PROGRAM OUTLINE
Program provides funds for the refinance or acquisition of an existing multifamily project.  It is possible to finance 100% of all transaction costs. Owners having low-leverage debt may take cash out.  This program is provided through one of our correspondent lenders.

PROJECT CRITERIA

• Must be an existing multifamily market rate rental project at least three years old
• No rehabilitation permitted but repairs may be made for up to the greater of:
  

  15% of the value of the project $6,500 per unit (175% increase in high cost areas). Cost of kitchen appliances is excluded from the percentage of dollars for repairs

• Commercial area shall not exceed 20% of the net rental area or 25% of gross project income
• Sustaining occupancy must have been reached or a 12 month operating deficit account may be established
• An initial capital replacement reserve escrow must be established with monthly payments into escrow included with debt service

MORTGAGE TERMS

• Fixed rate, level amortization, non-recourse, fully assumable, and 100% insured by FHA
• Term - up to 35 years
• Refinancing determined by lesser of:

  statutory limits loan supported by 85% of net operating income for debt service greater of 85% of estimated value or 100% of costs, not to exceed 80% of value if cash proceeds are taken out

• Acquisition loans not to exceed the lower of:

  statutory limits loan supported by 85% of net operating income for debt service 85% of cost of acquisition 85% of value

• Loan amount subject to 1.17 debt service coverage constraint
• Interest Rates (quoted based on market):
  

  Low interest GNMA Mortgage Backed Securities or whole loans Tax exempt bonds

PREPAYMENT PENALTIES/LOCKOUTS

• No yield maintenance required
• Prepayment lockout penalties are negotiated at the time of interest rate lock

FINANCING COSTS (based on loan amount)

Paid at Application:

• 0.3% for a Firm Commitment to insure a mortgage. This fee is an FHA exam fee and is non-refundable and paid to HUD
• Appraisal, engineering, and environmental report costs if under MAP
• Lead base paint report for pre-1978 properties

Paid at Closing:

• applicable GNMA discount fees or similar fees charged by private programs
• 1% for the first year's Mortgage Insurance Premium (MIP) payable to HUD
• 100% of the cost of repairs (mortgage proceeds) must be set aside in an escrow account plus a 50% letter of credit for Assurance of Completion of Repairs
• financing fee

Annual Fees:

• 0.5% MIP
• 0.25% to 0.50% Annual GNMA Guarantee / Servicing Fees
• Firm Commitment Review by HUD - 60 days

 Information is available on other FHA programs upon request.