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.
- 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.
- 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.
Up to 30 years.
Up to 35 years.
DEBT SERVICE COVERAGE RATIO
1.15x for deals with 90% or more affordable units. 1.20x for all other deals.
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.
+5% and -10% is available.
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.