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Freddie Mac

Transitional Line of Credit

TERM
  • 3- or 5-year interest-only.
  • Two conditional 1-year extension options.
COMMITMENT AMOUNT
  • $100 million preferred minimum.
  • Up to 50% of initial commitment amount in expansion rights.
BORROWERS

Seasoned and well-capitalized multifamily owner/operators with strong credit performance; preferably with prior credit facility borrowing experience.

GUARANTOR FINANCIAL COVENANTS
  • 10% liquidity and 30% net worth.
INTEREST RATE TYPE

Floating.

COLLATERAL

First-lien mortgages of mission-based workforce housing (not available for Small Balance Loans)

CROSSED TLC

LTV/DSCR sublimits measured at the TLC level with no limits at the property level.
No minimum occupancy requirement.

UNCROSSED TLC

Each property is evaluated individually and must meet the sublimit requirements individually.
No minimum occupancy requirement.

TYPICAL LTV RANGE

50% - 70%.

MINIMUM DSCR

Minimum DSCR varies by product type:

  • Conventional Multifamily: 1.45x.

  • Manufactured Housing Communities: 1.45x-1.50x.

  • TAH: 1.40x*.

  • Uncrossed Pools Added: +0.10x.

    *Subject to Freddie Mac review/approval.

UNDERWRITING RATE (FOR MOST MARKETS)
  • Without interest rate cap: index floor + stress rate (100 bps) + gross spread.
  • With interest rate cap: cap strike rate + gross spread.
INTEREST RATE CAP

Third-party caps are recommended.

COMMITMENT FEE AND PROPERTY ADDITION FEE
  • Commitment fee: 5 basis points.
  • Addition fee: 10 basis points.
EXTENSION FEE

$50,000 for each extension year.

UNUSED COMMITMENT FEE

20 basis points charged annually on the difference between the commitment amount and UPB drawn.

SEASONING FEE

50 basis points charged annually at the asset level beginning in the fourth year the asset is in the TLC.

ASSET RELEASE FEE    

Securitized Product Exit

  • No release fee.
  • If exit into floating-rate securitized product, increased call protection may be required.

Property Sale

  • 1% of the allocated loan amount; waived if new buyer finances with a Freddie Mac securitized product.

All Other Exits

  • Years 1 to 3 of facility: 2% of the allocated loan amount.
  • After year 3 of facility: 1% of the allocated loan amount.

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.