Conventional Float-to-Fixed Rate Loan (Two-Plus-Seven)
Must be well-qualified and preferably have Freddie Mac borrower experience.
- 2 years.
- IO, no cap required, locked-out/no prepayments.
- No supplemental loans during floating-rate period.
- 7 years.
- IO subject to 7-year fixed-rate IO credit parameters with defeasance.
- Amortizing loan with defeasance.
- Compliant with current credit parameters.
- Sized based on fixed rate.
- Must pass Refinance Test using aggregated term (2 years floating plus 7 years fixed) with 2 years of IO.
Terms (subject to revisions due to market fluctuations)
- Floating rate: 30-day Average SOFR + 20 bps.
- Fixed rate: 7-year UST + 7-year fixed pricing + 20 bps.
- Fixed rate is locked when the floating-rate spread is locked. Index locks also available during underwriting.
- No future rate adjustments.
PROCESS AND CONVERSION TO FIXED RATE
- Conversion of floating rate to fixed rate is automatic.
- Permits additional loan proceeds via a supplemental mortgage (pari passu). Any additional proceeds will be priced at then first-mortgage pricing.
- Freddie Mac must receive request for additional proceeds no less than 150 days prior to conversion.
- For securitization purposes, updated third-party reports required prior to fixed rate period conversion. Third- party reports paid by Freddie Mac unless additional proceeds are requested.
- If original loan fails to meet Freddie Mac’s credit parameters at conversion, Freddie Mac retains the right to restructure the transaction via a split note at time of securitization.
- Supplemental loans are allowed beginning the second year of the fixed-rate 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.