Cooperative Properties
Fannie Mae Multifamily provides financing options for properties owned by a Cooperative Organization, which is a corporation or other legal entity where each shareholder or equity owner is granted the right to occupy a unit in a multifamily residential property under a proprietary lease or occupancy agreement.
Benefits
- Flexible loan terms
- Competitive pricing
- Certainty and speed of execution
- Customized solutions
Eligibility
- Existing stabilized Cooperative Properties in eligible Cooperative Property markets
- Cooperative corporations with strong management and solid operating history
- Limited equity cooperative properties for low- and moderate-income families are also eligible
- Overall Property condition rating of two or better
Term
5 - 30 years.
Amortization
Up to 30 years.
Interest Rate
Fixed-rate.
Maximum LTV
55% (on a market rental basis).
Minimum DSCR
1.00x for Actual Cooperative Property operations and 1.55x for Cooperative Market Rental operations.
Property Considerations
- The property management company is required to have experience with cooperative properties of like size and market.
- Operating Reserve balance must be equal to or greater than 10% of annual maintenance fees.
- Maintenance fees must be sufficient to achieve a balanced budget.
- High levels of ownership by one sponsor or investor (in excess of 40%) will require additional due diligence.
Supplemental Financing
Supplemental Mortgage Loans are available.
Prepayment Availability
Loans may be voluntarily prepaid upon payment of yield maintenance.
Rate Lock
30- to 180- day commitments. Borrowers may use the Streamlined Rate Lock option provided that the Board of Directors or managers of the Cooperative Organization approve any increase in the Cooperative Maintenance Fee prior to using the Streamlined Rate Lock option.
Recourse
Non-recourse execution is available with standard carve-outs for “bad acts” such as fraud and bankruptcy.
Escrows
Replacement reserve, tax, and insurance escrows may be required. Escrows are typically required for a Limited Equity Cooperative Property.
Third-Party Reports
Standard third-party reports required, including Appraisal, Phase I Environmental Site Assessment, and Property Condition Assessment.
Assumption
Mortgage Loans secured by a Cooperative Property are typically not assumable by another entity.
