articles

Top Markets for Multifamily Permitting in 2024’s First Half

While the overall pace of new multifamily permitting per capita in the U.S. slowed recently, it has picked up momentum in pockets of the country, especially the Midwest. In the first two quarters of 2024, Madison, WI, Columbus, OH, and Omaha, NE, were among the major metropolitan markets posting solid permitting gains, another sign of multifamily’s strength in all cycles.

Analysis

Top U.S. Multifamily Rent Growth Markets — Q2 2024

The U.S. multifamily market followed the quick pandemic contraction with a strong recovery, and has now normalized into a more stable cycle. Demand remained strong across the country, with a wide variety of markets among the leaders for rent growth.

Articles

Affordable Housing Supports Positive Physical and Mental Health

Did you know that more U.S. renters now spend over 30% of their income on housing and utilities than at any other time on record? Limited affordable housing options not only increase the rent burdens of low-income tenants but disrupt physical and mental health, underscoring the need for the creation and preservation of more affordable housing units nationwide. Quality affordable housing adds stability to communities and supports healthier environments that can significantly improve well-being.

Analysis

U.S. Multifamily Market Snapshot — August 2024

After skyrocketing through a boom cycle over the past two years, the U.S. multifamily market settled into a cycle of stabilization in the first half of 2024. Rents held steady, occupancy increased, and vacancy rates remained in line with historical averages, while investor sentiment remained positive.

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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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