Affordable Housing Preservation

Term Sheet (PDF)

Benefits

• Flexible underwriting to specific affordable developments
• Competitive pricing
• Flexible loan terms, and fixed- or variable-rate financing options
• Certainty and speed of execution

Eligibility

• Expiring Low-Income Housing Tax Credit deals
• Refinancing of existing tax-exempt bond deals
• Properties eligible for the Rental Assistance Demonstration (RAD) program
• Properties with HUD Section 8 HAP Contracts
• Properties with existing Rural Housing Service (RHS) Section 515 loans
• Loans insured under Sections 202 or 236 of the National Housing Act

Term

5 - 30 years.

Amortization

Up to 35 years.

Interest Rate

Fixed- and variable-rate options available.

Maximum LTV

80%.

Minimum DSCR

1.20x (fixed-rate).

Property Considerations

Low-income qualifying restrictions required and must be recorded:

• 20% or more units rented to families earning at or below 50% of Area Median Income (AMI);
• 40% or more units rented to families earning at or below 60% of AMI; or
• Project-Based Housing Assistance Payments contract (Section 8) covering 20% or more units.

Supplemental Financing

Supplemental Loans are available.

Prepayment Availability

Flexible prepayment options available, including yield maintenance and declining prepayment premium.

Rate Lock

30- to 180-day commitments. Borrowers may lock a rate with the Streamlined Rate Lock option.

Accrual

30/360 and Actual/360.

Third-Party Subordinate Financing

Hard subordinate debt (which requires scheduled repayment of principal) is permitted only if provided by a public, quasi-public, or not-for-profit lender and combined debt service coverage cannot fall below 1.05x. Soft subordinate debt is permitted subject to requirements which include capping payments at 75% of available Property cash flow after payment of senior liens and Property operating expenses.

Recourse

Non-recourse execution with standard carve-outs for “bad acts” such as fraud and bankruptcy.

Escrows

Replacement reserve, tax, and insurance escrows are typically required.

Third-Party Reports

Standard third-party reports required, including Appraisal, Phase I Environmental Site Assessment, and Property Condition Assessment.

Assumption

Loans are typically assumable, subject to review and approval of the new borrower’s financial capacity and experience.