• Deal specific/negotiated
• Interest-only during renovation
• Hedge: Uncapped during renovation; cap required post-renovation if not converted to fixed-rate

• $25,000-$60,000 in renovations per unit with a minimum of $7,500 per unit designated for interior work
• Minimum occupancy: Rehabilitation plan may not take debt service coverage ratio below 1.0x on an interest-only basis

• Fund up to 80% of the as-is value, supported by the property acquisition price if applicable
• Periodic draws of unfunded loan proceeds (as opposed to an escrow) to reimburse the sponsor for up to 80% of the renovation costs on a monthly or quarterly basis as work is completed, similar to construction financing
• Appraisal must demonstrate 80% as improved LTV (with fully funded renovation proceeds)

Debt coverage ratio (DCR):

• Initial sizing – 1.20x interest only “as is”
• An improved underwritten net operating income (NOI) per appraisal must reflect no less than 1.30x amortizing debt service coverage ratio and will be subject to appraisal support

• Additional documents: Freddie Mac Disbursement Agreement, Disbursement Servicing Agreement, Operating Deficit Agreement & Completion Guaranty for 80% of approved budget and all work initiated
• Property Condition Report: Must include reasonable confirmation of the budgeted scope of work
• Draws: Monthly or quarterly; first draw will be based on a certificate from servicer to Freddie Mac confirming that request complies with requirements set forth in Disbursement Agreement (including but not limited to inspections, lien waivers and standard documentation); subsequent draws will require additional certifications as well as Freddie Mac’s independent confirmation of the information/documents supporting prior certificate
• Monitoring: In addition to the draw certificates noted above, monitoring will incorporate quarterly progress reports and inspections, including rent rolls and operating statements
• Timing: All renovation work is expected to be completed within 36 months

• Loan type: Float-to-Fixed, or fixed-to-float
• Conversion: Fixed rate after initial floating period; note rate to be determined at loan origination
• Additional options: Varying combinations of fixed and floating structures will be considered on a case-specific basis