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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.

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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

FREDDIE MAC®

Green Advantage

The Freddie Mac Green Advantage suite of offerings includes Green Up or Green Up Plus options. These financing programs reward borrowers who improve their properties to reduce their energy and/or water usage by 30% or those who already have green-certified properties and are looking for new financing. When you commit to reduce energy or water consumption, according to a Green Assessment or a Green Assessment Plus, borrowers can receive better pricing and maximize funding to make these enhancements. Green Advantage works with Freddie Mac Conventional, Targeted Affordable Housing (TAH) and Seniors Housing products.

Green Assessment
  • Quick property analysis to show borrowers how they can save energy and/or water by making property improvements
  • Can be completed within two weeks without adding to processing time
  • Reimburse up to $4,000 of the cost of the report when the borrower closes a loan
Green Assessment Plus
  • Highly detailed property analysis based on an ASHRAE Level 2 energy audit
  • Reimburse up to $4,000 of the cost of the report when the borrower closes a loan
Eligible Loans
  • Conventional and TAH cash preservation (excludes SBL, Seniors, MHCs and supplementals)
  • 10- year fixed-rate Freddie Mac Multifamily Optigo loans
  • Workforce housing properties (at least 50% of units affordable at workforce housing rents):
    • 80% AMI in standard markets
    • 100% AMI in cost-burdened renter markets
    • 120% AMI in very cost-burdened renter markets
    • 150% AMI in extremely cost-burdened renter markets
  • Green Retrofits (at least 50% of units affordable at 60% AMI)
  • Affordability Test required
Minimum Projected Consumption Reduction
  • Green Up and Green Plus: 30% of energy or water/sewer consumption for the whole property, with a minimum of 15% from energy based on Green Assessment or Green Assessment Plus
  • Green Retrofit: 15% energy or water/sewer consumption savings at the property; Property improvements must have been made within the current alendar year and the preceding two calendar years from the completion date of the Form 1209: Green Retrofits Certification.
Underwriting Approach
  1. Green Up: Recognize 50% of projected owner-paid energy and/or water/sewer savings based on Green Assessment
  2. Green Up Plus: Recognize 75% of projected owner-paid energy and/or water/sewer savings based on Green Assessment Plus
Loan Proceeds and Sizing
  • Debt Coverage Ratio (DCR): -0.05x of policy-compliant DCR; Subject to lesser of 1.20x or program/product limit
  • (LTV) Ratio: +5.0% of policy-compliant LTV; Subject to greater of 85% of program/product limit
As-Is DCR/LTV
  • DCR: -0.05x of policy compliant DCR; Subject to lesser of 1.20x or product limit
  • LTV: +5.0% of policy compliant LTV; Subject to greater of 85% or product limit
As-Improved DCR/LTV (If Applicable)
  • Must meet policy compliant DCR/LTV; No adjustments
  • Based on As-Improved NOI and As-Improved appraised value
Minimum Green Improvement Budget $250 per unit.
Time to Complete Green Improvements Two years
Escrow Requirements Funds for energy/water efficiency work will be escrowed at 125% of cost and released as work is completed
Benchmarking Data Collection Green Up and Green Up Plus loans require borrowers to engage a third-party Collection data collection consultant prior to the origination of the loan to collect, input and monitor actual energy and water usage through the term of the loan
Required Third-Party Reports
  • Green Up: Green Assessment
  • Green Up Plus: Green Assessment Plus
Green Certified Discounted loan pricing for 10-year, fixed-rate loans if at least 50% of the property’s units are affordable at workforce housing levels. They must have an industry-standard green building certification:

  • EarthCraft, South Face
  • ENERGY STAR for Multifamily Existing Building, High Rise, New Construction, EPA
  • Green Communities, Enterprise Community Partners
  • Green Globes, Green Building Initiative
  • GreenPoint Rated, Build It Green
  • Leadership in Energy and Environmental Design (LEED), US Green Building Council
  • National Green Building Standard (NGBS), Home Innovation Research Labs
  • Passive House Institute US (PHIUS) Certified
  • Passive House Institute (PHI) Certified
Green Rebate For multifamily properties with greater than 20 units, a $5,000 rebate may be available for a borrower reporting an ENERGY STAR Score. Rebate will be provided at settlement after all obligations and requirements are met. There is no minimum score required to receive the rebate

V102021

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