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Research

How Big is Small Cap Multifamily?

A closer look at the multifamily housing inventory in the United States and the size of the small cap investment opportunity.

Around the Web

Multifamily Forecast: Investors Moving to Secondary Markets

The apartment sector has remained the darling of the commercial real estate for the past six years. This doesn’t appear to be changing anytime soon, as 2016 is expected to set a new record for multifamily mortgage origination volume. While multifamily’s position as top dog remains uncontested, savvy investors are altering their strategy for sourcing Read the full article…

GENERAL: 800.ARBOR.10

FHA®223(f)

Refinance of HUD Section 202 Properties

Arbor provides FHA-insured, long-term, fixed-rate financing for refinance or moderate renovation of existing Section 202 projects nationwide. Arbor uses the single-stage Multifamily Accelerated Processing (MAP) program to expedite underwriting and approval.

Loan Term & Amortization Up to 35 years (fully amortizing)
Minimum DSCR 1.11x
Maximum LTV/Purchase Price Up to 90%
Fixed Rate Yes
Eligible Properties Existing Section 202 projects
Eligible Borrower Single asset entity (for profit or nonprofit)
Developer Fee Up to 15% of the acceptable development cost
Tax & Insurance Escrows Monthly deposits required
Recourse Nonrecourse, subject to HUD Regulatory Agreement
Commercial Space Maximum 25% of net rentable area and maximum 20% of effective gross income; 10% vacancy applied
Required Reports Appraisal, Project Capital Needs Assessment (PCNA) & Phase I Environmental
Prepayment Negotiable; generally two-year lockout with a 10% to 1% declining prepayment penalty; other prepayment options available
Assumable Subject to Arbor and HUD approval and payment of assumption fee
Good Faith Deposit Based on project type and loan size
Expense Escrow Yes – sufficient to cover Arbor’s expenses and third-party report costs
Origination Fee Negotiable
HUD Application Fee Nonrefundable fee of $3 per $1,000 (0.3%) of the mortgage amount due to HUD upon application submission
HUD Inspection Fee $30 per unit when repairs are less than $3,000 per unit; if above $3,000 per unit, 1% of the total cost of the repairs
Legal/Closing Fee Borrower pays Arbor’s counsel fee and miscellaneous closing costs
Rehabilitation Qualifications Repairs cannot exceed $15,000 per unit (adjusted for local high-cost factor); repairs/replacements are also limited to one major building component
Davis Bacon Not applicable to this program
HUD Mortgage Insurance Premium (MIP) HUD sets the cost of the FHA insurance; initial MIP is due to HUD at closing, and the MIP is escrowed monthly thereafter
Prepayment of Section 202 Loan HUD’s Housing Notice 2013-17 provides guidance for the prepayment approval process
HUD Mortgage Insurance Premium HUD sets the cost of the FHA insurance; initial MIP is 1% of the loan amount due to HUD at closing. Annual MIP rates:

  • Market rate properties: 0.60%
  • Affordable properties: 0.35%
  • Broadly affordable or energy efficient properties: 0.25%

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