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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 up to 75 bps. 
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- to 36-month commitments. One delegated six-month extension available.

LOAN TO VALUE

90% for Mortgage Loans secured by a property with at least 90% of units meeting affordability requirements. 85% for a property with less than 90% of units meeting affordability requirements. 80% for refundings. 

LOAN TERM

10 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

15 bps per year paid upfront prior to rate lock.

DELIVERY TOLERANCE

The original principal amount of the permanent Mortgage Loan must not be greater than 100% of the amount of the Unfunded Forward Commitment. 

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.