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Financing Options

Reduced Occupancy Affordable Rehab (ROAR) Execution

Permanent mortgage loan financing for Multifamily Affordable Housing (MAH) Properties in need of renovations, eliminating the need for a construction loan.

Term Sheet (PDF)

 

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Benefits

 

  • Flexible permanent loan solution that allows the sponsor to rehabilitate more efficiently
  • Eliminates need for a construction loan or forward commitment
  • Increased leverage opportunities when underwritten to as-improved rents
  • Interest only during rehab period

Eligibility

 

  • Existing, stabilized Multifamily Affordable Housing properties undergoing renovations
  • Borrowers and Lenders with demonstrated experience
  • Available for both acquisition and refinance

Term

 

5 - 30 years.

Amortization

 

Up to 35 years.

Interest Rate

 

Fixed- and variable-rate options. Variable-rate only available for a Credit Enhancement Mortgage Loan for a bond transaction.

Maximum LTV

 

Up to 90% “as stabilized.”

Minimum DSCR

 

1.15x – 1.20x “as stabilized.”

Execution

 

Cash or Credit Enhancement Mortgage Loan for a bond transaction. Interest only available, structured to match the rehab period.

Loan Size

 

$5,000,000 minimum; no maximum.

Eligible Properties

 

Stabilized Multifamily Affordable Housing properties undergoing renovations up to $120,000 per unit.

Eligible Borrowers

 

Strong borrowers with demonstrated tenant-in place rehab track record.

Rate Lock

 

30- to 180-day commitments.

Prepayment Availability

 

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

Rehab Period

 

12 – 15 months.

Rehab Period Occupancy

 

During the rehabilitation period occupancy may drop from stabilized levels to a minimum of 50%.

Rehab Period – DSCR

 

During the rehabilitation period, DSCR may drop from stabilized levels to a minimum of:

  • 1.0x (Interest-only basis)
  • 0.75x (Amortizing basis)

Rehab Escrow

 

Rehab funds escrowed by Lender.

Re-stabilization

 

Fully stabilized no later than 15 months after Mortgage Loan origination.

Fannie Mae UW Fee

 

3 bps.

Recourse

 

Non-recourse execution with standard carve-outs for “bad acts” such as fraud and bankruptcy. Construction Completion and Operating Deficit Guarantees required during the rehab and stabilization period.