Search Site
Fannie Mae

Reduced Occupancy Affordable Rehab (ROAR) Execution

BENEFITS
  • Flexible permanent loan solution that allows the sponsor to rehabilitate more efficiently.
  • Eliminates need for a construction loan or forward commitment.
  • Increased leverage opportunities when underwritten to as-improved rents.
  • Interest only during rehab period.
ELIGIBILITY
  • Existing, stabilized Multifamily Affordable Housing properties undergoing renovations.
  • Borrowers and Lenders with demonstrated experience.
  • Available for both acquisition and refinance.
TERM

5 - 30 years.

AMORTIZATION

Up to 35 years.

INTEREST RATE

Fixed- and variable-rate options. Variable-rate only available for a Credit Enhancement Mortgage Loan for a bond transaction.

MAXIMUM LTV

Up to 90% “as stabilized.”

MINIMUM DSCR

1.15x – 1.20x “as stabilized.”

EXECUTION

Cash or Credit Enhancement Mortgage Loan for a bond transaction. Interest only available, structured to match the rehab period.

LOAN SIZE

$5,000,000 minimum. No maximum.

ELIGIBLE PROPERTIES

Stabilized Multifamily Affordable Housing properties undergoing renovations up to $120,000 per unit.

ELIGIBLE BORROWERS

Strong borrowers with demonstrated tenant-in-place rehab track record.

RATE LOCK

30- to 180-day commitments.

PREPAYMENT AVAILABILITY

Flexible prepayment options available, including yield maintenance and declining prepayment premium.

REHAB PERIOD

12 – 15 months.

REHAB PERIOD OCCUPANCY

During the rehabilitation period occupancy may drop from stabilized levels to a minimum of 50%.

REHAB PERIOD DSCR

During the rehabilitation period, DSCR may drop from stabilized levels to a minimum of:

  • 1.0x (Interest-only basis)
  • 0.75x (Amortizing basis)
REHAB ESCROW

Rehab funds escrowed by Lender.

RE-STABILIZATION

Fully stabilized no later than 15 months after loan origination.

FANNIE MAE UW FEE

3 bps.

RECOURSE

Non-recourse execution with standard carve-outs for “bad acts” such as fraud and bankruptcy. Construction Completion and Operating Deficit Guarantees required during the rehab and stabilization period.

 

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.