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Purpose:
Offers borrowers a fixed rate for an initial term of 5
to 15 years followed by a 1-year adjustable rate term
during which the loan may be repaid without a prepayment
penalty.
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Eligible
Properties: Multifamily properties. FNMA approval
required for Moderate Rehab, Seniors or Student Housing
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Ineligible
Properties: Multifamily Affordable Housing
Mortgages or Bond Credit Enhancement
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Collateral:
1st mortgage
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Loan Amount:
No minimum or maximums
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Loan Term:
6,8,10,11 or 16 years terms. Final year is the
adjustable rate period.
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Interest
Rate/Pricing: Fixed interest rate over the initial
5,7,9,10 or 15 year period. The 1-year ARM period is at
1-month LIBOR plus 2.4
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Amortization: Amortizing over 25 or 30 years or
full and partial interest-only, based on standard DUS
requirements.
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Origination
Fees: Market driven
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Max LTV:
80%
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Min DSCR:
1.25x
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Recourse:
Non-recourse in most cases with standard carveouts for
"bad acts."
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Property
Occupancy: 90% occupancy for 90 days required
prior to funding
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Min
Vacancy/Collection Loss: Greater of market, actual
or 5%.
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Escrows:
Replacement reserves, tax and insurance typically
required for higher leverage transactions.
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Replacement
Reserves: May be required
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Third Party
Reports: Appraisal, Phase I and a Physical Needs
Assessment are required.
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Interest
Accrual Basis: Actual/360 or 30/360
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Rate
Lock:30- to 90-day commitments. Extended Rate Lock
available on limited basis.
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Assumption:
Typically assumable subject to lenders review and
approval of new borrower's financial capability.
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Prepayment
Provisions: Yield Maintenance, Defeasance and
Graduated Prepayment Premium
