Government Shutdown: What Multifamily Borrowers Need to Know

Unless an 11th-hour agreement is reached, a Congressional impasse will trigger the first partial U.S. government shutdown in four years. Starting October 1, 2023, many non-essential federal government operations will be limited or suspended. Agency lending, however, will not be interrupted, and there is no cause for concern. Borrowers should anticipate some inconveniences, such as processing and closing delays.


Understanding the Impact of Wildfires on Rental Property Insurance

From California to Maui, the frequency and scope of wildfire events are rising, causing insurance markets and public agencies to reevaluate property in areas at risk for catastrophic damage. As a result, rental housing providers are seeing greater limitations to coverage, higher premium prices, and, in some cases, a total absence of viable private insurance — a trend detailed in the NMHC 2023 State of Multifamily Risk Survey and Report. This troubling new trend has placed many rental housing operators in a bind where they must simultaneously contend with the declining availability and affordability of insurance options.


Five Advantages of FHA Multifamily Construction Loans

In the last three years, multifamily construction has reached levels not seen since the 1980s, supported, in part, by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) loans. If you are exploring the acquisition, refinancing, rehabilitation, or new construction of conventional multifamily, affordable housing, seniors housing, or a healthcare facility, consider FHA multifamily construction loans, a stable financing option with excellent terms and many other attractive advantages.


Where are Single-Family Rental (SFR) Rents Rising the Fastest?

While the single-family rental (SFR) sector’s rent growth averages have retreated from record highs, structural tailwinds are keeping price growth positive — both nationally and in major SFR markets. In this research brief, Chandan Economics and Arbor Realty Trust analyze DBRS Morningstar data, which covers the top 20 MSAs by SFR activity, to discover the metropolitan areas where SFR rent growth is the hottest right now.


Fannie Mae Small Loans Cap Raised to $9 Million

Fannie Mae recently announced that its Small Loan cap has increased from $6 million to $9 million for all loans committed as of August 22, 2023. Multifamily borrowers and lenders have praised the change to the Fannie Mae Small Loans program, which will encourage greater investment in a rapidly growing sector where demand remains high despite market volatility.


The Top Five Emerging Metros for Retiree Relocation

As Baby Boomers reach retirement age, their evolving geographic preferences are strengthening housing markets and local economies in new locations, which feature attractive climates, relative affordability, and ample outdoor activities. With swelling populations of senior citizens, our top five emerging metropolitan areas for retiree relocation are fertile ground for multifamily real estate investment.



Small Balance Loan Program

Arbor’s Freddie Mac Small Balance Loan program streamlines the entire loan process for multifamily acquisition and refinancing loans ranging from $1M to $7.5M.

Loan Amount $1 million – $7.5 million in all markets
Note: Deals greater than $6 million and up to $7.5 million in Small and Very Small Markets may be permitted subject to Freddie Mac’s approval.
Markets Nationwide
Unit Limitations
  • Loan amount ≤ $6M: no unit limitations
  • Loan amount > $6 million and ≤ $7.5 million: up to 100 units (above 100 units may be permitted, subject to Freddie Mac’s approval)
Loan Term Fixed-rate loan terms of 5, 7, or 10 years; hybrid ARM loan terms of 20 years with initial 5, 7 or 10 years fixed rates
Amortization Up to 30 years; interest-only options also available
Minimum DSCR 1.20 in Top Markets; 1.25 in Standard Markets; 1.30 in Small Markets; 1.40 in Very Small Markets.
Maximum LTV
  • 80% in top and standard markets
  • 75% if acquisition in small/very small markets
  • 70% refinance in small/very small markets

To determine market tier, please consult with your Arbor Relationship Manager

Full-Term Interest Only DSC/LTV Thresholds
  • Minimum DSC 1.35/maximum LTV 65% in top markets
  • Minimum DSC 1.40/maximum LTV 65% in standard markets
  • Minimum DSC 1.40/maximum LTV 60% in small markets
  • Minimum DSC 1.50/maximum LTV 60% in very small markets
Rate Structure Fixed and hybrid ARM loan terms available
Eligible Properties Multifamily housing, with five residential units or more, including:

  • Properties with tax abatements
  • Age-restricted properties with no resident services
  • Properties with space for certain commercial (non-residential) uses
  • Properties with tenant-based housing vouchers
  • Low-Income Housing Tax Credit (LIHTC) properties with Land Use Restriction Agreements (LURAs) that are either within the final 24 months of the initial compliance period or in the extended use period (investor must have exited)
  • Properties with local rent subsidies for 10% or fewer units where the subsidy is not contingent on the owner’s initial or ongoing certification of tenant eligibility
  • Properties with certain regulatory agreements that impose income and/or rent restrictions, provided all related funds have been disbursed
  • Loans secured by groups of contiguous and non-contiguous duplexes, triplexes and fourplexes may be permitted as part of a larger loan configuration, subject to additional restrictions
Eligible Borrower Limited partnerships; Limited Liability Companies (LLCs); Single Asset Entities; Special Purpose Entities; tenancy in common with up to five unrelated members; and irrevocable trusts with an individual guarantor
  • Minimum Net Worth: Equal to the loan amount
  • Minimum Liquidity: Equal to 9 months of principal and interest
Occupancy Requirement Property must generally be stabilized at 90% physical occupancy for the trailing 3-month average prior to Underwriting
Tax & Insurance Escrows
  • Real estate tax escrows deferred for deals with an LTV ratio of 65% or less
  • Insurance escrows are deferred
  • Replacement reserve escrows may qualify for deferral for certain loans
Replacement Reserves Underwritten at a minimum of $200 per unit per annum; replacement reserve escrow is required for properties with greater than 50 units, subject to acceptable property condition
Commercial Space Allowed up to 40% of total Gross Potential Rent; no more than 40% of Net Rentable Area
Recourse Nonrecourse with standard carve-out provisions required
Prepayment Declining schedules and yield maintenance available for all loan types; all prepayment options open for prepayment without penalty three months prior to maturity
Assumable Subject to approval and 1% fee
Rate Lock 60-, 90-, 120-, 150-, 180-day extended delivery options available
Freddie Mac Fee Nonrefundable application fee (0.1% of loan amount in all markets except top markets) collected at time of rate lock
Good Faith Deposit 1% of loan amount due upon acceptance and execution of the Small Balance Loan (SBL) Rate Lock Application; refundable post-closing
Top Markets New York-Kings-Queens-Bronx-Richmond-Rockland-Westchester-Suffolk-Nassau-Bergen-Essex-Hudson-Somerset-Middlesex-Passaic-Union-Monmouth-Morris (NY-NJ-PA); Middlesex-Norfolk-Suffolk-Essex-Plymouth (MA-NH); District of Columbia-Montgomery-Prince George’s-Arlington-Alexandria-Fairfax-Fairfax City-Falls Church City (DC-VA-MD-WV); Dallas (TX); Cook-Lake-DuPage (IL-IN-WI); Los Angeles-San Francisco-Sacramento-Contra Costa-Marin-Alameda-Orange-Santa Clara-San Mateo-San Diego (CA); Denver-Jefferson-Arapahoe-Adams (CO); Fairfield (CT); Miami-Broward-Palm Beach (FL); Dakota-Ramsey-Hennepin-Anoka (MN-WI); Washington-Clackamas-Clark-Multnomah-King-Pierce-Snohomish (OR-WA)


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