Sponsor-Dedicated Workforce (SDW) Housing Term Sheet
Fannie Mae Multifamily provides better pricing and more flexible underwriting to incentivize the election of rent restrictions on workforce housing supply.
Benefits
- Creation and preservation of workforce housing affordable to households earning 80% – 120% of area median income (AMI)
- Flexible loan terms
- Competitive pricing
- Supports workforce housing providers
- Speed in processing and underwriting, with simple Loan Document modifications
- Straightforward annual rent monitoring process
Eligibility
- Existing, stabilized Conventional properties
- A minimum of 20% of units must be made affordable to households earning up to 80% of AMI or, in certain metros, up to 100% –120% AMI
- Rent affordability levels are identified and in place by the Mortgage Loan Origination Date
- The Property has 12 months from the Mortgage Loan Origination Date to comply with the SDW rent restrictions. The Lender is responsible for notifying Fannie Mae of noncompliance
Term
5 to 30 years
Amortization
Up to 30 years
Interest Rate
Fixed- and variable-rate options available. Structured ARM Loans with a lockout period of less than a two years are not eligible
Maximum LTV
80%
Minimum DSCR
1.25x
Loan Document Requirements
- Modifications to Loan Agreement (Sponsor-Dedicated Workforce Housing) (Form 6271.SDW);
- Modifications to Security Agreement (Sponsor-Dedicated Workforce Housing) (Form 6325)
- Supplemental Annual Loan Agreement Certification (Form 6620.Supplemental.SDW)
Annual Compliance Requirements
The Servicer manages the affordability requirements, including verification of the SDW rent restrictions. The Borrower must annually submit:
- a certification of compliance via the Supplemental Annual Loan Agreement Certification (Form 6620.Supplemental.SDW), and
- rent rolls to the Servicer.
Execution
MBS
Supplemental Financing
Supplemental Mortgage Loans are available
Prepayment Availability
Flexible prepayment options are available, including yield maintenance and declining prepayment premium. Mortgage Loans may be voluntarily prepaid upon payment of the required per the Loan Documents.
Rate Lock
30- to 180-day Rate Lock periods are available
Accrual
30/360 and Actual/360
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
Mortgage Loans are typically assumable, subject to review and approval of the proposed new borrower’s financial capacity and experience
Asset Management
The Property must comply with the SDW rent restrictions within 12 months of the Mortgage Loan Origination Date. The Lender is responsible for notifying Fannie Mae of noncompliance