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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

FRDDIE MAC®

Moderate Rehab Loan

Arbor offers a flexible liquidity source for properties undergoing significant renovation. It is a highly customized solution for borrowers experienced in completing moderate rehabilitation deals and allows for a wide variation in borrower term and structure needs.

Loan Terms
  • Deal specific/negotiated
  • Interest-only during renovation
  • Hedge: Uncapped during renovation; cap required post-renovation if not converted to fixed-rate
Eligible Sellers Approved Program Plus Sellers for Moderate Rehab Loans, depending on their rehabilitation experience and familiarity with our process.
Eligible Sponsors Experienced and well-capitalized sponsors who have successfully completed rehabilitation projects of similar scope and who are familiar with the Freddie Mac loan process.
Eligible Properties
  • $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
Loan Proceeds/Sizing Loan-to-value (LTV) ratio:

  • 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
Rehabilitation
  • 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 Structure
  • 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
Prepayment 2% prepayment penalty during Interim Loan; standard Freddie Mac prepay structures available thereafter.
Fees Standard fees apply, including application fee and good faith deposit.

V032318

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