Search Site
Fannie Mae

Unfunded Forward Commitment 4% LIHTC

Offers an unfunded forward commitment to issue an MBS upon completion of construction and conversion to a permanent mortgage loan for multifamily affordable properties. The MBS as Collateral for Tax-exempt Bonds (M.TEB) execution is an available option for 4% LIHTC transactions.

BENEFITS
  • Protection from interest rate volatility by locking the interest rate and other key provisions prior to construction.
  • Single asset security allows for customized loan structures.
  • Certainty and speed of execution.
  • M.TEB execution offers reimbursement of certain Costs of Issuance.
ELIGIBILITY
  • LIHTC new construction and properties undergoing substantial rehabilitation, including preservation and rural transactions.
  • Lenders approved to deliver forward commitments under Fannie Mae’s Multifamily Affordable Housing product line.
FORWARD RATE LOCK PERIOD

24- or 30-month commitments. One delegated six-month extension available.

LOAN TO VALUE

90% for deals with 90% or more affordable units. 85% for all other deals.

LOAN TERM

Up to 30 years.

AMORTIZATION

Up to 35 years.

DEBT SERVICE COVERAGE RATIO

1.15x for deals with 90% or more affordable units. 1.20x for all other deals.

INTEREST RATE

Fixed or Variable Rate.

CONVERSION TO PERMANENT REQUIREMENTS

The permanent loan will close upon project completion with:

  • Certificates of occupancy for all units.
  • 90% Occupancy for 90 days.

The permanent loan must meet Fannie Mae’s underwriting requirements.

GOOD FAITH DEPOSIT

1% of loan amount, due at issuance of the forward commitment, refundable upon conversion.

FORWARD STANDBY FEE

0.15% per year paid upfront prior to rate lock and 0.075% for the 6-month extension.

DELIVERY TOLERANCE

+5% and -10% is available.

ADDITIONAL CONSIDERATIONS

During the construction phase, the M.TEB execution requires the bonds to be cash collateralized with proceeds of a side-by-side construction loan and bond loan. The MBS will be delivered as bond collateral after conversion, following the M.TEB delivery guidelines.

 

This sheet sets out the general guidelines of a loan program and is designed solely as an aid to prospective borrowers and other clients. It does not represent or imply a contract or a commitment to lend funds. A commitment to lend funds may only be made by a written letter issued by NewPoint to a prospective borrower. This term sheet is subject to change at any time without notice at the sole discretion of NewPoint Real Estate Capital LLC.